EU BYTES
or the temporary collapse thereof certainly remains a key concern of the Commission. Let’s have a closer look.
THE PROPOSALS
On 27 May, the European Commission published its major recovery plan and the budget for 2021-2027. Yes, before you ask, money has also been allocated for 2020 with a push to make additional liquidity available before 1 January 2021 through its 2020 Work Programme. The key recovery instrument is called Next
• “A €55 billion top-up of the current cohesion policy programmes between now and 2022 under the new REACT-EU initiative to be allocated based on the severity of the socio- economic impacts of the crisis, including the level of youth unemployment and the relative prosperity of Member States.” This will be supported by incentives for private investments such as: • “A new Solvency Support Instrument will mobilise private resources to urgently support viable European companies in the sectors, regions and countries most affected;…for companies from all economic sectors and prepare them for a cleaner, digital and resilient future.”
Generation EU and the pillars it is supposed to cover include the following: • “A new Recovery and Resilience Facility of €560 billion will offer financial support for investments and reforms, including in relation to the green and digital transitions and the resilience of national economies, linking these to the EU priorities.”
• “Upgrade InvestEU, Europe’s flagship investment programme, to a level of €15.3 billion to mobilise private investment in projects across the Union.”
Together with the MFF proposal, this implies a total of EUR 1.85 trillion.
TOURISM
If you look at the proposals, you will notice the word tourism dotted around, most notably on the basis that, as stated in the InvestEU instrument: “Tourism is an important area for the Union
economy and the sector, which experienced a particularly severe contraction as a result of COVID-19 pandemic”. The European Regional Development Fund and on the Cohesion Fund also provides that it would be possible “to enable exploiting the potential of culture and tourism in enhancing economic development, social inclusion and social innovation.” In other words, the ball is very much in the air about what will be specifically funded as additional proposals to this end will come along in time. Apparently, a strategy on sustainable tourism is expected in September of this year; we should know a little more then. It is important to keep one thing in mind though. Not all money is administered at Brussels level. If you, for example, apply for funding to get a stadium built, you will need to go to your national/local authorities to access the EU funds. Therefore, contextual conditions and chances of success can vary from region to region or country to country.
THE POLITICS OF BUDGETS
Now, what are the problems currently faced with the macro-budgetary proposals? Discussing budgetary matters at EU level has never been an easy activity, especially when looking for agreement across the EU’s membership. There have been requests for rebates, there have been threats of linking political and judicial stances in Member States to allocations of budget, and so
on. It has never been pretty, but I guess one motivation for discussions lies within financial numbers being clear pillars of public motivation and perception. Brexit and the NHS, *cough* *cough*. So, what is new this time? In essence, nothing, but the debate has taken an interesting paradigm. And, it’s about where the money for the recovery plan is supposed to come from. As indicated by the Commission, for Next
Generation EU, it “plans to raise money by temporarily lifting the own resources ceiling to 2.00% of EU Gross National Income, allowing the Commission to use its strong credit rating to borrow 750 billion [Euro] on the financial markets.” That is certainly not to the liking of the
“Frugal Four”. Kindly note, I did not come up with that name. Austria, Denmark, Netherlands and Sweden have instead argued for low- interest loans, not least because a rise in the allocated amount for the MFF and a mutualisation of debt would not be acceptable. This has been a longer-standing debate. The original MFF proposal for 2021-7 was already published in 2018.
All in all, the rift in approaches remains
large and von der Leyen hopes to have approval from the Member States (European Council) by July 2020.
Greetings from Brussels and #StaySafeStayTuned
MAY/JUNE 2020 31
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