Coronavirus - At a glance: The EU's Coronavirus Recovery Plan - Ireland

• Ireland

• Competition, EU and Trade
• Coronavirus
• Corporate

23-09-2020

On 21 July 2020, EU leaders agreed a recovery package for the EU in response to the unprecedented economic downturn caused by the pandemic.

The first limb of the recovery package is the multi-annual financial framework for the years 2021-2027 (the “MFF”) which is the budget funding the operation of the EU institutions. The MFF is financed through member state contributions and will total €1,074 billion up to 2027.

The second limb of the recovery package is the Next Generation EU Instrument (the “Plan”) which, crucially, will be financed by the Commission borrowing funds from capital markets. This action alone represents a dramatic departure for the EU which has never before borrowed money to stimulate economic growth.

Under the Plan, the EU will make €750 billion available for use by member states to stimulate economic growth and shall be comprised of:

In recognition of the difficulties that SMEs now face and their reluctance to access credit facilities, the Commission will provide 70% of the grants via the RRF in the years 2021 and 2022 with the remaining 30% to be paid in 2023.

Following it’s approval by the European Parliament last week (16 September 2020), and by member states in the coming months, the combined budgets of the MFF and the Plan will be €1.8 trillion to be spent by the EU over the next 7 years representing 5% of the GDP of the EU.