EU leaders agree on €750 billion recovery package
By ECCT staff writers
EU leaders have agreed to a recovery package and the 2021-2027 budget that will help the EU to rebuild after the coronavirus pandemic and will support investment in “green and digital transitions”. The comprehensive package of €1,824.3 billion combines the seven-year multiannual financial framework (MFF) budget and an extraordinary recovery package under the Next Generation EU (NGEU) instrument, which will allow the European Commission to borrow on capital markets for the first time.
The new Multiannual Financial Framework (MFF) will cover seven years between 2021 and 2027. The MFF, reinforced by Next Generation EU, will also be the main instrument for implementing the recovery package to tackle the socio-economic consequences of the Covid-19 pandemic.
Under the agreement the European Commission will be able to borrow up to €750 billion on the markets. These funds may be used for back-to-back loans and for expenditure channelled through the MFF programmes. Capital raised on the financial markets will be repaid by 2058.
€390 billion from the €750 billion recovery package will be distributed in the form of grants to member states and €360 billion in loans. The plan ensures the money goes to the countries and sectors most affected by the crisis: 70% under the grants of the Recovery and Resilience Facility will be committed in 2021 and 2022 and 30% will be committed in 2023.
Allocations from the RRF in 2021-2022 will be established according to the Commission’s allocation criteria taking into account member states’ respective living standards, size and unemployment levels.