Setting Europe’s economic recovery in motion: a first look at national plans

Plans for spending European Union recovery funds submitted by the four largest EU countries reflect rather different priorities. So far, only Italy is interested in borrowing from the EU.

 
European Union countries are starting to set out how they plan to spend money from Next Generation EU (NGEU), the EU’s landmark instrument for recovery from the coronavirus pandemic. In late April, countries began submitting their recovery and resilience plans. A first quick analysis shows that the plans of the four largest EU countries, FranceGermanyItaly and Spain, reflect rather different priorities, even if all meet the minimum expenditure benchmarks of 37% for climate and 20% for digitalisation.

Let’s briefly clarify what plans have been submitted. The total funding envelope for NGEU amounts to €750 billion at 2018 prices or €795 billion at current prices. NGEU includes seven instruments, of which the largest is the Recovery and Resilience Facility (RRF). This is composed of grants amounting to €312.5 billion at 2018 prices or €337 billion at current prices, and loans amounting to €360 billion at 2018 prices or €390 billion at current prices. Most recovery plans relate to RRF only, but in Italy’s plan, ReactEU (another component of NGEU) is also included. Italy also includes some extra spending from national resources in its plan. Here, we focus on spending financed by NGEU. It should be noted we do not examine whether spending plans constitute new spending, or also cover spending that was planned before the pandemic.

Of the four countries, only Italy’s plan envisages borrowing under the RRF and thus the Italian plan amounts to a much larger value (€205 billion = €69 billion RRF grants + €14 billion ReactEU grants + €123 billion RRF loans) than, for example, the Spanish plan, which amounts to €69 billion in RRF grants only. Nevertheless, the Spanish plan indicates the country might apply for RRF loans in the future.

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Πηγή: bruegel.org

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