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NextGenerationEU: a recovery package to support the European economy

Article written by Giacomo Frisanco – Project and Communication officer at EURADA 

 

NextGenerationEU is an European Union recovery package, which worth €750 billion, to help repair the immediate economic and social damage brought about by the coronavirus pandemic. Post-Covid-19 Europe will be greener, more digital, more resilient and better fit for the current and forthcoming challenges. These funds provide a unique opportunity to heavily invest in the transformation to a more green and digital economy while at the same time safeguarding jobs and creating new ones. Used properly, Next Generation EU can create a genuine, social and sustainable European economy.

The EU’s long-term budget, coupled with NextGenerationEU will be the largest stimulus package ever financed in Europe. A total of €1.8 trillion will help rebuild a post-COVID-19 Europe. The new long-term budget will increase flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. It is a budget fit not only for today's realities but also for tomorrow's uncertainties. The last step of the adoption of the next long-term EU budget was reached on 17 December 2020. 

More than 50% of the amount will support modernisation, for example through:  

  • research and innovation, via Horizon Europe; 

  • fair climate and digital transitions, via the Just Transition Fund and the Digital Europe Programme; 

  • preparedness, recovery and resilience, via the Recovery and Resilience Facility, rescEU and a new health programme, EU4Health. 

In addition, the package pays attention to: 

  • modernising traditional policies such as cohesion and the common agricultural policy, to maximise their contribution to the Union's priorities; 

  • fighting climate change, with 30% of the EU funds, the highest share ever of the European budget; 

  • biodiversity protection and gender equality. 

 

Going back to the NextGenerationEU, this recovery package is composed by 2 distinctive actions/packages/plans/economic stimulus: 

  1. The Recovery and Resilience Facility: the centrepiece of NextGenerationEU with €672.5 billion in loans and grants available to support reforms and investments undertaken by EU countries. The aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. Member States are working on their recovery and resilience plans to access the funds under the Recovery and Resilience Facility. 

  1. Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU): NextGenerationEU also includes €47.5 billion for REACT-EU. It is a new initiative that continues and extends the crisis response and crisis repair measures delivered through the Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative Plus. It will contribute to a green, digital and resilient recovery of the economy. The funds will be made available to 

These additional funds will be provided in 2021-2022. The NextGenationEU package is so composed: 

  • Recovery and Resilience Facility (RRF) €672.5 billion, of which, loans €360 billion and of which, grants €312.5 billion 

  • ReactEU €47.5 billion 

  • Horizon Europe €5 billion 

  • InvestEU €5.6 billion 

  • Rural Development €7.5 billion 

  • Just Transition Funds (JTF) €10 billion 

  • RescEU €1.9 billion 

TOTAL €750 billion 

 

In conclusion, the NextGenerationEU in a very important opportunity which all the Regional Development Agencies cannot miss in order to better recover from the Covid-19 pandemic effects and, in addition, to mobilise notable resources to create a more suistable European economy which will also be greener, more ditigal and better shaped in order to deal with the upcoming challenges.