Recovery plan for Europe

The largest stimulus package ever

The EU’s long-term budget, coupled with NextGenerationEU, the temporary instrument designed to boost the recovery, will be the largest stimulus package ever financed through the EU budget. A total of €1.8 trillion will help rebuild a post-COVID-19 Europe. It will be a greener, more digital and more resilient Europe.

The new long-term budget will increase flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. It is a budget fit not only for today's realities but also for tomorrow's uncertainties.

The last step of the adoption of the next long-term EU budget was reached on 17 December 2020.

Main elements of the agreement

More than 50% of the amount will support modernisation, for example through:

	research and innovation, via Horizon Europe
	fair climate and digital transitions, via the Just Transition Fund and the Digital Europe Programme
	preparedness, recovery and resilience, via the Recovery and Resilience Facility, rescEU and a new health programme, EU4Health

In addition, the package pays attention to

	modernising traditional policies such as cohesion and the common agricultural policy, to maximise their contribution to the Union's priorities
	fighting climate change, with 30% of the EU funds, the highest share ever of the European budget
	biodiversity protection and gender equality

Key novelties

Multiannual Financial Framework 2021-2027
total allocations per heading*

_{All amounts in € billion, in constant 2018 prices. Source: European Commission}

_{* The amounts include the targeted reinforcement of ten programmes for a total of €15 billion, compared to the agreement from 21 July 2020. The programmes are Horizon Europe, Erasmus+, EU4Health, Integrated Border Management Fund, Rights and Values, Creative Europe, InvestEU, European Border and Coast Guard Agency, Humanitarian Aid.}

NextGenerationEU

NextGenerationEU is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic. Post-COVID-19 Europe will be greener, more digital, more resilient and better fit for the current and forthcoming challenges.

• The Recovery and Resilience Facility: the centrepiece of NextGenerationEU with €672.5 billion in loans and grants available to support reforms and investments undertaken by EU countries. The aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. Member States are working on their recovery and resilience plans to access the funds under the Recovery and Resilience Facility.
• Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU): NextGenerationEU also includes €47.5 billion for REACT-EU. It is a new initiative that continues and extends the crisis response and crisis repair measures delivered through the Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative Plus. It will contribute to a green, digital and resilient recovery of the economy. The funds will be made available to
  - the European Regional Development Fund (ERDF)
  - the European Social Fund (ESF)
  - the European Fund for Aid to the Most Deprived (FEAD)
  These additional funds will be provided in 2021-2022 from NextGenerationEU and in 2020 through a targeted revision to the current financial framework.
• NextGenerationEU will also bring additional money to other European programmes or funds such as Horizon2020, InvestEU, rural development or the Just Transition Fund (JTF).

NextGenerationEU breakdown

_{Source: Conclusions of the European Council of 21 July 2020}

Figures

NextGenerationEU figures per EU country

• Recovery and Resilience Facility: grants allocation per Member State
• REACT-EU: allocations 2021
• Just Transition Fund: allocations per Member State
• European Agricultural Fund for Rural Development: allocations per Member State

MFF figures per EU country

• MFF 2021-2027 Breakdown of Cohesion Policy allocations per Member State (2018 prices)
• MFF 2021-2027 Breakdown of Cohesion Policy allocations per Member State (current prices)
• MFF 2021-2027 Breakdown of European Agricultural Guarantee Fund per Member State (current prices)
• MFF 2021-2027 Breakdown of European Agricultural Fund for Rural Development per Member State (MFF only, current prices)

Financing the EU long-term budget and NextGenerationEU

The EU long-term budget will continue to be financed through the well-known revenue sources of the EU budget: customs duties contributions from the Member States based on value added tax (VAT) contributions based on gross national income (GNI) In addition, as of 1 January 2021, a new national contribution based on non-recycled plastic packaging waste will be introduced as a source of revenue of the EU budget.   To finance the recovery, the EU will borrow on the markets at more favourable rates than many Member States and redistribute the amounts. For the Commission to start borrowing, all Member  States must ratify the new Own Resources Decision in line with their constitutional requirements.

A clear roadmap towards new sources of revenue to help repay the borrowing

The Commission will put forward proposals by June 2021 on sources of revenue linked to:

	a carbon border adjustment mechanism
	a digital levy
	the EU Emissions Trading System

By June 2024, the Commission will propose new sources of revenue, such as:

	a Financial Transaction Tax
	a financial contribution linked to the corporate sector
	a new common corporate tax base

Sources of revenue for the 2021-2027 EU budget

Potential new sources of revenue

Next steps

The European Commission will start committing the funds under the next Multiannual Financial Framework (the EU long-term budget) as of 1 January 2021, following the adoption of the relevant sector-specific rules as well as of the annual budget for 2021 by the European Parliament and the Council.

For the Commission to start borrowing under NextGenerationEU, thus making the instrument operational, the ratification of the new Own Resources Decision by all Member States in line with their constitutional requirements is still needed.

The Commission relies on the commitment of Member States to proceed as quickly as possible, in the interest of all EU citizens.

The beneficiaries

Anyone can benefit from the EU budget. Find open and upcoming calls for funding proposals, get background information on funding processes and programmes, and apply online.

Learn about the tendering process and opportunities for doing business with the European Commission.

Background

The Commission put forward its proposal for the EU’s next long-term budget on 2 May 2018. The framework proposal was immediately followed by legislative proposals for the 37 sectoral programmes (e.g. cohesion, agriculture, Erasmus, Horizon Europe, etc). Between 2018 and the beginning of 2020, the Commission worked hand in hand with the rotating Presidencies of the Council, and in close collaboration with the European Parliament, to take the negotiations forward.

On 27 May 2020, in response to the unprecedented crisis caused by the coronavirus, the European Commission proposed the temporary recovery instrument NextGenerationEU of €750 billion, as well as targeted reinforcements to the long-term EU budget for 2021-2027.

On 21 July 2020, EU heads of state or government reached a political agreement on the package.

On 10 November 2020, the European Parliament and the Council reached an agreement on the package.

On 10 December 2020, EU Member States in the European Council agreed to finalise the adoption of the MFF Regulation and the Own Resources Decision, at the level of the Council.

On 17 December 2020, the Council decided to adopt the next long-term EU budget for the period 2021-2027. This was the final step in the adoption process following the vote in the European Parliament on 16 December, which endorsed the MFF Regulation with a significant majority.

On 18 December 2020, the European Parliament and the Council reached an agreement on the Recovery and Resilience Facility, the key instrument at the heart of NextGenerationEU.

The negotiation process