NEXT GENERATION EU – The biggest package of stimulus measures ever

The EU’s long-term budget, together with the Next Generation EU, will be the largest stimulus package ever financed by the EU budget. It’s 1.8 billion EUR to help rebuild post-COVID-19 Europe.

The Next Generation EU is a temporary 750 billion euros recovery instrument that will enable the Commission to raise funds on the capital market. It will help to repair the immediate economic and social damage caused by the coronavirus pandemic. Post-COVID-19 Europe will be greener, more digital and more resilient and better prepared for current and future challenges.

The new long-term budget will reinforce flexibility mechanisms to ensure its ability to respond to unforeseen needs. It is a budget that is appropriate not only to current realities, but also to the uncertainties of the future.

On November 10th 2020, an agreement was reached in the Council between the European Parliament and the EU countries on the EU’s next long-term budget and the Next Generation EU. This agreement will reinforce specific programs under the long-term budget for 2021-2027 for a total of 15 billion euros.

The purpose of the Recovery and Resilience Mechanism, available under the Next Generation EU, is to mitigate the economic and social impact of the coronavirus pandemic and to make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities for ecological and digital transitions. Member States are preparing their recovery and resilience plans to access funds under the Recovery and Resilience Mechanism.

Next Generation EU also includes € 47.5 billion for the REACT-EU initiative, an initiative that continues and extends crisis response and crisis repair measures through the Response Investment Initiative to the Coronavirus Crisis and the Coronavirus + Crisis Response Investment Initiative.

These additional funds will be made available in 2021-2022 from the Next Generation EU instrument and through a specific review of the current financial framework.

Next Generation EU will also contribute additional funds to other European programs or funds, such as Horizon 2020, InvestEU, rural development or the Fund for a Just Transition (FTJ)

The national Recovery and Resilience Plan is guided by national strategies and policies, as part of the European response framework and in line with the European priority given to climate and digital transitions.

The Plan also benefits from the “Strategic Vision for the Portugal 2020-2030 economic recovery plan” developed by Professor António Costa Silva (at the request of the Portuguese Government) and which was the subject of a wide national debate, having deserved a wide consensus regarding the overall priorities listed.

The document identifies the strategic options that should be translated into measures that can promote the change of structural constraints that inhibit and limit the country’s economic development.

Response to structural constraints:

  • Putting companies at the center of the economy’s recovery, turning them into the real engine of growth and wealth creation;
  • Creating conditions for the diversification of the economy, making it more resilient , stimulating the reorganization of logistics and production chains, aligning the country’s industrial clusters with the concept of Europe’s “strategic autonomy”; 
  • Diversifying the economy in conjunction with changing the specialization profile of the production system national;
  • Responding to structural limitations with strong investment in science, research and technological development, education and training, quality of management and infrastructure; 
  • To counter market limitations internal market, solving the problem of the small size of companies and defining mechanisms for consolidating and concentrating companies; 
  • Facing the aging of the Portuguese population; 
  • Creating conditions to build an inclusive and that works in favor of the majority of people;
  •  Supporting the treasury of economically viable companies; 
  • Betting on a better quality State, promoting its digital skills and improving all interaction with citizens and businesses; 
  • Facing the sharp decline in investment and the destruction of capital caused by the crisis; 
  • Increase the effectiveness of regulators; 
  • Combat the slowness of tax justice and licensing processes

Financial instruments available in the period 2020-2029:

source: Plano de Recuperação e Resiliência

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