A recovery plan for Europe

In the aftermath of the COVID-19 crisis, the EU has set out an unprecedented recovery plan, Next Generation EU, to kickstart the European economy and support the green and digital transitions, making Europe more resilient and fit for future challenges.

What is the EU doing for crisis recovery?

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 maximise 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.

On 21 July 2020, EU leaders agreed on a comprehensive package of €1 824.3 billion (in 2018 prices), which combines the €1 074.3 billion long-term budget for 2021-2027, known as the multiannual financial framework (MFF), and an extraordinary €750 billion recovery effort, Next Generation EU (NGEU).

The multiannual financial framework, reinforced by Next Generation EU, is 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 by building a greener, more digital and more resilient Europe.

Leaders also agreed that 30% of the total expenditure from the MFF and Next Generation EU would go to climate-related projects.

Together with the €540 billion of funds already in place for emergency safety nets (for workers, for businesses and for member states), the EU's overall resources to support the recovery amount to €2 364.3 billion (in 2018 prices).

The EU’s long-term budget for 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 enable the EU to overcome the crisis, create jobs and build a sustainable economy for future generations. The long-term budget enables the EU to align its spending with political priorities, such as the green and digital transitions.

What is the EU's multiannual financial framework (MFF)?

How does Next Generation EU work?

To provide the EU with the necessary means to address the challenges posed by the COVID-19 pandemic, the European Commission is authorised to borrow funds on behalf of the Union on the capital markets up to the amount of €750 billion (in 2018 prices). All member states ratified the own resources decision by 31 May 2021, thereby empowering the Commission to borrow the money.

The EU will use the funds for the sole purpose of addressing the consequences of the COVID-19 crisis, via the Next Generation EU 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 (RRF): €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 were made by 31 December 2023. Related payments will be made by 31 December 2026.

The Recovery and Resilience Facility and ReactEU are 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