EU Recovery Instrument NextGenerationEU

 

SUMMARY OF:

Regulation (EU) 2020/2094 establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis

WHAT IS THE AIM OF THE REGULATION?

It sets up the European Union Recovery Instrument NextGenerationEU to support the recovery from the COVID-19 crisis and sets out how it will operate.

KEY POINTS

NextGenerationEU is a temporary recovery instrument worth up to €750 billion in 2018 prices. It is at the heart of the European Union (EU) response to the COVID-19 crisis and aims to support the recovery and build a greener, more digital and more resilient future, in particular to reinvigorate potential for sustainable growth and employment in order to support EU Member States’ transition towards a green and digital economy.

The instrument will also help repair the immediate economic and social damage brought about by the COVID-19 crisis and build a post-COVID-19 Europe that is better equipped to deal with current and forthcoming challenges.

The centrepiece of NextGenerationEU is the allocation of financing to the Recovery and Resilience Facility — by offering grants and loans to support reforms and investments in the Member States with a total value of €672.5 billion in 2018 prices:

• up to €312.5 billion will be provided in the form of grants;
• up to €360 billion will provide EU loans to individual Member States. These loans will be repaid by those Member States.

In addition, NextGenerationEU will reinforce several EU programmes as follows:

• Cohesion, under the Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU), to help tackle the economic consequences of COVID-19 in the first years of the recovery — with €47.5 billion;
• Just Transition Fund with €10 billion;
• Rural development with €7.5 billion;
• InvestEU with €5.6 billion;
• Union Civil Protection Mechanism, under rescEU, with €1.9 billion;
• Horizon Europe, with €5 billion.

To finance NextGenerationEU, the Own Resources Decision (Decision (EU, Euratom) 2020/2053) (see summary) will enable the European Commission to borrow on the capital markets on behalf of the EU. As set out by the Own Resources Decision, repayment can take place over the long term, at the latest until 2058. This will avoid placing immediate pressure on Member States’ national finances and enable them to focus their efforts on the recovery.

Additional information:

• commitment appropriations* for all expenditure, apart from the €360 billion of loans, should be available as soon as the Own Resources Decision enters into force, with at least 60% committed by 31 December 2022 and any remaining amount by 31 December 2023;
• decisions on granting the €360 billion in loans should be adopted by 31 December 2023;
• specific conditions apply to the EU’s budgetary and investment guarantees.

The regulation does not apply to the United Kingdom.

The Commission shall submit a report to the Council by 31 October 2022 on how the funds allocated under this instrument are being used.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 23 December 2020.

BACKGROUND

With their combined €1.8 trillion, NextGenerationEU, and the long-term EU budget 2021-2027, form the largest stimulus package ever financed through the EU budget.

The package will also help rebuild a post-COVID-19 Europe, which will be greener, more digital, more resilient and better equipped for the current and forthcoming challenges.

In addition to this Regulation, the package also includes:

• the 2021-2027 multiannual financial framework (Regulation (EU, Euratom) 2020/2093) — see summary;
• the interinstitutional agreement on budgetary discipline (see summary);
• Regulation (EU, Euratom) 2020/2092 on a general regime of conditionality for the protection of the EU budget — see summary;
• the Own Resources Decision (Decision (EU, Euratom) 2020/2053).

KEY TERMS

MAIN DOCUMENT

Council Regulation (EU) 2020/2094 of 14 December 2020 establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis (OJ L 433I, 22.12.2020, pp. 23-27)

RELATED DOCUMENTS

Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources (OJ L 433I, 22.12.2020, pp. 28-46)

Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom (OJ L 424, 15.12.2020, pp. 1-10)

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, pp. 1-222)

last update 20.05.2021