A recovery plan for Europe

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Infographic - EU budget 2021-2027 and recovery plan

The COVID-19 pandemic has tested our societies and economies in unprecedented ways. The public health emergency rapidly turned into the most drastic economic crisis in the EU's history. 

From the early days of the pandemic, the EU took action to tackle the crisis. It put in place immediate measures to mobilise the EU budget and maximise flexibility in the application of budget and state aid rules. On 9 April 2020, the Eurogroup put forward a €540 billion emergency support package for jobs and workers, businesses and member states.

It was clear that the recovery would require a joint effort at EU level: EU leaders decided to work towards establishing a recovery fund. The proposal, a recovery plan for Europe, was presented by the European Commission on 27 May 2020.

On 21 July 2020, EU leaders agreed on a comprehensive package of €1 824.3 billion (in 2018 prices), which combines the €1 074.3 billion long-term budget for 2021-2027, known as the multiannual financial framework (MFF), and an extraordinary €750 billion recovery effort, Next Generation EU (NGEU).

The multiannual financial framework, reinforced by Next Generation EU, is the main instrument for implementing the recovery package to tackle the socio-economic consequences of the COVID-19 pandemic. It will also help transform the EU through its major policies, particularly by building a greener, more digital and more resilient Europe. 

The EU's stimulus package to boost the recovery (in current prices)

Leaders also agreed that 30% of the total expenditure from the MFF and Next Generation EU would go to climate-related projects.

Together with the €540 billion of funds already in place for emergency safety nets (for workers, for businesses and for member states), the EU's overall resources to support the recovery amount to €2 364.3 billion (in 2018 prices). 

What is the EU's multiannual financial framework (MFF)?

The EU’s long-term budget is at the heart of the recovery plan for Europe. It is the foundation of all the programmes and investments which will enable the EU to overcome the crisis, create jobs and build a sustainable economy for future generations. The long-term budget enables the EU to align its spending with political priorities, such as the green and digital transitions.

Infographic - Next Generation EU – COVID-19 recovery package

To provide the EU with the necessary means to address the challenges posed by the COVID-19 pandemic, the European Commission is authorised to borrow funds on behalf of the Union on the capital markets up to the amount of €750 billion (in 2018 prices). All member states ratified the own resources decision by 31 May 2021, thereby empowering the Commission to borrow the money.

The EU will use the funds for the sole purpose of addressing the consequences of the COVID-19 crisis, via the Next Generation EU recovery effort. The repayment will be scheduled until 31 December 2058. 

NGEU will be channelled through seven programmes in the form of loans (€360 billion) and grants (€390 billion):

Legal commitments will be made by 31 December 2023. Related payments will be made by 31 December 2026.

The Recovery and Resilience Facility and ReactEU are entirely funded by Next Generation EU. The other amounts are top-ups to programmes funded under the multiannual financial framework.

The recovery effort ... is significant, focused and limited in time. Significant because the effects of the crisis are far-reaching. Focused because it must target the regions and sectors that are most hit by the crisis. Limited in time because the MFF and the rules governing it remain the basic frame for the Union's budgetary planning and implementation.

Infographic - Recovery and Resilience Facility

The Recovery and Resilience Facility represents the bulk of the Next Generation EU effort: close to 90% of the total envelope. On 11 February 2021, the Council adopted the regulation establishing the facility.

The €672.5 billion facility (in 2018 prices) is disbursed as:

As regards grants, 70% were committed in the years 2021 and 2022, based on the following criteria: 

The remaining 30% will be fully committed by the end of 2023, based on other criteria:

The funds will help member states address the economic and social impact of the COVID-19 pandemic whilst ensuring that their economies undergo the green transition and the digital transformation, becoming more sustainable and resilient.

Infographic - Recovery fund: the EU delivers

Over 2021 and 2022, member states submitted national recovery and resilience plans setting out their reform and investment agendas up to 2026.

They were asked to set out coherent packages of projects in six policy areas:

On 30 June 2022, the Commission updated the maximum financial contribution for non-repayable financial support for each member state, in accordance with article 11(2) of the RRF regulation. The plans will be reviewed and adapted as necessary to take account of the final allocation of funds.

The recovery and resilience plans were assessed by the Commission based on a set of criteria, including:

The assessment of the recovery and resilience plans was then approved by the Council within one month, by qualified majority on a Commission proposal.

Positive assessment of payment requests is dependent on satisfactory fulfilment of the relevant milestones and targets.

The ratification of the own resources decision by all member states enabled the EU to start making funds available under the Recovery and Resilience Facility.

Timeline

Council adopts update to Finland’s national plan

Council adopts REPowerEU

Updated German national plan gets green light

Council adopts update to Luxembourg’s national plan

Council approves national plan of Hungary

On 13 July 2021, the Council gave the green light to the first 12 EU countries: Austria, Belgium, Denmark, France, Germany, Greece, Italy, Latvia, Luxembourg, Portugal, Slovakia and Spain. These countries were officially notified of the Council decision on 14 July 2021.

On 28 July 2021, four more EU countries – Croatia, Cyprus, Lithuania and Slovenia – were also given the green light. The official notification followed on 29 July 2021.

On 8 September 2021, the Council adopted its implementing decisions on the approval of the recovery and resilience plans for Czechia and Ireland. The two countries were notified on 9 September 2021.

On 5 October 2021, the Council adopted the implementing decision on the approval of Malta's recovery and resilience plan.

On 29 October 2021, Estonia, Finland and Romania got the green light as the Council, following a written procedure, adopted the implementing decisions on the approval of their recovery and resilience plans.

On 3 May 2022, the Council welcomed the positive assessment of national recovery and resilience plans for two more countries, Bulgaria and Sweden.

On 17 June 2022, the Council adopted the implementing decision on the approval of Poland's recovery and resilience plan.

On 4 October 2022, economy and finance ministers gave the go-ahead to the national plan for the Netherlands.

On 16 December 2022, the Council approved the national plan for Hungary.

After the official notification of the Council decisions approving the Commission’s assessment of the plans, member states were able to sign bilateral grant and loan agreements with the Commission allowing for the countries whose plans were adopted in 2021 to receive pre-financing of up to 13% of the total amount allocated to kickstart recovery. These agreements also set out the conditions and schedule for further disbursements once milestones and targets have been met.

In 2022, the Commission presented the REPowerEU plan to overcome the global energy market disruption caused by Russia's invasion of Ukraine. The Recovery and Resilience Facility contributes to the implementation of the new plan to transform the EU's energy system and phase out its dependence on Russian fossil fuels by financing infrastructure and supporting energy reforms.

To do so, member states are adding dedicated REPowerEU chapters to their existing recovery and resilience plans. The updated recovery and resilience plans including REPowerEU chapters are being assessed by the Commission following a process similar to the one described above.