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Next EU appointments: MFF and Recovery Fund, Green Deal and Just Transition

There is a strong delay to decide the EU budget for 2021-2027. The emergency in various Member States makes necessary an extraordinary support by the EU, and this might have consequences for the future common budget, its amount, and its scope. The Commission has announced a similar Multiannual Financial Framework (MFF) as previously discussed, and an EU Recovery Fund on top which has not been agreed at the time of closing this Newsletter. The promising Commission’s proposal has been endorsed by the Parliament, and the reaction of the Council, is expected very soon. You can watch and read here the last speech delivered by Ms von der Leyen at the European Parliament Plenary on 13 May with insights on the new MFF, own resources and the EU Recovery plan. Most European Parliament’s political groups have endorsed this plan on 14 May, and the reaction of the Council is expected very soon.


Southern EU member states (ES, FR, IT, PT, GR and CY) had asked Von den Leyen on 12 May for a long-term fund (a trillion Euro) to finance non-refundable grants to safeguard the Single Market and avoid disruptions in EU value chains. Meanwhile, the Commission finishes the design of a European Fund for economic recovery to be launched in September at the latest, substantially based on grants.

We keep on following this, and so does the #CohesionAlliance, which will meet again early June after the next Summit of the European Council dedicated to these key topics.

The President of the European Commission told MEPs that we need to support those that need it the most, push for investment and reform, and strengthen our economies by focusing on our common priorities: like the European Green Deal, digitalization and Resilience.

The recovery package consists of two parts: the MFF as already proposed and, on top of it, a Recovery instrument funded through a larger headroom. This headroom fixes the maximum amount that the Commission can borrow on the capital markets with the guarantee of the Member States.

All recovery funds will be channelled through EU programmes, and the European Parliament will have the same say on how the recovery money is spent as it does on how the MFF is spent. The Commission proposes to spend across three pillars:

  1. Supporting Member States to recover, repair and come out stronger from the crisis. Most funds will be spent through a new Recovery and Resilience tool, to fund key public investment and reforms aligned with European priorities: the twin transition to a climate-neutral and a digitalised and resilient Europe. This will be done within the European Semester and it will be available to all Member States (whether in the euro area or not) and it will be focused on those parts of the Union that have been most affected and where resilience needs are the greatest. The Commission proposes here a cohesion top-up above the usual cohesion envelope within the MFF. This top-up will be allocated based on the severity of the economic and social impacts of the crisis.
  2. Kick-starting the economy and helping private investment to get moving again in key sectors and technologies: from 5G to Artificial Intelligence, from clean hydrogen to offshore renewable energy.
    • InvestEU will be strengthened.
    • A new Strategic Investment Facility will be created to help invest in key value chains crucial for our future resilience and strategic autonomy, such as the pharmaceutical sector.
    • A new Solvency Instrument will help match the recapitalisation needs of healthy companies who have been put at risk as a result of the lockdown – wherever they are located in Europe.
  3. Learning the most immediate lessons of the crisis, strengthening programmes that have proven their value in the crisis, such as RescEU or Horizon Europe. A new, dedicated Health Programme has also been announced, as well as the strengthening of the instruments for Neighbourhood, Development and International Cooperation and for pre-accession assistance.


The President of the Commission summarized the Recovery Instrument as follows:

  • it will be focused on where there is the greatest need and the greatest potential;
  • it is short-term and concentrated on the first years of recovery;
  • it will include grants; and
  • it will include the possibility to frontload part of the investment still this year, using proven financing models based on national guarantees.

And it will complement the three important safety nets agreed by the Leaders in April:

  • the SURE initiative (Support to mitigate Unemployment Risks in an Emergency);
  • the finance available from the European Investment Bank;
  • the European Stability Mechanism.

“Together with next MFF, this is the ambitious Commission’s answer Europe needs, including new own resources, just as it was proposed in 2018”, said President Von der Leyen. She also asked for “a strengthened solidarity effort between nations, people, and generations to invest in a clean future. Scientist will develop a vaccine against coronavirus, but there is no vaccine against climate change.”

“The huge investment in rebuilding comes at a price: rising debt. If it is necessary to increase our debt, which our children will then inherit. We must therefore use that money to invest in their future, by addressing climate change, reducing the climate impact and not adding to it. Building a modern, clean and healthy economy, which secures the livelihoods of the next generation.”

The Parliament seems to be on board looking at their resolution on 14 May, asking to finance Reconstruction exclusively with EU funds, through EU programmes, but without mixing up “traditional” and emergency ones; but the Council’s opinion is the most important, at the end of the day. Anyway, the Parliament has offered an unusual agreement to Member States. They could avoid increasing their contributions if they agree to extend EU own resources (new taxes). This would lead to achieve 2 trillion Euro for this plan, mostly in the form of grants than loans.


Several think-tanks following climate change have welcomed the Green Deal focus of the Recovery Plan, even asking for a more radical shift towards a more nature-friendly behaviour.

On 11 December 2019, the Commission presented the European Green Deal, with the ambition of becoming the first climate-neutral bloc in the world by 2050. On 14 January 2020, the Commission announced the European Green Deal Investment Plan to help finance the transition. But not all Member States start from the same point in their transition – some will be more impacted than others.

The Just Transition Mechanism (JTM) is a key tool to ensure that the transition towards a climate-neutral economy happens in a fair way, leaving no one behind. The Mechanism provides targeted support to help mobilise at least €100 billion over the period 2021-2027 in the most affected regions, to alleviate the socio-economic impact of the transition. Special attention will be paid to regions strongly impacted by the transition but with less capacity to deal with its challenges.

To access funding, Member States have to draw up, in dialogue with the Commission, territorial just transition plans identifying territories that would be most impacted by this transition, set out their development challenges, and outline their pathways for transition until 2030, in close consultation with relevant national, regional and local stakeholders. The Commission has approved all requests made by 18 Member States (BE, BG, CY, CZ, EL, ES, FI, HR, HU, IE, IT, LT, LV, PL, PT, RO, SE and SK) and will unlock its support through the 3 pillars of the Just Transition Mechanism:

  • the Just Transition Fund, which will provide grants that will mobilise €30-50 billion for social and economic transformation in just transition regions;
  • a dedicated scheme under InvestEU, which will crowd-in up to €45 billion in private investment, and
  • a public sector loan facility, which will mobilise €25-30 billion euros in public sector investment.

Over the past two years, the Commission already provided hands-on support to regions through the SRSP to help prepare long-term economic strategies for their transition out of coal, such as in Slovakia’s Horna Nitra region, Greece’s Western Macedonia or Romania’s Jiu Valley.

You can find more information in the Commission’s dedicated website.


In the meantime, we should not forget there are some open issues regarding migrants, asylum-seekers and refugees. Irregular entries have dropped in the last two months, but let’s see how the situation looks like once the borders return to a more “normal” stand. Around the Greek-Turkish border there were very worrying news at the end of March due to the risk of spread of the virus (fortunately this area has not the worst exposure). Crossings in the Mediterranean seem to have dropped, and illegal border crossing on Europe’s main migratory routes fell by 85% in April, according to FRONTEX. On the other hand, the European Union Court of Justice has asked Hungary to review the situation of asylum-seekers in its border with Serbia in Röszke, and release them if there is no reason to keep them under arrest. Italy has proposed to regularize 600,000 migrants to guarantee social benefits.


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