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

Summary:

Regulation (EU) 2020/2094 - adopted by the Council of the European Union on 14 December 2020 - establishing a European Union Recovery Instrument - also known as NextGenerationEU - to support recovery across the European Union (EU) in the aftermath of the COVID-19 (coronavirus) pandemic.

Further information:

The pandemic has not only been a sanitary emergency but also carried a strong socioeconomic impact across the EU. Member States adopted measures to support workers and enterprises, but not all could do this to the same extent. While every country was affected by the virus, it became apparent there would be a risk of an imbalanced recovery, an uneven playing field and widening disparities across the European Union.

A comprehensive plan for recovery requires considerable amounts of public and private investment at EU-level. The Next Generation EU is a funding package amounting to €750 billion (2018 prices), which complements the revised Multiannual Financial Framework (MFF) for 2021-2027. This Regulation establishes the funding instrument and determines the allocation of funds to different EU programmes in line with the strategy set out in the Recovery Plan for Europe. It instrument comprises:

• Recovery and Resilience Facility (RRF), which includes €672.5 billion in loans and grants available to support reforms and investments undertaken by Member States;
• Recovery Assistance for Cohesion and the Territories for Europe (REACT-EU), which includes €47.5 billion that continues and extends the measures delivered through the CRII and CRII Plus;
• Additional funding for other existing EU programmes.

In order to provide the financing of NextGenerationEU, the Own Resources Decision (ORD) was amended to authorise the European Commission (on behalf of the EU) to borrow an amount of €750 billion.

The draft law for this Regulation was tabled by the European Commission on 27 May 2020. A political agreement between national leaders on the terms of the Recovery Plan was reached at a European Council meeting in July 2020. Negotiations between the Council of the European Union and the European Parliament on these matters were concluded successfully on 10 November. The Act was adopted by the Council of the European Union on 14 December 2020 and published in the Official Journal on 22 December.

In April 2021, the Commission published a Communication setting out its funding strategy to finance this recovery instrument.

Commentary and Analysis

Wikipedia: Next Generation EU https://en.wikipedia.org/wiki/Next_Generation_EU

Bruegel: Tag: Next Generation EU https://www.bruegel.org/tag/next-generation-eu/

UK in a Changing Europe: Analysis, 28/05/2020: Next Generation EU (NGE): the Commission’s Covid-19 recovery package https://ukandeu.ac.uk/next-generation-eu-nge-the-commissions-covid-19-recovery-package/

OSW: Analyses, 03/06/2020: Recovery plan for the EU economy: Central European countries react https://www.osw.waw.pl/en/publikacje/analyses/2020-06-03/recovery-plan-eu-economy-central-european-countries-react

CEPS: In Brief, 04/06/2020: Next Generation EU Bonds Might Face a Credit-Rating Challenge https://www.ceps.eu/next-generation-eu-bonds-might-face-a-credit-rating-challenge/

Fitch Ratings: Research, 08/06/2020: EU MFF Proposal Consistent with 'AAA' Debt Coverage Metric https://www.fitchratings.com/research/sovereigns/eu-mff-proposal-consistent-with-aaa-debt-coverage-metric-08-06-2020

EPRS: Briefing, July 2020: Next Generation EU - Where are assigned revenue? Which impact in 2021? https://www.europarl.europa.eu/thinktank/en/document.html?reference=IPOL_BRI(2020)656549

European University Association: News, 20/04/2021: Next Generation EU: state of play and funding opportunities for universities https://eua.eu/news/673:next-generation-eu-state-of-play-and-funding-opportunities-for-universities.html

S&P Global: Comments, 27/04/2021: Next Generation EU Will Shift European Growth Into A Higher Gear https://www.spglobal.com/ratings/en/research/articles/210427-next-generation-eu-will-shift-european-growth-into-a-higher-gear-11929949

Balkan Insight: Analysis, 29/04/2021: How to spend it: CEE's NextGenerationEU submissions reflect the past https://balkaninsight.com/2021/04/29/how-to-spend-it-cees-nextgenerationeu-submissions-reflect-the-past/

IDDRI: Blog, 27/05/2021: Aligning the European recovery with the Green Deal’s objectives: national policies and strategies are essential https://www.iddri.org/en/publications-and-events/blog-post/aligning-european-recovery-green-deals-objectives-national

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News

The Sofia Globe, 27/05/2020: EC proposes 750BN euro ‘Next Generation EU’ rescue plan https://sofiaglobe.com/2020/05/27/ec-proposes-750bn-euro-next-generation-eu-rescue-plan/

Politico, 27/05/2020: European Commission proposes €750B EU recovery package https://www.politico.eu/article/commission-to-propose-recovery-instrument-of-e750-billion/

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Official

EUR-LEX: COM(2020)441: Proposal for a Regulation establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 pandemic https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2020:441:FIN

European Commission: Recovery Plan for Europe: NextGenerationEU https://ec.europa.eu/info/strategy/recovery-plan-europe_en#nextgenerationeu

European Commission: Q&A : Next Generation EU - Legal Construction (9 June 2020) https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1024

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ESO Records

Franco-German initiative for European economic recovery in the wake of the COVID-19 pandemic https://www.europeansources.info/record/franco-german-initiative-for-european-economic-recovery-in-the-wake-of-the-covid-19-pandemic/

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