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  17 December 2020  
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Economic and Financial Affairs

ECFIN E-news 229

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EU Leaders reach agreement on long-term EU budget and Next Generation EU coronavirus recovery package
European Council Roundtable © European Union, 2020

At their meeting on 10-11 December, EU leaders reached agreement on the EU’s €1.1 trillion seven-year budget (the Multiannual Financial Framework 2021-2027) and the €750 billion Next Generation EU coronavirus recovery package.

Leaders addressed concerns expressed regarding conditionality provisions for the protection of the EU budget following violations of the rule of law in Member States. They affirmed that such provisions, while ensuring sound financial management and the Union’s financial interests, will be applied in an objective, fair, impartial and fact-based manner that ensures due process, non-discrimination and equal treatment of Member States. The Commission will develop and adopt guidelines on the way it will apply the Regulation, including a methodology for carrying out its assessment. Moreover, should an action for annulment be introduced with regard to the Regulation, the guidelines will be finalised only after the judgment of the European Court of Justice. Following the Council’s decision, on 16 December the European Parliament also approved the EU budget with 550 votes in favour. In other news, to meet the objective of a climate-neutral EU by 2050, the European Council also endorsed a binding EU greenhouse gas emissions reduction target of at least 55% by 2030.

See also European Council meeting (10 and 11 December 2020) – Conclusions
Ursula von der Leyen, President of the European Commission
Ursula von der Leyen, President of the European Commission © European Union, 2020

“This is a good day for Europe. The agreement on the EU budget and #NextGenerationEU will help us provide a strong economic response to the crisis. Citizens and the EU economy need our support more than ever and they need it now.”

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Commission welcomes political agreement on InvestEU
InvestEU banner © European Union, 2020

The Commission welcomed the political agreement reached between the European Parliament and EU Member States in the Council on the InvestEU Regulation on 8 December.

The political agreement, pending the final approval of the legal texts by the European Parliament Plenary and the Council, lays the ground for a successful and sustainable recovery of the European economy from the coronavirus pandemic in the long run. The InvestEU Programme will provide the EU with crucial long-term funding, crowd in private investments in support of a sustainable recovery and help build a greener, more digital and more resilient European economy. The compromise would allow an EU budgetary guarantee of EUR 26.2 billion to be distributed across four policy areas and for at least 30% of the investments to contribute to Union objectives on climate action, in support of the European Green Deal Investment Plan. Member States will be able to implement part of their plans under the Recovery and Resilience Facility via the InvestEU programme and the InvestEU Advisory Hub. InvestEU will be implemented in partnership with the European Investment Bank and the European Investment Fund, as well as several other implementing partners, including international financial institutions and national promotional banks and institutions.

See also Commission welcomes political agreement on InvestEU
EU disburses €600 million in macro-financial assistance to Ukraine
Macro-financial infographic © European Union, 2020

The European Commission, on behalf of the EU, disbursed €600 million on 9 December to Ukraine under its COVID-19 related macro-financial assistance (MFA) programme.

Ukraine is the seventh country to receive a disbursement from the €3 billion emergency MFA package for ten enlargement and neighbourhood partners, which aims to help them limit the economic fallout from the coronavirus pandemic. This disbursement will contribute to macro-financial stability in Ukraine while allowing it to allocate resources towards mitigating the severe negative socio-economic consequences of the coronavirus pandemic. The disbursement follows the agreement of a Memorandum of Understanding (MoU) this summer and its ratification in mid-September as well as Ukraine's renewed engagement to continue cooperation under the IMF programme in recent weeks and its commitment to the policy programme agreed with the EU. Given the emergency nature of this support, the first disbursement is not conditional on the fulfilment of any specific policy conditions. The disbursement of the second tranche will be conditional on fulfilling the eight specific measures laid down in the MoU.

See also COLLEGE MEETING: Security Union - A Counter-Terrorism Agenda and stronger Europol to boost the EU's resilience
Investment Plan: EU supports investment in advanced technologies including IoT, identity verification, and “New Space”
Plant growing © European Union, 2020

Vauraus, the Finnish crowdlending platform, is to receive backing from the European Investment Fund (EIF) in the form of a €27.5 million cornerstone investment in its new SME Loan Fund.

The investment announced on 10 December is made possible under the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe. In a deal reached on 9 December, the European Investment Bank (EIB) and EIF issued a €795 million guarantee to ING, which will support new lending to Dutch SMEs and Mid-Caps to mitigate the economic impact of Covid-19. In Germany, the EIB will provide €15 million in growth funding to identity verification platform IDnow. Meanwhile, at the Web Summit on 3 December, the EIB announced that it will provide Spanish Internet of Things (IoT) pioneer Worldsensing with €10 million to develop next-generation industrial monitoring solutions. In another partnership announced at the Web Summit, the EIB said it is investing €20 million in the Portuguese software company Bizay to finance the implementation of its research and development (R&D) programme and product development roadmap, particularly the company’s B2B marketplace targeted at SMEs such as retail stores, restaurants, hotels and small corporates. On 3 December, the EIB announced the first direct financing for a start-up in the European “New Space” sector with a €20 million venture loan to support Spire Global’s nanosatellite development and launches, space infrastructure, data analytics, and high-skilled job creation in Luxembourg and the EU. In the Netherlands, Invest-NL and the EIF signed an agreement on 2 December under the “InnovFin SME Guarantee Facility” to unlock up to €66 million in SME-lending. The EIB has also invested €30 million in the €85 million GAGEO 1 Fund that offers companies long-term financing of between 3 and 7 years with their stocks or industrial equipment as collateral. The EIB will also provide €290 million to the German company Wacker Chemie AG to help it become a climate neutral chemicals organisation. A loan of up to €50 million from the EIB will help Spanish pharmaceuticals company Ferrer further develop its portfolio of pioneering products and services for treatments related to the cardiovascular and central nervous systems and pain relief. As part of the EIB Group's Covid-19 support measures, the EIF is guaranteeing a portfolio of up to €6 million in micro-loans from Faktoro in Lithuania. On 14 December, the EIB and Boni Holding AD, a fast-growing agri-business company, signed a €30 million loan agreement for the modernisation of existing and construction of new production facilities in rural areas across Bulgaria.

See also Investment Plan for Europe

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