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Adopted As a Response To The Period Of Crisis Due Mainly To The Covid-19 Pandemic, The Community Instrument Called Next Generation EU Has Worked As Hoped Over The Last 2 Years
In the last week of February, the European Commission took stock of the progress of one of the most important instruments adopted in the last two years, called Next Generation EU. To make up for the difficulties encountered by all European states, due to the Corona Virus pandemic, which manifested itself at the beginning of 2020, there have been purely national initiatives, with the aim of reducing the economic and social losses, directly managed by the various European governments in charge, during the 2 years in question. Right from the start, the need for a community plan that was complete and effective, for all of Europe, seemed clear and the establishment of a common continental plan seemed the most suitable choice and the most pragmatic strategy.
The program created with the aim of safeguarding the health and finances of European citizens was called Next Generation EU and had as its main objective, that of increasing the resilience of the member states of the European Community to counter the inevitable negative effects of the Covid-19 pandemic. Europe was not ready for a health and economic crisis like the one of the last 3 years and, therefore, it was necessary to adopt instruments that were objectively different from those used to limit the damage of the Great Recession or the sovereign debt crisis. The response was up to the problem and the European institutions have identified in the Next Generation EU a precise and innovative solution which consists in the preparation of a recovery fund aimed at the economies of the Member States in troubles.
The story of the NGEU program began in the summer of 2020, in the midst of the pandemic, when there were still no decisive health solutions that could bode well for an end to the crisis in the short term. In July 2020, with an extraordinary meeting of the European Council, the figure of approximately 740 billion euros was established which would be allocated to the Member States to support the economy and the health response necessary in view of a complete recovery.
The Next Generation EU project provides for the availability of non-repayable grants, which can be combined with the more traditional ones made available by Europe for the member countries, marking a revolutionary novelty which for the first time has been adopted also in view of a process of greater integration of the European states involved, through the issue of common debt, never taken into consideration in past crises.
The key element of the NGEU is the so-called Recovery and Resilience Facility (RRF) which, since February 2021, one year after the start of the pandemic crisis, has been the main source of economic funds allocated to member states to reduce the shock due to the social and economic hardships caused by the worldwide spread of the virus and with the aim of making the societies and economies of the nations themselves more sustainable and ready to take up the opportunities that the ecological transition would have offered together with the digital transformation foreseen for the next years. These funds will be raised by the European Community through loans on the capital markets, until 2026. Every European state, intending to take advantage of the resources offered by the RRF, had to officially present recovery and resilience plans designed specifically for the occasion which have been thoroughly analysed by the program commission itself, in order to establish the quality of the projects presented on the basis of the planned reforms and investments, by the end of 2026.
The availability of the allocated funds has been activated, for the Member States that have requested it, with periodic disbursements based on the achievement of precise objectives, established by the Commission, following a project roadmap that confirms compliance with the envisaged conditions. Each government has received its share of resources and will continue to receive them, only based on the performance of the planned recovery and resilience plan which will be closely monitored by the commission appointed by the EU. The established objectives must be achieved on a six-monthly basis, demonstrating the quality of the proposed national programme, so as to continue to benefit from the funds of the Recovery and Resilience Facility.
Through a precise communication, therefore, the European Commission reported the results achieved in the last two years of activity of the Next Generation EU and RRF program and the absolute effectiveness of the positive thrust of the plan was confirmed, above all with reference to the reforms and investments related to the ecological transition, undertaken by the Member States, just as desired by the Commission that created the instrument used.
After 2 years from the creation of the support fund, the NGEU plan has acquired ever greater importance in tackling the difficulties experienced due to the pandemic crisis, and 140 billion euros have already been disbursed, exceeding the investment objectives envisaged at the beginning of the project, intended above all for projects related to the ecological and digital transition. Almost 40% of the funds, analysing the programs of the 22 European states involved, were in fact destined for the expenditure necessary to activate climate protection measures, while 26% were reserved for the digital transition, going beyond the better predictions. A large part of the resources was then allocated to the development of social policies for future generations as required by the Next Generation EU plan, honouring the name of the project itself.
The RRF plan has concretely changed, according to the analysis carried out, the internal development of the nations that have benefited from it, through often revolutionary reforms that have increased the post-crisis recovery capacity, both in the economic and purely social spheres. In some Member States such as Italy, for example, there have been reforms, financed by the EU plan, which are changing the civil and criminal justice systems while, in Spain, the conditions of the labour market are reformed and the conditions of house market in Latvia are becoming better than ever. Other important goal of the program is the promotion of new investments in renewable energy and digitalisation in Greece and Portugal.
Every European nation has tried to use the resources received to follow the projects indicated at the community level and, at the same time, integrate the internal reforms necessary for national growth. The union of the truly European interest with the national one has allowed the creation of innovative development plans capable of changing the future vision of many countries in difficulty. The very nature of the European Recovery and Resilience Plan has allowed for free management of the funds by the Member States but has also provided a common guide necessary for the success of the established projects.
Since the establishment of the Next Generation EU fund, the European Commission has disbursed over 144 billion euros to member states, as part of the Recovery and Resilience mechanism. The nations concerned were able to take advantage of a total of 96 billion, in the form of grants and 48 billion in loans as well as other disbursements foreseen for the future based on the objectives achieved by the governments, thus creating a sort of constant and common subsidy in years of crisis that would otherwise, led many troubled states into recession.
The program in question, as planned, is leading Europe to a shared management of economic funds in the name of educational recovery and ecological and digital transformation. In more practical terms, it is estimated that the reforms allowed by the resources of the NGEU plan will be able to increase the GDP of all of Europe by about one and a half percentage points in 2024, also creating new jobs.