The European Commission is proposing a €750bn (£670bn) recovery fund to help the EU tackle the ‘unprecedented crisis’ produced by the coronavirus pandemic
The fund, dubbed ‘Next Generation EU’ will be available to all 27 member states. The money will be raised by borrowing on the financial markets, with the Commission temporarily lifting the own resources ceiling to 2% of EU gross national income.
When added to a proposed €1.1 trillion budget for 2021-27, the €750bn recovery fund would bring to €1.85tn the amount that the Commission says will ‘kick-start our economy and ensure Europe bounces forward’.
Added to an earlier €540bn initial rescue package, that would amount to a total of €2.4tn of support, the Commission reported.
This additional funding will be channelled through EU programmes and repaid over a long period of time throughout future EU budgets – not before 2028 and not after 2058.
The Commission says there are a number of options which could be introduced to pay back the funding. These include a carbon tax based on the Emissions Trading Scheme, a digital tax, and a tax on non-recycled plastics.
In order to make funds available as soon as possible to respond to the most pressing needs, the Commission proposes to amend the current multiannual financial framework 2014-2020 to make an additional €11.5bn in funding available already in 2020.
The money raised for Next Generation EU will be invested across three pillars.
A new ‘recovery and resilience facility’ of €560bn will offer financial support for investments and reforms, including in relation to the green and digital transitions and the resilience of national economies, linking these to the EU priorities. It will offer up to €310bn in grants and will be able to make up to €250bn available in loans.
Secondly, the Commission will seek to incentivise private investments, via a new solvency support instrument. This will have a budget of €31bn, aiming to unlock €300bn in solvency support for companies from all economic sectors.
Finally, €9.4bn will be allocated to a new health programme, EU4Health, to strengthen health security and prepare for future health crises.
Ursula von der Leyen, European Commission president, 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 digitalization 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.’
