Two days to kick start Europe…

Two items are up for discussion at the extraordinary European summit on 17 and 18 July: the Next Generation EU plan to recover from the COVID-19 crisis and the new long-term EU budget for 2021-2027 . The European Commission’s is seeking to repair the damage caused by the pandemic and put the EU on the path to a “resilient and sustainable recovery”. Under the Commission’s 27 May proposal, the EU could commit directly up to €1.1 trillion and €750 billion via its Multiannual Financial Framework and the Next Generation EU plan . Next Generation EU, an exceptional and temporary emergency plan, is the EU’s flagship recovery plan. At its heart, the Recovery and Resilience Facility will be equipped with €560 billion, including grants of up to €310 billion , to reinforce the Cohesion and Values component of the EU budget and embed European solidarity. The Commission estimates that if its proposal were to be voted in its current form, taking into account the leverage effect and the support measures already in place (€540 billion), €3.5 trillion would be injected into the economy between 2020 and 2027 , i.e. a little over 25% of EU GDP. Such financial firepower would be unprecedented. Compared with these amounts, the question of €500 billion in non-repayable aid ( subsidies and guarantees) seems secondary. But beyond being a symbol of European solidarity, mutualisation could also be a decisive factor in the effectiveness of the various EU programmes. Indeed, the success of the Commission’s recovery plan depends greatly on the ability to encourage private financing from committed public funds and therefore on the confidence of investors which could only be increased by enhanced financial solidarity. This report outlines the main priorities of the recovery plan that will be discussed at the upcoming extraordinary European summit .