European Funds

COVID-19 Recovery Plan

Following the Covid-19 pandemic, to protect individuals and save the economy, EU leaders agreed in July 2020 on a package of €1,824.3 billion:

Multiannual financial framework (MFF)	+	Next Generation EU
€1,074.3 billion		extra €750 billion recovery effort

 

The Multiannual Financial Framework is the ‘traditional’ budget, and the Next Generation EU is an additional package to respond to the Covid-19 crisis, increasing the funds available for EU programmes.

They also agreed on three thematic special instruments to provide additional financial means for specific unforeseen events:

• the Brexit Adjustment Reserve,
• the European Globalisation Adjustment Fund,
• the Solidarity and Emergency Aid Reserve (SEAR).

The plan was adopted by the EU institutions, and it will be fully enforceable after ratification from every Member State.

 

Technicalities: how does the Recovery Plan work?

All Member States are engaging this debt together, and they will have to pay it until 2058. Member States have to send their National Plans explaining what they are going to do. But there are specific recommendations for each country which must be followed.

The Plans will be evaluated by the Commission, and then voted by the other Member States, and will need to receive the positive vote of at least 15 Member States that represent 65% of the EU population. Member States have until 2023 to send their plans, and the funds can be given until 2026.

Flexibility is a keyword. EU leaders agreed on a Single Margin Instrument (SMI) to allow the financing of specific unforeseen expenditure in commitments and corresponding payments that could not be financed otherwise. The SMI annual ceiling, which is the maximum amount that can be financed each year, will be set at €772 million (2018 prices).

3 pillars of the Next Generation EU

 

• Supporting the Member States to recover,
• Kick-starting the economy and helping private investment,
• Learning the lessons from the crisis.[1]

The amounts available under the Next Generation EU will be allocated to seven individual programmes.[2]

 

Recovery and Resilience Facility (RRF)

This programme represents close to 90% of the total envelope of the NGEU. Member States shall prepare national recovery and resilience plans for the years 2021-2023. The review of the plans will be done following the country-specific recommendations of the European Semester.[3]

Each plan should contribute to the 2021 Annual Sustainable Growth Strategy:

• Environmental sustainability
• Productivity
• Fairness
• Macroeconomic stability

The Commission will also assess the plans according to two minimums to be included in each recovery and resilience plans:

• Minimum of 37% of expenditure related to climate,
• Minimum of 20% of expenditure to foster the digital transition.^[4]

ReactEU

REACT-EU stands for Recovery Assistance for Cohesion and the Territories of Europe. It will contribute to a green, digital and resilient recovery of the economy.

The REACT-EU package includes €55 billion of additional funds that will be made available to the 2014-2020: [5]

• European Regional Development Fund (ERDF) – this instrument aims to strengthen economic and social cohesion in the Union by correcting imbalances between regions.[6]
• the European Social Fund (ESF) – Europe’s main instrument for supporting jobs and ensuring fair job opportunities. 20% of the investments shall be committed to the promotion of social inclusion and to combat poverty.
• the European Fund for Aid to the Most Deprived (FEAD) – supports Member States actions to provide material assistance to the most deprived and social inclusion measures.

These programmes are not new, but part of the long-term budget of the EU; ReactEU will increase the funds available and the conditions more flexible.

RescEU

As an additional safety net, the European Commission created a strategic medical stockpile and distribution mechanism. The stockpile enables the swift delivery of medical equipment such as ventilators, personal protective equipment, vaccines and therapeutics and laboratory supplies.[7]

 

[1] https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/recovery-plan-europe/pillars-next-generation-eu_en

[2] https://www.consilium.europa.eu/en/meetings/european-council/2020/07/17-21/

[3] https://ec.europa.eu/info/publications/2020-european-semester-country-specific-recommendations-commission-recommendations_en

[4] https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en

[5] https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_948

[6] https://ec.europa.eu/regional_policy/en/funding/erdf/

[7] https://ec.europa.eu/echo/what/civil-protection/resceu_en

The Multiannual Financial Framework is the long-term EU budget. It determines the amount allocated to EU priorities and limitations.[1]

The 2021-2027 MFF is made up of an extraordinary amount of money in comparison to previous years.[2]

Cohesion policy measures

The Commission launched in April 2020 two packages of measures, in addition to the ReactEU:

Coronavirus Response Investment Initiative (CRII)

The first package of measures concentrated on the immediate mobilisation of structural funds – which are funds destined to reduce regional inequalities in the EU – to allow a prompt response. CRII can be used to emergency funding needs of social services due to COVID-19, and access to these funds is immediate.[3]

Coronavirus Response Investment Initiative Plus (CRII+)

This package introduces extraordinary flexibility to allow that all non-utilised funds from the European Structural and Investment Funds to be mobilised to their fullest, with:

• Unlimited transfer possibilities across the three ReactEU funds;[4]
• Transfers between the different categories of regions, which are divided according to their development level;
• Flexibility when it comes to focusing investment on specific objectives;
• 100% EU co-financing rate for cohesion programmes in 2020-2021, so Member States can have total EU financing to respond to the crisis.

The CRII+ package also simplifies procedural steps linked to programme implementation, use of financial instruments and audit.[5]

 

The European Social Fund+

The European Social Fund+ aims to merge:[6]

• the European Social Fund (ESF),
• the Fund for European Aid to the most Deprived (FEAD),
• the Youth Employment Initiative (YEI) – supports young people who are not in education, employment or training.[7] The new proposal reinforces the Youth Guarantee and reaches out to vulnerable young people across the EU, aged from 15 to 29,[8]
• the Employment and Social Innovation Programme (EaSI) – aimed to promote a high level of “quality and sustainable employment”, with adequate and decent social protection, combating social exclusion and poverty, and ameliorating working conditions,
• the EU Health Programme.

While this new programme is still in process, it will help build a more social Europe by supporting the implementation of the European Pillar of Social Rights and of the priorities of the European Semester. The European Parliament suggested a high earmark for social inclusion expenditure, where the Member States would have to spend at least 25% of the funds on social inclusion.[9]

The Covid-19 crisis has affected the ESF+ not only by delaying its adoption, but it may also result in more flexible conditions than expected.[10]

The Rights and Values Programme

Based on a proposal from 2018, it brings together: [11]

• Rights, Equality and Citizenship (REC) Programme
• Europe for Citizens Programme.

With the new Recovery Plan, available funds for this programme are lower than in the previous period. [12]

The previous REC Programme had as one of its priorities the promotion of the active inclusion and participation of people with disabilities in society and the support active stakeholders in the implementation of the Convention on the Rights of People with Disabilities (CRPD).^[13]

 

[1] https://www.consilium.europa.eu/en/policies/the-eu-budget/negotiating-the-long-term-eu-budget/

[2] https://ec.europa.eu/info/strategy/eu-budget/long-term-eu-budget/2021-2027_en

[3] https://www.easpd.eu/en/content/european-commission-promotes-dialogue-social-services-covid-19-recovery

[4] https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_574

[5] https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_574

[6] https://www.europarl.europa.eu/legislative-train/theme-new-boost-for-jobs-growth-and-investment/file-mff-esf

[7] https://ec.europa.eu/social/main.jsp?catId=1176

[8] https://ec.europa.eu/info/strategy/priorities-2019-2024/economy-works-people/youth-employment-support-bridge-jobs-next-generation_en

[9] https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:52018PC0382

[10] Eurocities, Policy brief on the ESF+ for 2021-2027, https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiOx8eEkZnuAhXbiVwKHVxiDQYQFjAAegQIAxAC&url=http%3A%2F%2Fnws.eurocities.eu%2FMediaShell%2Fmedia%2FPolicy_brief_on_the_ESF_.pdf&usg=AOvVaw1j2vVDqedvVTgJjlm7quS4

[11] https://www.consilium.europa.eu/media/45109/210720-euco-final-conclusions-en.pdf

[12] https://www.europarl.europa.eu/legislative-train/theme-a-new-push-for-european-democracy/file-mff-rights-and-values-programme

[13] https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/programmes/rec

In addition to those programmes, the Commission developed the SURE initiative as an emergency aid. It is a new instrument that will provide up to €100 billion in loans to countries that need it to ensure that workers receive an income and businesses keep their staff.[1] The loans are to be directed to where they are most urgently needed, particularly in the countries most affected by the Covid-19 crisis.

[1] https://ec.europa.eu/commission/presscorner/detail/en/IP_20_582