Next Generation EU and a reinforced MFF, the Commission’s proposal to recover from the crisis

27.05.2020

The European Commission has presented its European Recovery Plan, a proposal with which the Commission intends to repair the damage in a sustainable, uniform, inclusive and fair way for all Member States. The Executive proposes:

  • To create Next Generation EU, a new recovery instrument with € 750 billion (€500 billion in loans and €250 billion in grants).
  • A reinforced the Multiannual Financial Framework (MFF) for the period 2021-2027 to channel investment quickly to where it is needed most.


In total, the European Commission proposes to activate €1,290 billion of targeted and front-loaded support to Europe’s recovery. It is necessary to highlight that this aid announced today is added to the €540 billion already approved by the Council on April 23 (more information here).

What is Next Generation EU?

Next Generation EU is an emergency temporary recovery instrument created by the European Commission to help repair immediate economic and social damage caused by Covid-19. It proposes to act under three pillars:

  • Supporting Member States to recover, repair, and emerge stronger from the crisis.
  • Kick-starting the economy and helping private investment to get moving again.
  • Learning the lessons of the crisis and addressing Europe’s strategic challenges.


If you want to know more about these three pillars, visit this link

How will it work?

The plan will raise funds by temporarily raising the ceiling on its own resources to 2.00% of EU Gross National Income, allowing the Commission to use its strong credit rating to borrow €750 billion on the financial markets. This additional funding will be channeled through EU programs and will be reimbursed not before 2028 or after 2058.

What about the Multiannual Financial Framework?

In order to make funds available as soon as possible, the Commission proposes to modify the current 2014-2020 MFF so that by 2020 an additional €11.5 billion will be available.

Where does the funding come from in the next long-term EU budget?

The sources have not changed. They come from customs duties, contributions from Member States on the basis of VAT, and those based on the Gross National Income. More economic details here.

Next steps:

This proposal has to be approved now by the European Council, which will meet on 17 -18 July.


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