Members' Research Service By / December 1, 2021

EU recovery package

In December 2020, the European Union (EU) agreed the recovery package for Europe: the seven-year budget, known as the 2021 2027 multiannual financial framework (MFF), and a special instrument aiming at helping the EU economy to recover in the aftermath of the Covid 19 crisis – the European Recovery Instrument ‘Next Generation EU’

Recovery package for Europe

Written by Magdalena Sapała.

Updated on 20 December 2021.

If you are you looking for a comprehensive source of information, analysis and infographics explaining the recovery package for Europe, you are in the right place. This blog post will lead you through a collection of EPRS publications, financial data, legal acts and other interesting sources of information and analysis on the topic.

Content:

Section 1 – What is the recovery package for Europe?

Section 2 – How is the recovery package implemented?

Section 3 – How is the Recovery and Resilience Facility (RRF) implemented?

Section 4 – How are the other programmes financed under the Next Generation EU implemented?

Section 5 – Key EPRS publications and infographics

Section 6 – Other interesting sources of information

(1) What is the recovery package for Europe?

In December 2020, the European Union (EU) agreed the recovery package for Europe: the seven-year budget, known as the 2021‑2027 multiannual financial framework (MFF), and a special instrument aiming at helping the EU economy to recover in the aftermath of the Covid‑19 crisis – the European Recovery Instrument ‘Next Generation EU’ (Figure 1). While the MFF ensures financial means for the functioning of the European Union, for the investments and implementation of various EU policies, Next Generation EU provides an extraordinary, temporary instrument, created to address the exceptional consequences of and challenges posed by the Covid‑19 pandemic. Both elements of the financial package differ in their sources of financing. The MFF is financed from the EU’s own resources. Most of these (70 %) comes from direct payments from the Member States’ national budgets, calculated on the basis of gross national income (GNI). The rest comes from customs duties, contributions based on value added tax (VAT) collected by the Member States, and since 2021, from a national contribution based on non-recycled plastic packaging waste. The Next Generation EU recovery instrument, however, is financed from money borrowed by the Commission on behalf of the EU on the international capital markets (the first borrowing operations began in June 2021). Then, by 2058 at the latest, Next Generation EU should be repaid from the EU’s own resources. The EU budget will repay the grants and their borrowing costs, while the Member States that have taken loans will be responsible for their repayment. To help repay the borrowing, new sources of revenue for the EU should be in place by that time.

2021-EU-Recovery-update-01.jpg

Links to useful legal documents

(2) How is the recovery package implemented?

In December 2020, the approval of the 2021-2027 MFF and Next Generation EU, followed by the completion of the ratification process of the own resources decision in May 2021, opened the way for the implementation of the recovery package for the EU (see the timeline in Figure 4) .

The MFF (€1 210.9 billion in current prices) covers the years 2021 to 2027, and is implemented through more than 40 programmes and funds under seven main EU spending priorities, known as headings (for details about the agreement on the 2021‑2027 MFF see the EPRS blog).

Next Generation EU (€806.9 billion in current prices) is implemented through seven programmes. The bulk of the instrument (90 %) was allocated to the Recovery and Resilience Facility (RRF), and the remaining 10 % to the programmes co-financed under the 2021‑2027 MFF, i.e. regional development (React-EU), rural development, Horizon Europe, the Just Transition Fund, Union Civil Protection Mechanism (RescEU), and InvestEU. In other words, up to 2023, these programmes will be partly financed and implemented under the MFF and partly under NGEU. The proportions of both components vary by programme. While the NGEU share in the total allocation on Horizon Europe is 6 %, it is 56 % in the JTF.

Under Next Generation EU, the legal commitments on spending have to be made during 2021‑2023, whereas the payments can be made until the end of 2026. Each year the amount to be used under the instrument will be entered to the EU budget as an external assigned revenue (read more about the external assigned revenue and the EU annual budget in the EPRS publication Economic and Budgetary Outlook 2021).

Most of the Next Generation EU resources have been pre-allocated to the Member States. Figure 2 illustrates the distribution of NGEU funding under the RRF, React-EU, JTF and rural development programmes per Member State and capita. Spending under the Horizon Europe, RescEU and Invest EU programmes will be distributed to different projects across the EU on a competitive basis.


Figure 2 – Pre-allocated funds under Next Generation EU


NGEU resources pre-allocated to Member States (RRF, REACT-EU, JTF and rural development) by Member State and per capita (€, current prices)

(3) How is the Recovery and Resilience Facility (RRF) implemented?

The Recovery and Resilience Facility (RRF) is the main building block of Next Generation EU. Its budget amounts to €723.8 billion (current prices) and is divided between non-repayable grants (€338 billion) and loans (€385.8 billion). The Member States’ maximum indicative financial envelopes under the RRF were decided in the RRF regulation (Annex I‑IV) and pre-allocated. However, the actual amounts to be transferred to the Member States (see Figure 3) and the calendar of payments depend on many conditions. They concern two areas in parallel, as presented on each side of the timeline in Figure 4. Legislative and organisational procedures had to be completed before the financing of the NGEU Recovery Instrument, including the RRF, could become operational, as well as the process of drawing up, evaluating and approving the individual countries’ planned reform and investment to be implemented using the borrowed resources.


Figure 3 – Distribution of the Recovery Resilience Facility (grants) by Member State.


Recovery and Resilience Facility (RRF) grants by Member State and per capita (current prices)
Recovery and Resilience Facility (RRF) grants by Member State and per capita (current prices)

Figure 4 – Timeline of the main events in the implementation of the Recovery and Resilience Facility.(grants) by Member State.


Timeline and main steps in the procedure

National Recovery and Resilience Plans

Any Member State wishing to use the RRF must submit a national recovery and resilience plan (NRRP). This document should outline the national reform and investment package, referring to the areas specified under the six pillars (See Article 18 and Annex V of the RRF Regulation) and to the challenges identified in the European Semester Country Specific Recommendations (CSRs). The preparation of the plans by the Member States, their positive assessment by the Commission, and approval by Council (implementing decision adopted by qualified majority), are the key preconditions for the first transfers from the RRF. Only once these are in place can the Commission conclude an agreement with each Member State on a legal commitment authorising the financial contribution and begin the pre-financing phase (Table 1).

Summary of progress (as of 3 December 2021):

  • 26 NRRPs have been submitted to the Commission (the submission deadline has been postponed for the Netherlands, where recent elections and negotiations on the formation of a new government have delayed the preparation of the plan);
  • 22 NRRPs positively assessed by the Commission (the plans from Bulgaria – submitted on 15 October 2021, Hungary, Poland and Sweden are still in the assessment procedure);
  • 22 NRRPs approved by the Council.

Table 1 – Implementation of the National Recovery and Resilience Plans: state of play as of 28 October 2021 (€ billion, current prices)

Member State Submission dateRequested amountsMaximum amountsAmounts in Implementing Decision
  grantloangrantloangrantloan 
Belgium (BE)01/05/20215.9 5.932.85.9 13/07/2021
Bulgaria (BG)15/10/20216.6 6.34.2Undergoing assessment  
Czechia (CZ)02/06/20217.1 7.114.37 06/09/2021
Denmark (DK)30/04/20211.6 1.621.91.6 13/07/2021
Germany (DE)28/04/202127.9 25.6240.925.6 13/07/2021
Estonia (EE)18/06/20211 11.91 28/10/2021
Ireland (IE)28/05/20211 118.71 06/09/2021
Greece (EL)28/04/202117.812.717.812.517.812.713/07/2021
Spain (ES)30/04/202169.5 69.584.869.5 13/07/2021
France (FR)29/04/202140.9 39.4168.439.4 13/07/2021
Croatia (HR)15/05/20216.4 6.33.76.3 26/07/2021
Italy (IT)01/05/202168.9122.668.9122.768.9122.613/07/2021
Cyprus (CY)17/05/202110.211.510.226/07/2021
Latvia (LV)30/04/20211.8 221.8 13/07/2021
Lithuania (LT)15/05/20212.2 2.23.22.2 26/07/2021
Luxembourg (LU)30/04/20210.1 0.12.80.1 13/07/2021
Hungary (HU)12/05/20217.2 7.29.7Undergoing assessment  
Malta (MT)13/07/20210.3 0.30.80.3 05/10/2021
Netherlands (NL)Postponed  655.3   
Austria (AT)01/05/20214.5 3.527.23.5 13/07/2021
Poland (PL)03/05/202123.912.123.934.8Undergoing assessment  
Portugal (PT)22/04/202113.92.713.914.213.92.713/07/2021
Romania (RO)31/05/202114.31514.21514.21528/10/2021
Slovenia (SI)01/05/20211.80.71.83.21.80.726/07/2021
Slovakia (SK)29/04/20216.6 6.36.36.3 13/07/2021
Finland (FI)27/05/20212.1 2.116.42.1 28/10/2021
Sweden (SE)28/05/20213.2 3.332.2Undergoing assessment  

Payments

Pre-financing should take place within two months of the adoption of the agreement and is set at a maximum 13 % of the financial contribution (grants) and 13 % of the loan. The Member States will implement their NRRPs and send the Commission requests for payment twice a year. The disbursements will be made once the relevant milestones and targets set out in the implementing decision have been reached. All payments must be made by 31 December 2026. Table 2 includes detailed information about the progress of payments.

Disbursements upon completion of relevant milestones and targets

  • In November 2021, Spain and France have submitted payment requests together with evidence on milestones and targets reached.
  • On 3 December 2021, the Commission adopted positive preliminary assessment of the Spanish request for disbursement of €10 billion (based on 52 milestones achieved by the end June 2021).

Table 2 – Disbursement of pre-financing as of 20 December 2021 (€ billion, current prices)

 DateAmounts disbursed (max 13 % of total allocation)Share of total allocationRemaining amount
 
Austria28/09/20210.4513 %3.05
Belgium03/08/20210.7713 %5.15
Croatia28/09/20210.8213 %5.48
Czech Republic28/09/20210.9213 %6.08
Cyprus09/09/20210.1613 %1.05
Denmark02/09/20210.213 %1.35
Estonia17/12/20210.1313%0.87
France19/08/20215.1213 %34.25
Germany26/08/20212.259 %23.36
Greece09/08/20213.9613 %26.53
Italy13/08/202124.8913 %166.61
Latvia10/09/20210.2413 %1.59
Luxembourg03/08/20210.0113 %0.08
Lithuania17/08/20210.2913 %1.94
Malta17/12/20210.0413%0.26
Portugal03/08/20212.1613 %14.45
Romania02/12/20221.813 %27.4
Slovakia13/10/20210.8213 %5.51
Slovenia17/09/20210.2313 %1.57
Spain17/08/20219.0413 %60.48
Total54.3387.7
Source: European Commission, Press releases.

European Parliament role in the scrutiny of the RRF

The European Parliament is not directly involved in the assessment of the national plans or adoption of the implementing decisions that authorise the financial contributions to the Member States. Those roles belong to the European Commission and the Council respectively. However, based on the provisions of the RRF Regulation (in particular Articles 25 and 26) and the Interinstitutional Agreement on cooperation on budgetary matters, the Parliament can scrutinise the work of the Commission. Special fora have been set up to assist the European Parliament in the execution of its role.

Interinstitutional cooperation

  • Interinstitutional meetings on the implementation of Next Generation EU (based on the Interinstitutional Agreement, Annex I, part H). These meetings include representatives of the Parliament, Council and Commission, and should take place at least three times a year (meetings took place on 29 April, 15 July and 14 October 2021). They are not open to the public.
  • Recovery and resilience dialogue with the European Commission (based on Article 26 of the RRF Regulation). These meetings should take place every two months, are open to the public and live-streamed by the European Parliament (three meetings have taken place so far, on 10 May, 14 July, 1 September and 13 December 2021).

Parliament’s internal cooperation:

  • The two main committees dealing with the topic are the Committee on Budgets (BUDG) and the Committee on Economic and Monetary Affairs (ECON), but many others are involved in the discussions on different aspects of the RRF. Their meetings are open to the public and live-streamed.
  • The Standing Working Group (BUDG and ECON) on scrutiny of the RRF (based on the Conference of Presidents decision of 4 March 2021) serves as a preparatory and follow-up forum for the bi-monthly recovery and resilience dialogue. It consists of 27 Members of BUDG, ECON and associated committees, nominated by the political groups. Meetings are not open to the public.

Plenary debates and resolutions

In addition, the Parliament regularly debates the topic during plenary sessions. It has also adopted resolutions concerning the implementation process:

  • 11 March 2021 – Plenary debate on respecting the partnership principle in the preparation and implementation of national recovery and resilience plans, and ensuring good governance of the spending.
  • 18 May 2021 – Plenary debate on the right of information regarding the ongoing assessment of the national recovery and resilience plans.
  • 20 May 2021 – Resolution on the right of information regarding the ongoing assessment of the national recovery and resilience plans.
  • 8 June 2021 – Plenary debate on European Parliament’s scrutiny on the ongoing assessment by the Commission and the Council of the national recovery and resilience plans.
  • 10 June 2021 – Resolution on the views of the Parliament on the ongoing assessment by the Commission and the Council of the national recovery and resilience plans.
  • 6 October 2021 – Plenary debate on state of play on the submitted RRF recovery plans awaiting approval.

(4) How are the other programmes financed under the Next Generation EU implemented?

Regional development REACT-EU

Financial planning (commitments, current prices, billion):

 20212022Total
REACT-EU39 79510 82450 620
    
Source: European Commission, 2021

European Commission website on the implementation of REACT-EU


Rural development

Financial planning (commitments, current prices, € billion):

 20212022Total
Rural development2 3885 6388 070
    
Source: European Commission, 2021

NGEU-rural development pre-allocation per country: see the European Commission data.


Just Transition Fund

Financial planning (commitments, current prices, € billion):

 202120222023Total
Just Transition Fund2 1224 3304 41610 868
     
Source: European Commission, 2021

NGEU-JTF pre-allocation per country: see the European Commission data.

See also the EPRS animated infographic on the Just Transition Fund


Horizon Europe

Financial planning (commitments, current prices, € billion):

 202120222023Total
Horizon Europe1 8041 7861 8225 412
     
Source: European Commission, 2021

RescEU

Financial planning (commitments, current prices, € billion):

 202120222023Total
RescEU6866796922 056
     
Source: European Commission, 2021

InvestEU

Financial planning (commitments, current prices, € billion):

 202120222023Total
InvestEU1 7831 8182 4736 074
     
Source: European Commission, 2021

(5) Key EPRS publications

Latest state of play in National Recovery and Resilience Plans

Legislative trains

(6) Other sources of information

Useful links on Member States’ national recovery and resilience programmes

 National recovery and resilience planRequested amounts (COM press release)Implementing decision (ID)Commission assessment of the national plan (annex to ID)Commission staff working documents (SWD) – analysis of the national plan
Belgium (BE)BEBEBEBEBE
Bulgaria (BG)BG    
Czechia (CZ)CZCZCZCZCZ
Denmark (DK)DKDKDKDKDK
Germany (DE)DEDEDEDEDE
Estonia (EE)EEEEEEEEEE
Ireland (IE)IEIEIEIEIE
Greece (EL)ELELELELEL
Spain (ES)ESESESESES
France (FR)FRFRFRFRFR
Croatia (HR)HRHRHRHRHR
Italy (IT)ITITITITIT
Cyprus (CY)CYCYCYCYCY
Latvia (LV)LVLVLVLVLV
Lithuania (LT)LTLTLTLTLT
Luxembourg (LU)LULULULULU
Hungary (HU)HUHU   
Malta (MT)MTMTMTMTMT
Netherlands (NL)     
Austria (AT)ATATATATAT
Poland (PL)PLPL   
Portugal (PT)PTPTPTPTPT
Romania (RO)RORORORORO
Slovenia (SI)SISISISISI
Slovakia (SK)SKSKSKSKSK
Finland (FI)FIFIFIFIFI
Sweden (SE)SESE   


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