Monday, May 3, 2021
The largest EU stimulus package ever
The EU’s long-term budget, coupled with NextGenerationEU, the temporary instrument designed to boost the recovery, will be the largest stimulus package ever financed through the EU budget. A total of €1.8 trillion will help rebuild a post-COVID-19 Europe. It will be a greener, more digital and more resilient Europe.
The new long-term budget will increase flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. It is a budget fit not only for today's realities but also for tomorrow's uncertainties.
The last step of the adoption of the next long-term EU budget was reached on 17 December 2020.
Main elements of the agreement
Multiannual Financial Framework 2021-2027
total allocations per heading*
|1. Single market, innovation and digital||€132.8 billion||€10.6 billion||€143.4 billion|
|2. Cohesion, resilience and values||€377.8 billion||€721.9 billion||€1 099.7 billion|
|3. Natural resources and environment||€356.4 billion||€17.5 billion||€373.9 billion|
|4. Migration and border management||€22.7 billion||-||€22.7 billion|
|5. Security and defence||€13.2 billion||-||€13.2 billion|
|6. Neighbourhood and the world||€98.4 billion||-||€98.4 billion|
|7. European public administration||€73.1 billion||-||€73.1 billion|
|TOTAL MFF||€1 074.3 billion||€750 billion||€1 824.3 billion|
All amounts in € billion, in constant 2018 prices. Source: European Commission
* The amounts include the targeted reinforcement of ten programmes for a total of €15 billion, compared to the agreement from 21 July 2020. The programmes are Horizon Europe, Erasmus+, EU4Health, Integrated Border Management Fund, Rights and Values, Creative Europe, InvestEU, European Border and Coast Guard Agency, Humanitarian Aid.
NextGenerationEU is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic. Post-COVID-19 Europe will be greener, more digital, more resilient and better fit for the current and forthcoming challenges.
- The Recovery and Resilience Facility: the centrepiece of NextGenerationEU with €672.5 billion in loans and grants available to support reforms and investments undertaken by EU countries. The aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. Member States are working on their recovery and resilience plans to access the funds under the Recovery and Resilience Facility.
- Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU): NextGenerationEU also includes €47.5 billion for REACT-EU. It is a new initiative that continues and extends the crisis response and crisis repair measures delivered through the Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative Plus. It will contribute to a green, digital and resilient recovery of the economy. The funds will be made available to
- the European Regional Development Fund (ERDF)
- the European Social Fund (ESF)
- the European Fund for Aid to the Most Deprived (FEAD)
These additional funds will be provided in 2021-2022.
- NextGenerationEU will also bring additional money to other European programmes or funds such as Horizon2020, InvestEU, rural development or the Just Transition Fund (JTF).
|Recovery and Resilience Facility (RRF)||€672.5 billion|
|of which, loans||€360 billion|
|of which, grants||€312.5 billion|
|Horizon Europe||€5 billion|
|Rural Development||€7.5 billion|
|Just Transition Funds (JTF)||€10 billion|
Source: Conclusions of the European Council of 21 July 2020
NextGenerationEU figures per EU country
- Recovery and Resilience Facility: grants allocation per Member State
- REACT-EU: allocations 2021
- Just Transition Fund: allocations per Member State
- European Agricultural Fund for Rural Development: allocations per Member State
MFF figures per EU country
- MFF 2021-2027 Breakdown of Cohesion Policy allocations per Member State (2018 prices)
- MFF 2021-2027 Breakdown of Cohesion Policy allocations per Member State (current prices)
- MFF 2021-2027 Breakdown of European Agricultural Guarantee Fund per Member State (current prices)
- MFF 2021-2027 Breakdown of European Agricultural Fund for Rural Development per Member State (MFF only, current prices)
Financing the EU long-term budget and NextGenerationEU
The EU long-term budget will continue to be financed through the well-known revenue sources of the EU budget:
In addition, as of 1 January 2021, a new national contribution based on non-recycled plastic packaging waste will be introduced as a source of revenue of the EU budget.
Borrowing to finance the recovery
To finance NextGenerationEU, the European Commission - on behalf of the European Union – will borrow on the markets at more favourable rates than many Member States and redistribute the amounts. For the Commission to start borrowing, all Member States must ratify the new Own Resources Decision in line with their constitutional requirements.
The European Commission already issues bonds to finance loans to EU and third countries under four programmes, including up to €100 billion for the SURE programme to support jobs and keep people in work.
To raise up to around €800 billion in current prices until 2026 for NextGenerationEU under the best financial terms – 5% of EU GDP – the Commission will use a diversified funding strategy.
A clear roadmap towards new sources of revenue to help repay the borrowing
The Commission will put forward proposals by June 2021 on sources of revenue linked to:
|a carbon border adjustment mechanism|
|a digital levy|
|the EU Emissions Trading System|
By June 2024, the Commission will propose new sources of revenue, such as:
|a Financial Transaction Tax|
|a financial contribution linked to the corporate sector|
|a new common corporate tax base|