The European Commission is proposing to direct billions of euros of financial relief into high tech and green investments to help the bloc recover from the coronavirus crisis.
Technologies such as 5G, AI, cloud, cybersecurity, supercomputing and renewable energy look set to benefit from a €750BN pan-EU support package set out today — aligning with the Commission’s pre-existing policy priorities before the pandemic struck the region, causing thousands of deaths and major economic damage.
“Urgent action is needed to kick-start the economy and create the conditions for a recovery led by private investment in key sectors and technologies. This investment is particularly crucial to the success of Europe’s green and digital transitions,” it writes in a factsheet on its budget proposal set out today — which is being slated as a wider “recovery plan” for Europe.
“Investment in key sectors and technologies, from 5G to artificial intelligence and from clean hydrogen to offshore renewable energy, holds the key to Europe’s future,” it adds.
On the green deal front, it’s touting:
- A massive renovation wave of our buildings and infrastructure and a more circular economy, bringing local jobs;
- Rolling out renewable energy projects, especially wind, solar and kick-starting a clean hydrogen economy in Europe;
- Cleaner transport and logistics, including the installation of one million charging points for electric vehicles and a boost for rail travel and clean mobility in our cities and regions;
It also plans to funnel more financial support into a Just Transition Fund to support re-skilling and help businesses tap into the economic opportunities offered by digitization and going green.
The Commission estimates that at least €1.5 trillion will be needed to reboot the EU’s economy as a result of the pandemic crisis in 2020-2021 alone — so the budget proposals include a revision of the 2014-2020 multiannual financial framework as well as a financial framework for the 2021-2027 period.
The Commission is proposing to borrow €750BN on the financial markets, through the issuance of bonds, for a ‘Next Generation EU’ fund which will be channelled through EU programs between 2021 and 2024 — with the loan to be repaid over “a long period of time throughout future EU budgets” (not before 2028 and not after 2058).
It’s proposing three investment pillars for this fund: One focused on support for EU Member States via direct investment and reforms; a second focused on kick starting the EU economy by incentivizing private investments; and a third aimed at learning lessons from the COVID-19 crisis, with a big focus on health, as well as civil contingencies and foreign aid.
Under the first pillar, digital and green technologies are set to benefit from a proposed €560BN Recovery and Resilience Facility that will offer EU Member States financial support for related investments and reforms, including a grant facility of up to €310BN and up to €250BN available in loans.
“Support will be available to all Member States but concentrated on the most affected and where resilience needs are the greatest,” the Commission said today.
It’s also proposing €15BN extra for the European Agricultural Fund for Rural Development — to “support rural areas in making the structural changes necessary in line with the European Green Deal and achieving the ambitious targets in line with the new biodiversity and Farm to Fork strategies”.
Under the second pillar, a new Solvency Support Instrument is intended to mobilize private resources to support what the Commission bills as “viable” European companies in the sectors, regions and countries most affected. It wants this support to be operational from 2020, and is suggesting a budget of €31BN with the aim of aiming to unlock €300BN in solvency support for companies from all economic sectors (to “prepare them for a cleaner, digital and resilient future”, as it puts it).
There’s also more money for the InvestEU investment program which the Commission wants to see hitting €15.3BN over the budget period to spin up more private investment in projects across the EU.
It’s also proposing a new Strategic Investment Facility be built into InvestEU which it wants to generate investments of up to €150BN to boost the resilience of “strategic sectors”, again notably those linked to the green and digital transition — with €15BN set to be chipped in here from the Next Generation EU pot.
Under the third pillar, the Commission is earmarking €9.4BN for a new health programme, EU4Health, that’s intended to strengthen health security and prepare for future health crises.
While the Horizon Europe research program is set to get €94.4BN — including to support what it dubs “vital research” in health, resilience and the green and digital transitions.
Commenting in a statement, European Commission president, Ursula von der Leyen, said: “The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalization will boost jobs and growth, the resilience of our societies and the health of our environment. This is Europe’s moment. Our willingness to act must live up to the challenges we are all facing. With Next Generation EU we are providing an ambitious answer.”
In terms of next steps, the Commission’s budget proposals will need to gain political agreement from the European Council. It’s hoping will be achieved by July, with the EU’s executive keen to impress on Member States there’s no time to lose in financing coronavirus relief.
The EU parliament will also need to have its say but the Commission has penciled in early autumn for the adoption of the revised 2014-2020 framework and December 2020 for adoption of the revised Multiannual Financial Framework 2021-2027 (as well as Member States’ Own Resources Decision) — with the aim of implementing the latter framework in January 2021.