NextGenerationEU is the EU's €800 billion temporary recovery instrument to support the economic recovery from the coronavirus pandemic and build a greener, more digital and more resilient future.

To finance NextGenerationEU, the European Commission is borrowing on the capital markets on behalf of the EU.

Thanks to the EU's high credit rating, the Commission is able to borrow on advantageous conditions. The Commission is then passing the benefit on to the EU Member States directly when providing them loans or to the Union budget in the form of low interest rate payments on borrowings to finance recovery spending.

The EU budget – which is financed by own resources and contributions from all EU Member States – backs the borrowing.

The Commission's inaugural NextGenerationEU issuance took place in June 2021.  To find out more about the first year of the programme and its impact on international capital markets, read the Commission's latest policy brief  "The EU as an issuer: the NextGenerationEU transformation".

Read our policy brief

Funding strategy

The size of NextGenerationEU would translate into borrowing volumes of on average roughly €150 billion per year between mid-2021 and 2026, which will make the EU one of the largest issuers in euro.

Given the volumes, frequency and complexity of the borrowing operations needed, the Commission is following the best practices used by sovereign issuers, and implementing a diversified funding strategy.

By using diverse funding instruments and funding techniques, the Commission is expanding the investor base for EU securities, facilitating the smooth repayment of borrowed amounts, and delivering all funds as required on the most advantageous terms for EU citizens.

More information about the NextGenerationEU diversified funding strategy

Directing the funds to where the needs are

The centrepiece of NextGenerationEU is the Recovery and Resilience Facility - an instrument to offer grants and loans to support reforms and investments in the EU Member States with a total value of €723.8 billion in current prices.

Part of the funds – up to €338 billion – are being provided in the form of grants.

The other part – up to €385.8 billion – are going for Union loans to individual Member States. These loans will be repaid by those Member States.

In addition, NextGenerationEU is reinforcing several EU programmes.

Recovery and Resilience Facility

More information about NextGenerationEU

For more information on how the implementation of the Recovery and Resilience Facility is progressing, including live information on disbursements, please consult the Recovery and Resilience Scoreboard.

The NextGenerationEU instrument is aimed to finance Europe's economic recovery.

The announced assistance measures under the European Peace Facility in the context of the situation in Ukraine do not fall within the scope of NextGenerationEU.

Repayment of the borrowing

Repayment of the borrowing will start as of 2028 and will take place over a long-time horizon – until 2058.

The loans will be repaid by the borrowing Member States. The grants will be repaid by the EU budget.

To help repay the borrowing, the Commission has proposed new own resources to the EU budget (or sources of revenue), on top of the already existing ones. These could be also used for repayment before 2028.

More information about revenue to the EU budget

Guaranteeing of the borrowing

To back the borrowing, retain its high credit rating and raise funds under favourable market conditions, the EU uses the EU budget and its headroom.

Headroom is the difference between the Own Resources ceiling of the long-term budget and the actual spending. To ensure sufficient headroom, the EU has increased the Own Resources Ceiling of its budget by 0.6 percentage points of the EU's Gross National Income (GNI).

The Own Resources ceiling determines the maximum amount of own resources the Commission can call from Member States in any given year to finance expenditure. This gives certainty and predictability to Member States for their budgetary and financial planning. A sufficiently high ceiling allows the Union to cover all of its financial obligations and contingent liabilities falling due in a given year.

The permanent Own Resources ceiling of the budget has been increased to 1.4% of EU's gross national income. The additional ceiling of 0.6 percentage points has come on top. It is limited in time, until 2058, and is only used in the context of the recovery from the coronavirus pandemic. This increase in the Own Resource ceiling will expire when all funds have been repaid and all liabilities have ceased to exist.

The headroom serves as a guarantee that the EU will be able to make repayments under any circumstances. This enables the EU to continue benefiting from its high credit rating and borrow funds under advantageous market conditions.

Own Resources

Transactions data

The Commission started issuing EU-Bonds and EU-Bills under NextGenerationEU in June 2021. For an overview of the transactions completed to date, click here.

Reports

The Commission reports on the progress of the NextGenerationEU funding programme twice a year.

Published on 8 July 2022, the second report covered the period January – June 2022. It confirmed that the Commission raised €50 billion of long-term funding under NextGenerationEU in the first half of 2022, resulting in a total of €121 billion since the beginning of the programme. This borrowing enabled the Commission to disburse over €100 billion to EU countries in grants and loans under the Recovery and Resilience Facility (RRF) and €15.5 billion to other EU budget programmes that benefit from NGEU financing.

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Published on 17 February 2022, the first report covered the period June – December 2021. It confirmed that the Commission raised €71 billion of long-term funding under NextGenerationEU in 2021, incurring an average cost of funding of 0.14% in the process. This borrowing enabled the Commission to boost Member State recoveries from the Covid-19 pandemic with €64 billion in RRF grants and loans.

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Documents

All documents linked to the EU funding strategy for NextGenerationEU are available in the documents' section of our website.