President von der Leyen on the new EU Recovery Plan
The 13th of May the President von der Leyen at her speech at the European Parliament Plenary shared key aspects of the COVID-19 recovery plan. The recovery package consists of two parts: as previously announced, the EU's seven-year budget will be topped up by a recovery instrument "funded through a larger headroom".
- The European budget – the MFF
- On top of the budget - will be a recovery instrument funded through a larger headroom- maximum amount of money, that the Commission can borrow on the capital markets with the guarantee of the Member States
The entirety of the recovery funds will be channelled through EU programmes.
It will be spent across three pillars:
- First pillar will focus on supporting Member States to recover, repair and come out stronger from the crisis. Bulk of the money will be spent on a new Recovery and Resilience tool - created to fund key public investment and reforms, aligned with European priorities. This will be done within the European Semester; available to all Member States- focused on those parts of the Union that have been most affected. Within the first pillar, the Commission will propose a cohesion top-up- above the usual cohesion envelope within the MFF. This top-up will be allocated based on the severity of the economic and social impacts of the crisis.
- Second pillar- kick-starting the economy and helping private investment to get moving again: strengthen InvestEU; create a new Strategic Investment Facility- invest in key value chains crucial for our future resilience and strategic autonomy, such as the pharmaceutical sector; new Solvency Instrument- help match the recapitalisation needs of healthy companies who have been put at risk as a result of the lockdown – wherever they are located in Europe.
- Third pillar is about learning the most immediate lessons of the crisis. Strengthen programmes that have proven their value in the crisis, such as RescEU or Horizon Europe; create a new, dedicated Health Programme; strengthening our instruments for Neighbourhood, Development and International Cooperation and for pre-accession assistance.
The recovery instrument:
- will be focused on where there is the greatest need and the greatest potential.
- is short-term and concentrated on the first years of recovery.
- will include grants,
- will include the possibility to frontload part of the investment still this year, using proven financing models based on national guarantees
However, von der Leyen did not unveil the size of the recovery instrument or the updated EU budget, while the European Parliament is asking for a package worth €2 trillion