On 23 April, the European Council fully approved the common emergency plan agreed on by the EU finance ministers on 9 April [1]. The deal reached in Eurogroup is worth more than €500 billion. Based on three safety nets for workers, businesses and Member States, it shall be operational by 1 June 2020 [2]. The European Council also agreed on establishing the so urgently needed recovery fund. This fund shall be targeted towards the sectors and geographical regions most affected by the coronavirus crisis and dedicated only to dealing with its consequences. Thus, the recovery fund is meant to be the European response to the negative impacts of the current coronavirus crisis on our economies. While we can’t expect that a decision of such magnitude can be taken in a few meetings between Member States and acknowledge that details for a final and complete assessment of the needs are still unknown, we note that little clarification has been given on this fourth demand of the Eurogroup. However, a political decision has been made by heads of state and government last week.
The European Council has tasked the European Commission to present a proposal that is commensurate with the challenges posed by the coronavirus crisis. The statement of the President of the Council, Mr Charles Michel, does not seem to give much guideline on to the Executive or on how to prepare the recovery. A link with the Multiannual Financial Framework (MFF) can be retained. Yet, the Commission already put forward an MFF proposal for the 2021-2027 period and prior negotiations to reach an agreement already proved to be very difficult before the crisis. In any case, the Commission will now have to adjust the MFF to deal with the crisis and its aftermaths. A new proposal will have to take into account the need for a European recovery plan. As a result, this fund will be imbedded in a community instrument.

The recovery fund will be operated through the European Commission and is thereby becoming an institutional decision. If the Eurogroup has been dealing with the current crisis and urgency, the discussion on recovery is about rebuilding our economies once the sanitary crisis has been overcome. With the leeway given to the Commission, the discussion has been shifted from an intergovernmental institution – where countries’ interests are defended – to a European response setting legitimacy from the European Union. While it is not apparent at first, politically, this shift is not insignificant. Indeed, the approach towards problem solving has changed. Where the EU only intervened to coordinate the action of EU countries, now a European response is solicited.
Nevertheless, this shift could present some drawbacks. Given the short time the EU has to present its multiannual budget and not least, it’s limited ex ante power, the package could fall out shorter than an agreement reached between Member States right away.

In fact, the EU’s budget revenues are almost totally dependent on Member States’ contributions (+- 1% of GNI). There are no genuine own resources. Except for tariffs on imports, there are no European taxes that are directly affected to the budget. On the other side, expenditures mostly take the form of structural funds, development aid or grants – to public bodies as well as the private sector, NGOs, farmers under the common agricultural policy, research and Erasmus+. Finally, as the treaty obliges the EU budget to be in balance, there is no possibility for lending money. To increase the expenditures and allow for a recovery fund, Member States’ contributions would have to increase as well. Germany for instance has shown the will to increase its contribution, even though the question of the extend of it remains.

Eventually, the most important debates will be about how to spend the money, how to prioritise and supervise it. What companies will the EU want to boost? How much will be invested in the Single Market? Certainly, the twin transition towards a greener and more digital EU will play a major role [3] and aid from the recovery plan could be conditional on the Commission’s political priorities: strategic autonomy to face geopolitical shifts; climate neutrality by 2050; and shaping Europe’s digital future. The Commission already set the direction in its Industrial Strategy presented on 10 March [4] and could accelerate its implementation at the end of the pandemic.


[1] https://www.consilium.europa.eu/en/press/press-releases/2020/04/09/remarks-by-mario-centeno-following-the-eurogroup-videoconference-of-9-april-2020/

[2] https://www.consilium.europa.eu/en/press/press-releases/2020/04/23/conclusions-by-president-charles-michel-following-the-video-conference-with-members-of-the-european-council-on-23-april-2020/

[3] https://www.consilium.europa.eu/media/43384/roadmap-for-recovery-final-21-04-2020.pdf

[4] https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/european-industrial-strategy_en

Angela Lo Mauro
Conseillère affaires européennes auprès de la FEDIL