27 Member States have endorsed the European Commission’s recovery proposal, Next Generation EU, which aims to increase the Union’s sustainability and digitisation.
To repair the European Single Market and to build a lasting and prosperous recovery from the recent pandemic, the European Commission has announced the €1.85 trillion investment in a temporary recovery plan. The investment will be used to power their new proposal, Next Generation EU and targeted reinforcements to the long-term EU budget for 2021-2027, bringing the total EU recovery budget to €1.85tr. Around €390bn of this sum will be distributed in the form of grants, with the remainder coming in the form of loans to facilitate the recovery in member states.
European Commission President Ursula von der Leyen said: “The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitisation will boost jobs and growth, the resilience of our societies and the health of our environment. This is Europe’s moment. Our willingness to act must live up to the challenges we are all facing. With Next Generation EU we are providing an ambitious answer.”
How will the funding be allocated?
Next Generation EU will be composed of grants, including provisioning for guarantees, and loans. The pandemic recovery plan will be split into three pillars. Pillar 1 supports the recovery of Member States through four financial investments:
- The Recovery and Resilience Facility (€560bn)
- REACT-EU (€55bn)
- Rural Development (€15bn)
- Just Transition Fund (€40bn)
Pillar 2 is design to kick-start the economy and facilitate private investment. Pillar 2 will fund three initiatives:
- Solvency Support Instrument (€300bn)
- InvestEU (€15.3bn)
- A new Strategic Investment Facility (€150bn)
Pillar 3, titled Addressing the lessons of the crisis, supports innovation in health and sustainability with a focus on increasing the digitisation of Europe. Pillar 3 will supply funding to:
- EU4Health (€9.4bn)
- The Union’s Civil Protection Mechanism (€2bn)
- Horizon Europe (€94.4bn)
Commissioner Johannes Hahn, in charge of the EU budget, said: “Our common budget is at the heart of Europe’s recovery plan. The additional firepower of Next Generation EU and the reinforced multiannual financial framework will give us the power of solidarity to support Member States and the economy. Together, Europe will arise more competitive, resilient and sovereign.”