The coronavirus crisis has caused the deceleration or even the suspension of numerous economic activities and the initial reactions by the member-states have been spasmodic and unilateral. Immediate action was taken subsequently to boost liquidity and employment, as well as to relax fiscal discipline, competition and structural funds rules. The decisive answer to the coronavirus crisis was given by the historic decision to create the Next Generation EU (NGEU) and especially the Recovery Fund. The NGEU will have at its disposal a total of € 750 billion in grants and loans, which will come from a European Commission loan on behalf of the EU. Two taboos were broken with the NGEU: the size of the budget as a percentage of the Union’s Gross National Income (rising to 2% of EU GNI) and the possibility of debt mutualisation. The Recovery Fund covers all EU countries, it abandons the complex procedures of the structural funds, it introduces simplified management principles and, above all, it makes reforms an integral part of planning. At the same time, it promotes the reorientation of cohesion policy towards overall economic growth and less towards the reduction of regional disparities. The finance ministers and DG ECFIN are taking an active role in the new Fund. At the same time, the “intergovernmental” approach is further strengthened over the “Community method”. The new elements introduced by the Recovery Fund are expected to have a decisive impact on cohesion policy in the coming years. The creation of the Recovery Fund will be a historic milestone in the development of cohesion policy and European integration in general.
You may read the Policy Paper by Alekos Kritikos, Senior Policy Advisor of ELIAMEP, here (in Greek).