Economic and Financial Affairs

On the first day of the summit, EU leaders were joined by US President Joe Biden, in person, to discuss support for Ukraine and the strengthening of transatlantic cooperation, and by Ukrainian President Volodymyr Zelenskyy, via video conference. EU leaders called for work to be taken forward on building a more robust economic base. They specifically agreed on the need to pursue a robust trade policy, foster investment, and reduce strategic dependencies in key sectors such as critical raw materials, semi-conductors, health, digital and food. EU leaders also reaffirmed the importance of realising the full potential of the single market, calling for measures such as strictly implementing and enforcing the single market rules; implementing the industrial and SME strategies; closely monitoring and preventing bottlenecks; preventing administrative burdens; and sustaining the EU's capacity as an international standard setter. EU leaders also endorsed the policy priorities of the Annual Sustainable Growth Survey and invited Member States to reflect them in their National Reform Programmes and Stability and Convergence Programmes. Charles Michel was re-elected President for a second term of two and a half years and reappointed as President of the Euro Summit for the same period.

The budget support takes the form of a State and Resilience Building Contract to support the Ukrainian Government in strengthening civilian crisis preparedness and management at both central and local levels. This follows a previous disbursement of €300 million, which formed the initial part of the first €600 million instalment under Ukraine's new €1.2 billion emergency MFA programme announced by the European Commission on 24 January 2022, together with the €120 million grant support. The emergency MFA programme will make a meaningful contribution towards enhancing Ukraine's macroeconomic stability in the context of Russia's unprovoked and unjustified invasion. It represents a concrete demonstration of the EU's unwavering support for Ukraine. The remaining funds (€600 million) will be disbursed later in the year, in line with the Memorandum of Understanding signed by the EU and Ukraine. In parallel to implementing the emergency MFA programme, the Commission is preparing an additional MFA programme to further support Ukraine in the longer term, also announced by President von der Leyen at the end of January.

This is a key step paving the way for the EU to disburse €3.3 billion in grants to Sweden under the Recovery and Resilience Facility (RRF). This financing will support the implementation of the crucial investment and reform measures outlined in Sweden's recovery and resilience plan, enabling Sweden to emerge stronger from the coronavirus pandemic. The RRF is the key instrument at the heart of NextGenerationEU. It will provide up to €800 billion (in current prices) to support investments and reforms across the EU. The Swedish plan forms part of an unprecedented and coordinated EU response to the coronavirus crisis. It addresses common European challenges by embracing the green and digital transitions, strengthening economic and social resilience, as well as the cohesion of the single market. The Commission assessed Sweden's plan based on the criteria set out in the RRF Regulation. The analysis focused on whether the investments and reforms contained in Sweden's plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience.

Portugal had submitted a payment request to the Commission on 25 January based on the achievement of the 38 milestones and targets selected in the Council Implementing Decision for the first instalment. The milestones and targets cover reforms in the areas of health, social housing, social services, investment and innovation, qualifications and skills, forestry, the blue economy, the bio-economy, renewable gases (including hydrogen), public finances and public administration. Several targets also concern investments in the areas of infrastructure, de-carbonisation of industry and digital education. The Portuguese recovery and resilience plan includes a wide range of investment and reform measures in 20 thematic components. The plan will be supported by €13.9 billion in grants and €2.7 billion in loans, 13% of which (€2.2 billion) was disbursed to Portugal in pre-financing on 3 August 2021.

The 10-year bond, due on 06 July 2032, brings the total financing raised under the programme to €91 billion. Portugal had submitted a payment request to the Commission on 25 January based on the achievement of the 38 milestones and targets selected in the Council Implementing Decision for the first instalment. The milestones and targets cover reforms in the areas of health, social housing, social services, investment and innovation, qualifications and skills, forestry, the blue economy, the bio-economy, renewable gases (including hydrogen), public finances and public administration. Several targets also concern investments in the areas of infrastructure, de-carbonisation of industry and digital education. The Portuguese recovery and resilience plan includes a wide range of investment and reform measures in 20 thematic components. The plan will be supported by €13.9 billion in grants and €2.7 billion in loans, 13% of which (€2.2 billion) was disbursed to Portugal in pre-financing on 3 August 2021.

These SURE loans will assist the three Member States in addressing sudden increases in public expenditure to preserve employment following the coronavirus pandemic. Specifically, they will help the Member States cover the costs directly related to the financing of national short-time work schemes, and other similar measures that they have put in place as a response to the coronavirus pandemic, including for the self-employed. The disbursements follow the issuance of a 15-year bond, worth 2.17 billion, under SURE on 22 March. With this SURE disbursement, the EU has provided €91.8 billion in back-to-back loans under the scheme. All EU Member States which have asked to benefit from the scheme have received part or all of the amount they requested. The overview of the amounts disbursed so far is available online, as are the full amounts per Member State. Overall, 19 EU Member States are due to receive a total of €94.4 billion in financial support under SURE, following approval by the Council of the European Union based on a Commission proposal. Other Member States can submit requests to receive support under SURE, which can still provide €5.6 billion in financial assistance.

The survey is an important element in the wider debate on the EU's economic governance framework which was relaunched in October 2021. The survey closed on 31 December 2021 and received 225 valid contributions from respondents in 25 different countries, including 21 EU Member States and four third countries. An analysis of the replies indicates that many respondents think that fiscal policy should become more growth-friendly, mindful of social issues, and support policy priorities for the twin green and digital transition. Most respondents acknowledge that debt sustainability should remain a central objective of the EU’s fiscal rules, while the adjustment path towards lower government debt should be realistic and gradual. Many respondents stress the need to incentivise investment as a feature of the economic governance framework. Green investment is identified as deserving special attention due to the global climate challenge. Survey participants also call for simplification and stronger national ownership of the fiscal rules. A good number of respondents viewed the Recovery and Resilience Facility at the heart of NextGenerationEU as a good inspiration for the future governance framework in terms of fostering national ownership and promoting reforms through positive incentives.