Economic and Financial Affairs

On 28 June 2022, Italy submitted to the Commission a payment request based on the achievement of the 45 milestones and targets selected in the Council Implementing Decision for the second instalment. They cover reforms in the areas of public employment (as part of a broader reform of public administration), public procurement, the teaching profession, tax administration and territorial healthcare. The payment request includes investments in key policy areas including ultra-broadband and 5G, research and innovation, tourism and culture, hydrogen, urban regeneration and the digitalisation of schools. This payment request also includes an investment to support the reform of the justice system and reduce the backlog of cases. With their request, the Italian authorities provided detailed and comprehensive evidence demonstrating the fulfilment of the 45 milestones and targets. The Italian recovery and resilience plan includes a wide range of investment and reform measures in six thematic areas (the so-called “Missions”).

The Eurogroup took stock of global economic issues, including – as is customary – exchange rate developments, in view of the upcoming annual meetings of the World Bank Group and the International Monetary Fund. Based on input from the ECB and the Commission, ministers discussed the role of public and private participants in the digital euro ecosystem. In this context, ministers expressed their views on the role of supervised intermediaries and the Eurosystem throughout the payments process, and on possible distribution models that would ensure a pan-European reach of the digital euro whilst also fostering innovation. At the Economic and Financial Affairs Council on 4 October, the Council reached its position (general approach) on the REPowerEU proposal, a plan to phase out the Union’s dependency on Russian fossil fuel imports, which aims to strengthen the strategic autonomy of the Union by diversifying energy supplies and boosting the independence and security of the Union’s energy supply. Ministers discussed the role of financial markets regarding high volatility of energy prices and potential policy measures, based on a presentation by the Commission. This is part of efforts to prevent a spill-over of risks into the financial system. Ministers took stock of the implementation of the Recovery and Resilience Facility (RRF), following a presentation by the Commission on the state of play. The Council also adopted its implementing decision on the approval of the national plan of the Netherlands.

The report confirms and extends the findings of the three previous bi-annual reports; namely, that SURE was successful in cushioning the impact of the pandemic and supporting the recovery in 2021. National labour market measures supported by SURE effectively protected around 1.5 million people from unemployment in 2020. SURE also contributed to preventing a rise in labour market inequality across Member States. The protection of employment was crucial to facilitate the rapid economic rebound in 2021, which was faster than those experienced in previous crises. SURE helped enable this by financing schemes to allow firms to retain employees and skills, and to help the self-employed to be ready to resume their activities immediately, as well as by boosting confidence across the EU. A total of €93.3 billion in financial assistance to 19 Member States was proposed by the Commission and granted by the Council, of which almost €92 billion has been disbursed. SURE can still provide a further €6.2 billion of financial assistance to Member States.

These include an additional €900 million to Greece, bringing the total support to the country to €6.2 billion, an additional €26 million to Cyprus, bringing total support to €632 million, and an additional €300 million to Portugal, bringing total support to €6.2 billion. Once the Council approves the proposals, the financial support will be provided in the form of loans granted on favourable terms. The loans to all three countries will fund past expenditure for the continuation of measures that were introduced to tackle the severe socio-economic impact of the COVID-19 crisis. The loan to Greece will help cover costs incurred in 2021 related to the continuation of a short-time work scheme and a scheme covering social security contributions to preserve employment. The loan to Cyprus will contribute to funding the expenditure incurred in 2021 for the continuation of a short-time work scheme and similar measures for the self-employed and specific sectors in the tourism industry. The loan to Portugal will primarily help fund incurred expenditure up to May 2022 related to the continuation of numerous labour market and health-related measures.

This is expected to unlock investment of €100 million in new microfinance loans targeting more than 7,500 microenterprises across Romania and to improve access to finance for micro-entrepreneurs and small-scale farmers. The new agreement with BT Mic, the dedicated microfinance subsidiary of Banca Transilvania, Romania's largest banking group, aims to ensure enhanced access to finance for very small entrepreneurs, with a direct impact on job creation and economic development. The new cooperation represents the first operation in Romania to be backed by InvestEU.

This plan sets out the measures that will be supported by the Recovery and Resilience Facility (RRF). The RRF is at the heart of NextGenerationEU, which will provide €800 billion (in current prices) to support transformative investments and reforms across the EU. The Netherlands's recovery and resilience plan amounts to €4.7 billion in grants. The Commission will authorise the disbursements under the recovery and resilience plan based on the satisfactory fulfilment of the milestones and targets outlined in the Council Implementing Decision approving the plan, reflecting progress on the implementation of the investments and reforms covered in the plan.

Once the Council approves the proposal, the financial support will be provided in the form of loans granted on favourable terms. The loan will fund past expenditure, primarily in 2020 and 2021, on the continuation of measures that were introduced to tackle the severe socio-economic impact of the COVID-19 crisis. The measures include a short-time work scheme and similar measures for the self-employed that were wound down in early 2022. There are now eleven Member States who have requested additional SURE support on top of the support that the Council had already approved in 2020: Belgium, Cyprus, Greece, Latvia, Lithuania, Malta, Hungary, Bulgaria, Croatia, Portugal and Czechia. SURE is a crucial element of the EU's comprehensive strategy to protect jobs and workers in response to the coronavirus pandemic. The proposal, if adopted, would bring the overall financial support granted under SURE to a total of €98.2 billion. The Commission has already disbursed €91.8 billion to 19 Member States under SURE, and it expects to undertake the remaining borrowing operations in the coming months. €1.8 billion is still available under SURE for possible future requests.

The EU Finance Days 2022 are organised by the European Commission and implementing partners to present new financial and support programmes to relevant stakeholders. Join us at the EU Finance Days targeting Bulgaria on 19 October 2022.

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Register now for this year’s hybrid edition of the EU Sustainable Investment Summit, Building Tomorrow, taking place in Brussels on 28 October 2022. Check the website for more details on the programme #InvestGreenEU.

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Don’t miss the upcoming conference ‘Towards a legislative framework enabling a digital euro for citizens and businesses’ which will take place on Monday, 7 November in Brussels. Save the date – more details coming soon!

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