Albert Einstein noted that in the middle of every crisis, there is a great opportunity. With this spirit in mind, the European Union has designed a 750 billion euro European assistance fund for the Next Generation, the Next Generation EU.

This aims to repair the damage caused by COVID-19 and put economic growth back on a more sustainable route. But taking advantage of the situation, the funds will be deposited in the coffers of the member states to achieve common goals, especially in the environmental area.

In other words, these funds would come not only to rescue the old continent, but also to accelerate its transition to the future. In spite of all the negatives of this pandemic, there is optimism that Europeans can emerge more resilient than ever.

It took six months of parliamentary debates, internal discussions and judicial proceedings for all 27 EU countries to ratify the recovery fund. As a result, the money is expected to arrive to our governments in July.

As a condition for receiving the money, all national plans had to set out how EU funds would be used to promote the goals of the whole block, such as digitization and reducing carbon emissions, while members promised to carry out far-reaching reform. Observers warn that approving the plans will be a test for member states.

Recovery and Resilience Mechanism

The Recovery and Resilience Mechanism (RRM) is the biggest component of the Next Generation EU, the European Union’s reference instrument for recovery from the coronavirus pandemic.

The RRM will provide grants of up to EUR 312.5 billion in 2018 prices, or EUR 338 billion in current prices, and loans of up to EUR 360 billion in 2018 prices, or EUR 390 billion in current prices.

EU countries have to present national recovery and resilience plans describing the reforms and public investment projects they plan to implement with RRF support.

EU countries must have officially presented their recovery and resilience plans “as a rule” before 30 April 2021 (see paragraph 38 of the preamble and Article 18(3) of the RRF Regulation).

However, this deadline is flexible and the Commission has argued that countries can present their plans until mid-2022. Thirteen countries presented their plans by the deadline of 30 April 2021 or at most one day late. By 2 June 2021, the number of submitted plans rises to 23.

The comparison of national plans is a challenge, as they present data in very different structures. The number and definition of main categories and the availability of summarized information on sub-categories differs from country to country.

However, the biggest challenge in comparison between countries is the definition of non-overlapping expense categories, because a particular investment could support several purposes. For example, ecological, social and inclusive growth, as well as policies for the next generation.

140 billion euros from the European relief fund for Spain

Spain would receive up to 140 billion euros, a huge amount that is expected to represent a before and after for key investments in the country.

So, according to experts, this monetary injection into the veins of the Spanish economy could increase the country’s GDP up to 1.2 points. This, as long as the funds are spent according to the needs of the most disadvantaged or backward sectors of our economy.

Priority framework

The EU’s New Generation carries with it the guidelines for a new future. In other words, the NGEU will not only try to fix the consequences of the pandemic, it will also make long-term investments in issues that are pressing for the EU’s future.

Therefore, there are four specific recognised EU priorities which Next Generation EU will focus on:

1. The European Green Pact

To combat climate action, the EU’s Next Generation financing will introduce the circular economy in buildings and infrastructure, will develop renewable energy projects, optimize transport and logistics and will reinforce the Fair Transition Fund.

In essence, this agreement has 5 main objectives: climate neutrality up to 2050; the protection of all life by reducing pollution; achieving a progressive, inclusive and fair energy transition; developing clean and affordable energies and, finally, regenerating agriculture and rural areas.

2. Promoting the digital transformation

Digitisation is one of the European Commission’s priority areas and one of the main axes of the Recovery Plan. In Spain, for example, these investments will complement the Spain Digital Strategy 2025 and the SME Digitisation Plan 2021-2025.

This type of help looks to modernize technology, mainly for the self-employed and SMEs, through: improving connectivity, boosting e-commerce, promoting the responsible use of data, etc. Its purpose is to improve the digital skills of professionals and the integration of our technological tools.

3. Fair and inclusive recovery for everyone

Next Generation EU will provide funding to fight European unemployment with a focus on the development of EU citizens’ digital skills to adapt better to the new digital landscape. To ensure a fair transformation process, the European Parliament has adopted a strategic report entitled “A strong social Europe for fair transitions”.

4. Youth rescue

A youth employment support package structured around four chapters was launched last year, at the beginning of July to provide the next generation a “bridge to employment”. The proposal to replace the 2013 Recommendation was presented.

This initiative is connected to the needs of companies to provide the necessary skills, in particular for the green and digital transitions. It extends the age range covered by the Youth Guarantee from 24 to 29 years. Next Generation EU funds will also be used to financially support these initiatives, bringing relief to hundreds of thousands of young people who are unemployed and who, at present, have few real alternatives for a decent and stable future.