Today the European Parliament overwhelmingly approved the Recovery and Resilience Facility ( #RRF), the centrepiece of the EU’s Next Generation effort to reboot and transform its economy after the crisis. A short assessment follows in the thread

1/10

The RRF, with a total volume €672.5 billion in grants and loans, will create fiscal space, in particular for the countries hardest hit by the covid crisis. They will be able to continue investing and supporting their economies despite the sharp rise in debt ratios.

2/10

IMK simulations suggest the grants alone could add 0.3 %-points to growth every year, substantially more in the hardest-hit countries. Germany benefits directly much less but the boost to trading partners will help Germany indirectly via exports. https://www.boeckler.de/de/faust-detail.htm?sync_id=9110

3/10

In negotiations with the Commission and Council at the end of 2020, the EP achieved a number of improvements to the package:
- 37% of the spending is earmarked for “green” projects and 20% for digital transformation, environmentally harmful projects cannot be supported

4/10

- national expenditures on anti-covid measures going right back to February 2020 onwards will, once approved, be eligible for reimbursement.
- 13% (rather than 10%) of the funds are to be made immediately available to the Member States. This should aid swift deployment.

5/10

- Social partners and other relevant stakeholders must be involved in the preparation and implementation of the Recovery and Resilience Plans.

For implementation guidelines for the RRF see: https://ec.europa.eu/info/files/guidance-member-states-recovery-and-resilience-plans_en
6/10

The next step, following today´s RRF adoption, is for national parliaments to ratify the Own Resources Decision so that the Commission can borrow on financial markets. Member states must finalise their recovery plans and then the money can start to flow.

7/10

The RRF is certainly too small, on its own, to ensure Europe emerges from the covid-induced crisis. Member states need to maintain and step up their national support programmes.

8/10

At the low – for Germany and some other countries even negative - interest rates currently available, and with support forthcoming from the ECB and the fiscal rules suspended there is no excuse not to do so.
https://twitter.com/AndrewWattEU/status/1359119441594875905?s=20
https://www.ft.com/content/5ac65419-76a2-4269-aa84-912378e03cd1
9/10

What would be needed in addition is an investment programme in genuinely European public goods, such as a hi-speed rail network or a transmission grid for green electricity and public health, along lines proposed by @IMKFlash @ofceparis @wiiw_ac_at
https://www.boeckler.de/de/faust-detail.htm?sync_id=8938

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