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 22 November 2022.

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 and how is it implemented?

Section 2 – How is the Recovery and Resilience Facility (RRF) implemented?

Section 3 – Relevant EPRS publications

Section 4 – 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.

Figure 1. Recovery package for Europe

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.

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 and an animated infographic).

Under the Next Generation EU (€806.9 billion in current prices), 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.

The Next Generation EU 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, except from the RRF entirely financed under the Next Generation EU, 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.

Most of the Next Generation EU resources have been pre-allocated to the Member States. Spending under the Horizon Europe, RescEU and Invest EU programmes will be distributed to different projects across the EU on a competitive basis.


(2) 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 individual Member State and the calendar of payments depend on the content of the national recovery and resilience plans (NRRP). Any Member State wishing to use the RRF had to submit such plan, outlining the national reform and investment package, and referring to the areas of European priority (specified under the six pillars), and to the challenges identified in the European Semester Country Specific Recommendations (CSRs).

The positive assessment of the NRRP by the Commission, and approval by Council (implementing decision adopted by qualified majority), are the key preconditions for the transfers from the RRF. Only once these are in place can the Commission conclude an operational agreement and financial agreement with each Member State. The RRF embeds a performance-based system where payments are made when Member States achieve agreed steps towards the reforms and investments envisaged in their NRRPs. Progress in the implementation is measured against a set of milestones (qualitative achievements) and targets (quantitative achievements).

Explore the progress of the RRF implementation in:

Learn about the European Parliament role in the scrutiny of the RRF:


(3) Relevant EPRS publications:


(4) Other interesting sources of information

 Useful links to Member States’ national recovery and resilience plans

 NRRPSubmission of the NRRPImplementing decision and annexAssessment of the NRRPOperational arrangements
Belgium (BE)BEBEBEBE
Bulgaria (BG)BGBG BGBG BG
Czechia (CZ)CZCZCZCZCZ
Denmark (DK)DKDKDKDKDK
Germany (DE)DEDEDEDE
Estonia (EE)EEEEEEEEEE
Ireland (IE)IEIEIEIE
Greece (EL)ELELELELEL Annex
Spain (ES)ESESESESES
France (FR)FRFRFRFRFR Annex
Croatia (HR)HRHRHRHRHR
Italy (IT)ITITITITIT
Cyprus (CY)CYCYCYCYCY
Latvia (LV)LVLVLVLVLV
Lithuania (LT)LTLTLTLTLT
Luxembourg (LU)LULULULU
Hungary (HU)HUHU   
Malta (MT)MTMTMT & MTMT
Netherlands (NL)NL  NL NL  
Austria (AT)ATATATAT
Poland (PL)PLPL PL & PLPL 
Portugal (PT)PTPTPTPTPT
Romania (RO)RORORORORO
Slovenia (SI)SISISISISI
Slovakia (SK)SKSKSK & SKSKSK
Finland (FI)FIFIFIFI
Sweden (SE)SESESESE 

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