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On 18 December 2020, the Council and the Parliament reached a provisional agreement on the Recovery and Resilience Facility (RRF). The €672.5 billion facility is at the heart of the EU's extraordinary recovery effort, Next Generation EU (NGEU): the €750 billion plan agreed by EU leaders in July 2020.
The RRF will will help member states address the economic and social impact of the COVID-19 pandemic whilst ensuring that their economies undertake the green and digital transitions, becoming more sustainable and resilient.
In order to receive support from the Recovery and Resilience Facility, member states must prepare national recovery and resilience plans setting out their reform and investment agendas until 2026.
The provisional agreement will now be submitted to the Council and the Parliament for endorsement.
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 enable maximum 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.
This fund shall be of a sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected, and be dedicated to dealing with this unprecedented crisis.
On 21 July 2020, EU leaders agreed on a comprehensive package of €1 824.3 billion which combines the €1 074.3 billion multiannual financial framework (MFF) and an extraordinary €750 billion recovery effort, Next Generation EU (NGEU).
The multiannual financial framework, reinforced by the Next Generation EU, will be 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 the European Green Deal, the digital revolution and resilience.
Leaders also agreed that 30% of the total expenditure from the MFF and Next Generation EU would target climate-related projects.
Together with the €540 billion of funds already in place for the emergency safety nets (for workers, for businesses and for member states), the overall EU's firepower to support the recovery amounts to €2 364.3 billion.
To provide the EU with the necessary means to address the challenges posed by the COVID-19 pandemic, the European Commission will be authorised to borrow funds on behalf of the Union on the capital markets up to the amount of €750 billion (in 2018 prices).
The EU will use the funds borrowed for the sole purpose of addressing the consequences of the COVID-19 crisis, via the Next Generation EU (NGEU) 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):
Recovery and Resilience Facility: €672.5 billion
ReactEU: €47.5 billion
Horizon Europe: € 5 billion
InvestEU: €5.6 billion
Rural Development: €7.5 billion
Just Transition Fund: €10 billion
RescEU: €1.9 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 will be 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.
Conclusions, Special meeting of the European Council, 17-21 July 2020
Recovery and Resilience Facility
The new Recovery and Resilience Facility (RRF) represents the bulk of the Next Generation EU effort: close to 90% of the total envelope.
The €672.5 billion facility will be disbursed as:
loans: €360 billion
grants: €312.5 billion
For grants, 70% will be committed in the years 2021 and 2022, based on the following criteria:
unemployment 2015-2019
inverse GDP per capita
population share
The remaining 30% will be fully committed by the end of 2023, based on other criteria:
drop in real GDP over 2020
overall drop in real GDP 2020-2021
inverse GDP per capita
population share
Member states will prepare national recovery and resilience plans setting out their reform and investment agenda for the years 2021-23. The plans will be reviewed and adapted as necessary in 2022 to take account of the final allocation of funds for 2023.
The recovery and resilience plans shall be assessed by the Commission within two months of the submission based on a set of criteria, including:
consistency with the country-specific recommendations of the European Semester
strengthening the growth potential, job creation and economic and social resilience of the member state
effective contribution to the green and digital transitions
The assessment of the recovery and resilience plans shall be approved by the Council, by qualified majority on a Commission proposal.
The positive assessment of payment requests will be subject to the satisfactory fulfilment of the relevant milestones and targets.
The EU’s long-term budget 2021-2027
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 allow the EU to overcome the crisis, create jobs and build a sustainable economy for future generations. The long-term budget allows the EU to align its spending with political priorities, such as the green and digital transitions.
Council and Parliament reach provisional agreement on the Recovery and Resilience Facility
The German presidency of the Council and the European Parliament's negotiators reached a provisional agreement on the Recovery and Resilience Facility. With a financial envelope of €672.5 billion (2018 prices), the facility is the centrepiece of the Next Generation EU recovery instrument.
The provisional agreement covers a number of elements, including:
the scope of the facility
horizontal principles
general eligibility rules for the national recovery and resilience plans
the elements to be provided in each plan
the assessment criteria used by the Commission
At least 37% of each plan’s allocation has to support the green transition and at least 20% the digital transformation.
The provisional agreement will now be submitted to both institutions for endorsement.
Multiannual financial framework for 2021-2027 adopted
Following the European Parliament's consent on 16 December 2020, the Council adopted the regulation laying down the EU's multiannual financial framework (MFF) for 2021-2027.
The regulation provides for a long-term budget of €1 074.3 billion for the EU27 in 2018 prices, including the integration of the European Development Fund. Together with the Next Generation EU recovery instrument of €750 billion, it will allow the EU to provide an unprecedented €1.8 trillion of funding over the coming years to support recovery from the COVID-19 pandemic and the EU's long-term priorities across different policy areas.
Council approves conclusions on making the recovery circular and green
The Council approved conclusions aiming at providing comprehensive political guidance on the broad range of actions foreseen in the circular economy action plan, adopted by the Commission. The conclusions highlight the role of the circular economy in the recovery from COVID-19 and make a link to digitalisation, underlining its importance for achieving the full potential of the circular economy.
The conclusions aim to strike a balance between an ambitious approach and the need to consider a broad range of issues, including the different starting points of Member States, when implementing the various actions foreseen in the circular economy plan.
Council moves to finalise adoption of MFF and recovery package
The Council adopted a set of decisions on legislative acts forming part of the package and laying down the EU's budgetary framework for the coming years. The decisions follow the European Council meeting on 10-11 December, as a result of which all member states could support the package.
The EU institutions can now finalise the procedures for the adoption of the multiannual financial framework for 2021-2027 and the recovery package.
Presidency and Parliament reach political agreement on REACT-EU
The German Presidency of the Council and the European Parliament reached a political agreement on REACT-EU, an emergency legislative initiative to release €47.5 billion through the structural funds to the member states and regions hardest hit by the COVID-19 pandemic. This additional funding, which is part of the EU's recovery effort, Next Generation EU (NGEU), will be available over two years:
€37.5 billion in 2021
€10 billion in 2022
REACT-EU, which stands for Recovery Assistance for Cohesion and the Territories of Europe, is intended primarily to support health services, jobs and small and medium-sized enterprises while stimulating the twin green and digital transitions.
MFF: Council presidency reaches political agreement with the European Parliament
The German presidency of the Council reached a political agreement with the European Parliament’s negotiators in talks aimed at securing the Parliament's consent to the next multiannual financial framework, the EU’s long-term budget.
The agreement complements the financial package of €1 824.3 billion negotiated by EU leaders in July, which combines the next multiannual financial framework – €1 074.3 billion – and a €750 billion temporary recovery instrument, Next Generation EU (in 2018 prices).
With the regard to the recovery plan, the package agreed with the Parliament foresees greater involvement of the budgetary authority in the oversight of revenue under Next Generation EU.
The deal will be submitted to member states for endorsement together with the other elements of the next multiannual financial framework and recovery package.
Capital Markets Recovery Package: Council agrees its position
Member states' ambassadors to the EU agreed the Council's position on the Capital Markets Recovery Package. The package contains targeted amendments to the EU capital market rules to:
help EU companies raise capital on public markets
support the lending capacity of banks
boost investment in the real economy
The Commission presented the package on 24 July 2020 as part of the EU's overall coronavirus recovery strategy. It was subsequently taken forward as a key priority in the Council.
Recovery and Resilience Facility: political agreement on Council position
Ministers reached a political agreement on the Recovery and Resilience Facility, the main instrument of the €750 billion recovery package negotiated by EU leaders at their meeting on 17-21 July.
The political agreement will be formalised by the Permanent Representatives Committee as a mandate for negotiations with the European Parliament.
Eurogroup to focus on recovery and long-term growth
The Eurogroup adopted its work programme until June 2021, with a focus on economic recovery and long-term growth.
Ministers also discussed policy priorities for the eurozone in the context of the recovery.
The Eurogroup will continue to lead the euro area economy towards an inclusive recovery that benefits all citizens and to work on the strengthening of the Economic and Monetary Union.
EU leaders agreed that at least 20% of the funds under the Recovery and Resilience Facility will be made available for the digital transition, including for small and medium-sized enterprises (SMEs). Together with the amounts under the EU long-term budget, these funds should help advance objectives such as:
fostering the European development of the next generation of digital technologies, including supercomputers, quantum computing, blockchain, etc.
developing capacities in strategic digital value chains, especially microprocessors
speeding up the deployment of high capacity and secure network infrastructure, including fibre and 5G
enhancing the EUʼs ability to protect itself against cyber threats
making use of digital technologies to reach the ambitious environmental goals
Council sets priorities for future single market policy
The Council adopted conclusions on the role of a deepened and fully functioning single market for a strong economic recovery and a competitive and sustainable European Union.
The Council welcomed the long-term action plan and communication on barriers to the single market, presented as part of the European Commission's industrial strategy package of March 2020.
It requested the Commission to assess the resilience of the single market drawing lessons from the COVID-19 crisis. This assessment should be included a report to be presented by 15 January 2021.
EU leaders agreed a deal on the recovery package and the European budget for 2021-2027
Meeting physically in Brussels, EU leaders agreed on a €750 billion recovery effort to help the EU tackle the crisis caused by the COVID-19 pandemic and on a €1074 billion long-term EU budget for 2021-2027.
It was the first in-person summit of EU leaders since the outbreak of the pandemic.
We have reached a deal on the recovery package and the European budget. These were, of course, difficult negotiations in very difficult times for all Europeans. A marathon which ended in success for all 27 member states, but especially for the people. This is a good deal. This is a strong deal. And most importantly, this is the right deal for Europe, right now.
European Council President Charles Michel presented his new proposal for the long-term EU budget and the recovery package, the so-called negobox. This proposal will serve as a basis for the leaders’ discussions at the Special European Council on 17-18 July 2020.
The goals of our recovery can be summarised in three words: first convergence, second resilience and transformation. Concretely, this means: repairing the damage caused by COVID-19, reforming our economies, remodelling our societies.
Environment ministers: EU Green Deal should guide COVID-19 recovery
EU environment and climate ministers held a policy debate on the contribution of environmental and climate policies to the recovery from the COVID-19 pandemic. They agreed that the European Green Deal should guide the recovery towards green growth and a more resilient EU.
We want to build a modern, clean and healthy economy, which will help to secure the livelihoods of the next generations. The recovery plan can help kick-start Europe's economy after the Covid-19 crisis, and it can at the same time boost Europe's sustainability and climate action.
Tomislav Ćorić, Minister of Environment and Energy of Croatia
President Michel to prepare the ground for decision on recovery plan and long-term EU budget
EU leaders discussed via video conference the 2021-2027 EU budget and a recovery plan to respond to the COVID-19 crisis. European Council President Michel indicated his intention to hold an in-person summit around the middle of July, and to table a proposal ahead of the meeting.
In the first three weeks after the publication of the proposals of the Commission, we had the opportunity to consult the member states to find clarity on the interpretation of those proposals. Now we shift to another phase: we will negotiate. I welcome the readiness to engage. We are aware that it is essential to take a decision as soon as possible.
Health ministers discuss proposal for new, reinforced EU4Health programme
EU ministers for health held a first exchange of views on the European Commission's proposal for a regulation establishing the fourth Health programme (EU4Health programme) for the period 2021-2027.
Ministers broadly welcomed the new EU4Health programme and its objectives. The programme is designed to make a significant contribution to the post-COVID-19 recovery, with a focus on strengthening the resilience of health systems, and promoting innovation in the health sector.
The budget of the new programme is expected to be about 25 times higher than the current Health programme (worth about €450 million for the period 2014-2020).
Ministers discuss how the recovery fund will support reform and investment
Ministers for economics and finance highlighted the importance of using funds to ensure a sustainable recovery and achieve common policy objectives such as a green and digital transition.
They discussed the relation of the European Semester with the recovery plan, as well as the assessment of national investment and reform needs. They stressed the need to:
President Michel calls for European Council to discuss recovery plan proposal
On 27 May 2020, the European Commission issued its proposal for a recovery fund and an updated EU long term budget, the multiannual financial framework (MFF) for 2021-2027.
The President of the European Council issued a statement indicating he would consult with member states ahead of the next European Council scheduled for 19 June. In parallel, the Council would analyse and assess the proposal.
EU leaders agree to work towards establishing a recovery fund
During the video conference of the members of the European Council, EU leaders decided to work towards establishing a recovery fund.
They tasked the European Commission to urgently come up with a proposal, which would also clarify the link between the fund and the EU's long term budget.
Presidents Michel and von der Leyen present a joint roadmap for recovery
European Council president Charles Michel and European Commission President Ursula von der Leyen presented a joint roadmap for recovery. The document set out principles and identified four key areas for action to overcome the crisis and move forward.
See full infographic
