Europe’s Moment. The European Commission presents an unprecedented package of post-pandemic financial recovery for the EU economy
On May 27, the European Commission unveiled an unprecedented proposal of the financial recovery package, designed to address the devastating consequences of the COVID-19 pandemics. The total amount of mobilized financial resources would constitute 750 billion EUR, including 500 billion EUR worth of grants and 250 billion of loans.
The novel financial instrument “Next Generation EU” is set to be at the core of the package, accumulating massive additional funds available to the Member States. The Instrument will be integrated in the next 7-years EU MFF which will grow from 1,035 to 1,1 trillion EUR.
The new instrument reflects to a large degree a joint Franco-German initiative on the recovery package, unveiled earlier by President Macron and Chancellor Merkel. Once again, the Franco-German partnership proved its worth as a vital political engine of the European integration.
Key elements of the Next Generation EU Instrument will include:
- 310 billion EUR of financial grants and 250 billion EUR of loans made available to all Member States, prioritizing those hit hardest by the pandemics. Green economy transition will be a guiding light of the recovery effort;
- Additional 55 billion EUR for the EU Cohesion Fund to spend on economic recovery of regions hitby the pandemics;
- additional 40 billion EUR to the Just Transition Fund to support transition of the EU industrytoward European Green Deal objectives;
- establishment of the EU Strategic Investment Facility worth of 150 billion EUR to support green economy transition, diversification of supply chains in those sectors, whose importance has been highlighted by the pandemics;
- increased funding for external EU assistance by additional 16,5 billion EUR – an importantdecision for Ukraine. However, these funds will be distributed among all EU assistance recipients, including countries on a regular humanitarian aid list.
What are the key take-aways of the proposal from the point of view of EU-Ukraine economicrelationship and the interests of the Ukrainian exporters?
- The decisiveness and sheer scale of the Commission initiative, supported by virtually all Member States inspires confidence in the prospects of relatively quick recovery of the EU economy. Economic stabilization, stimulating investments in modernization of industry and buildings, restoring consumer demand and industrial growth are wonderful news of the Ukrainian exporters.
- A willingness to support financially the EU key partners and neighbours, whose stability is important to the EU;
- The EU takes advantage of the ‘window of opportunity’ to strengthen its course on the greening of the industry, stimulating innovations in digital technologies and electric mobility, promoting circular economy, renewable an emerging energy sources, such as hydrogen. The massive EU financial support of these innovative sectors will radically strengthen their competitive advantage over international peers both at the EU market and on the global scale.
Now we have to follow the debates among the Member States about the final makeup of the EU multiannual budget as well as implementation of those Commission legislative initiatives which have been underpinned by this unprecedented financial firepower.
More detailed information about the Commission proposal can be found here: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_940