EU and national funding to counter Covid and its effects on the economy

Since the Coronavirus outbreak in Europe, the EU as well as the individual EU countries have been taken unpreceded measures to contain the pandemic as well as to limit its impact on the economy.

The European Commission is mobilizing a package of immediate response funding drawn from all existing EU budget resources:

Since the Coronavirus outbreak in Europe, the EU as well as the individual EU countries have been taken unpreceded measures to contain the pandemic as well as to limit its impact on the economy.

The European Commission is mobilizing a package of immediate response funding drawn from all existing EU budget resources:

• Rapid liquidity of 37 billion EUR unspent structural funds across all EU countries can be devoted to the COVID-19 crisis. EU countries will also be able to shift additional 28 billion EUR unallocated to projects from other priorities to COVID-19. 
• 800 million EUR made available under the EU Solidarity Fund.
• Additional funding (grants and financial instruments) will be mobilized by the EU through the European Civil Protection Mechanism, The European Fund for Strategic Investments (EFSI), EIB, The European Globalisation Adjustment Fund or the EIC Accelerator to support research around COVID-19 and to tackle its economic consequences.
• The EC has just approved a State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak providing for five types of aid: (i) Direct grants, selective tax advantages and advance payments, (ii) State guarantees for loans taken by companies from banks, (iii) Subsidised public loans to companies, (iv) Safeguards for banks that channel State aid to the real economy and (v) Short-term export credit insurance.

IN-COUNTRY PROCUREMENT
In parallel, at the country level, governments supplement the EC efforts with their own economic and fiscal measures to address the pressures on the health sector and on the economy: delays in payment of bank/social/ tax obligations, support the cost of short term lay-offs, compensation schemes, local state aid schemes and cash injections in companies etc.

Urgent Joint Procurement at EU level as well as in-country fast track procurement is currently ongoing to purchase medical and protective equipment for member states mostly affected by the crisis. In addition, further investment in e-health/ telemedicine systems, e-learning platforms and broadband communications is expected to address the pressures and the rising needs of the different affected sectors (healthcare, education, working environment).​

The new EU 2021-2027 budget: a face lift or a total surgery?

While still dealing with the huge Covid health pressures right in the heat of these weeks, the EU is now called to prepare a comprehensive financial recovery plan to address the inevitable economic downturn that the Coronavirus will unfold.

Unprecedented measures have been announced already: the activation of the Escape clause under the European Growth and Stability Pact, the relaxation of the state aid rules to allow for faster and easier access to liquidity for the European companies or the reallocation flexibility around the 2014-2020 remaining structural funds. Other measures are still in the making, requiring agreement across all EU countries. An objective never easy to get and especially difficult under the current crisis context.

The European Commission is now expected to table a new EU Multi-Annual 2021-2027 proposal to reflect on the economic and social "Post-Corona" reality. The so intensively discussed structural funds' cuts operated in the soon to come EC "old MFF proposal" from May 2018, can actually turn into a golden ticket for the Cohesion Policy next budget with more funding potentially being allocated to support the economies of the hardest hit EU countries as well as to invest in making EU healthcare systems more resilient in the future.

Stay updated with the EU 2021-2027 budget developments. History is being rewritten under our eyes.

Photo source: EC - Audiovisual Service