Reconstruction Fund (EU)

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The Reconstruction Fund ( French Fonds de Relance , English Recovery Fund , also NextGenerationEU called) is a stimulus package of the EU , which in the course of COVID-19 pandemic was vorabschiedet 2020th The fund has a volume of 750 billion euros , which was raised on the capital market through joint European bonds . The money is to be given to regions and economic sectors between 2021 and 2023 that have been particularly affected by the economic crisis since 2020harmed, are disbursed in the form of loans and non-repayable grants . In addition, a record financial framework of over EUR 1 trillion was approved for the EU budget . It is thus the largest stimulus package in Europe of all time.

What is new about the proposal is the fact that for the first time the EU as a whole is going into debt. The implementation decided by the European Council on July 21, 2020 will give the EU a new financial instrument . In the long term, the repayment will be made through the EU budget. With regard to liability, it is provided that each country is only liable for its share of the reconstruction fund. The fund was formally established on February 12, 2021.

History of origin

prehistory

The European Central Bank decided to deal with the Corona-induced economic crisis a running until the end of 2020 aid package called Pandemic Emergency Purchase Program (short PEPP ) to issue bonds worth 750 billion euros to buy in addition.

On April 9, 2020, the EU states agreed on an aid package worth around 540 billion euros, the credit lines from the ESM euro rescue package (240 billion euros), a guarantee fund for corporate loans from the European Investment Bank (200 billion euros) and includes a European short-time work benefit called “ Sure ” (100 billion euros). According to a spokeswoman for the European Commission, the individual members of the European Union (EU), including the EU's 540 billion euro aid package, mobilized a total of 3.4 trillion euros as of April 2020 in order to contain the economic consequences.

An additional reconstruction fund for the time after the pandemic, which could be financed via joint EU bonds (so-called “corona bonds”, analogous to the “euro bonds” from the time of the euro crisis ) was discussed further . The discussion was controversial both at the European level and in the EU member states. While France , Italy and Spain, for example , support this, the Netherlands , Austria , Denmark and Sweden (the “thrifty four”) in particular rejected such a solution. In Germany, large parts of the Union parliamentary group opposed it, while Bündnis 90 / Die Grünen supported them. Chancellor Angela Merkel had also first spoken out against it.

On May 18, 2020, however, Angela Merkel and Emmanuel Macron proposed an aid fund for EU countries amounting to 500 billion euros, which the EU Commission would have borrowed on the financial market. According to newspaper reports, a major reason for the German government's change of opinion on the question of whether loans or grants should be granted was the decision of the Federal Constitutional Court on May 5, 2020 with regard to the European Central Bank. Austria, Sweden, Denmark and the Netherlands published a counter-proposal, the main difference being that the money should be given to the member states in the form of cheap loans.

European Commission proposal

Ursula von der Leyen spoke on May 13, 2020 at the plenary session of the European Parliament about a plan for the reconstruction of the economy. She mentioned that the European Parliament has a say in an EU program for reconstruction. The plan should have "three pillars":

  1. The bulk of the funds will be spent under the European Semester to fund major public investments and reforms, supporting the transition to a 'climate neutral, more digital and resilient Europe'.
  2. More economic growth and private investments, with von der Leyen mentioning the planned InvestEU fund , which is expected to trigger more than EUR 650 billion in additional investments across the EU from 2021 to 2027, and a new instrument for strategic investments (e.g. for investments in pharmaceutical Sector ).
  3. Programs that have proven themselves in the crisis are to be funded.

On Wednesday, May 27, the von der Leyen Commission proposed a reconstruction fund (“ Next Generation EU ”) of 750 billion euros, which should consist of 500 billion euros in grants and 250 billion euros in cheap loans for the member states. The fund is to be part of the Multiannual Financial Framework (MFF), the European Union's budget of at least five years from 2021 . According to the Commission, the money should not be repaid before 2028 and not after 2058. It could be raised through additional income, such as the expansion of EU emissions trading to include shipping and air traffic, a border adjustment measure (English: Border Carbon Adjustment ), a digital tax and other options. This proposal was submitted to the European Council for decision.

Result of the negotiation of the European Council

The 27 EU governments agreed on July 21, 2020 not to change the total of 750 billion euros. In response to pressure from Austria, Sweden, Denmark, the Netherlands and Finland, it became suitable to pay out 390 billion euros in grants and 360 billion euros in the form of repayable loans. It was also agreed that the funds should be linked to reforms. Should a government suspect that a state is not adequately meeting its reform obligations, it can trigger a mechanism for checking, which ultimately stops further payments to the accused country. Furthermore, the premium discounts in various countries have been increased instead of abolishing them, as the EU Commission is striving to do.

The reconstruction fund will initially be financed through the issue of new debt bonds by the EU as the issuing body. These debts are to be paid off gradually from 2027 to 2058. Among other things, a digital , plastic and CO 2 border tax that has yet to be introduced was decided at EU level. Other proposals of the European Commission is a financial transaction tax and a common corporate income - tax base .

Since the EU commits the debts, but does not itself assume liability, the member states are ultimately the guarantors. It was therefore decided that each country is only liable up to its own share of the EU budget. For Germany that would be up to 27% of the approved 750 billion euros. This corresponds to 202.5 billion euros in the event that the repayment by the EU does not go as planned.

The majority of the reconstruction fund (672.5 billion euros) will be paid out through a new “construction and resilience facility”, the remaining 77.55 billion euros through existing EU programs (see table). 70% of the money is to be paid out between 2021 and 2022, the remaining 30% in 2023. The allocation key to the individual member states (see graphic) is the unemployment figures for 2021-2022 and the total loss in GDP between 2020 and 2022 for 2023.

Use of the funds
Facility purpose Volume (in billion €)
Buildup and Resilience Facility Support for sustainable reforms and investments in EU countries through loans (€ 360 billion) and grants (€ 312.5 billion), with a focus on renewable energies (see European Green Deal ), energy efficiency , electric mobility , broadband expansion , digitalization of administration , Cloud computing and digital education . A total of 37% of the funds are to be used for the GreenDeal and 20% for digitization. 672.5
ReactEU As part of the so-called “Investment Initiative” (CRII +), all funds from the Cohesion Fund that have not yet been used may be mobilized unbureaucratically “in order to secure jobs and cushion the effects of the crisis on the economy and society”.

The funds are provided by

47.5
Horizon europe Promotion of research , development and innovation 5.0
InvestEU Promotion of investments in the EU (successor to the European Fund for Strategic Investments ) 5.6
Rural development The European Agricultural Fund for Rural Development (EAFRD) supports strategies and projects for rural development under the Common Agricultural Policy . 7.5
Just Transition Fund As part of the European Green Deal, the fund aims to promote the transition to a climate-neutral economy. The main aim is to diversify the economy and adapt to a changing labor market. 10.0
RescEU Strategic supply of medical equipment such as ventilators and protective masks . 1.9
Relative share of the aid package per member country (as a percentage of GDP )
_ grants
_Loans
** Countries hit particularly hard

classification

Werner Mussler speculated in the FAZ that the two heads of state also want to use the instrument to establish a new European budget and financial architecture. Ulrich Ladurner referred in the ZEIT on a ban in the EU Treaties, may not raise its own debt, according to the institutions of the EU - which would make a reform of the EU treaties required. One goes in the direction of communitisation of the debts.

The economist Daniel Stelter noted that the average private wealth in Italy and Spain, according to data from 2019, was significantly higher than that in Germany and that the tax burden in both countries was significantly lower. In this way, the two states could access the assets of their citizens instead of being financed by other EU states. However, this option is not being discussed in Italy and Spain.

Discussion of the detailed questions

Various proposals for the distribution of the funds from the fund were put forward, the Center for European Economic Research showed various approaches in mid-May 2020:

  • Southern European countries therefore preferred a distribution according to the level of the recession - the collapse of the gross domestic product in 2020. Austria, Luxembourg and Poland would be the countries that would be relatively most heavily affected.
  • According to the analysis, Eastern European countries would demand a distribution including unemployment figures. Germany, Denmark, Austria and Luxembourg bear the greatest burdens in terms of their GDP.

Bruno Le Maire , French Minister of Economy and Finance, said on May 19 that after the French government's presentation, the aerospace industry , car manufacturers and tourism should be supported.

Web links

Individual evidence

  1. ↑ EU summit: Agreement on historic Corona package is in place. In: Deutsche Welle. July 21, 2020, accessed August 4, 2020 .
  2. ↑ a b c d European development plan. EU Commission, accessed on February 9, 2021 .
  3. ↑ a b c "We pulled us together" - EU summit agrees on historic Corona package world of July 21, 2020
  4. ↑ Christoph Prantner, Berlin: “Mercron” plan: Hardly any criticism of EU reconstruction funds . In: Neue Zürcher Zeitung . ( nzz.ch [accessed on May 26, 2020]).
  5. ^ Badische Zeitung: Corona-Aufbaufonds is ready to go - Economy - Badische Zeitung. Retrieved February 15, 2021 .
  6. ↑ Anja Ettel, Holger Zschäpitz: EZB is bringing out a new bazooka in the fight against the virus. In: Welt.de. March 19, 2020, accessed April 3, 2020 .
  7. ↑ What's in the EU's Corona package. In: n-tv.de. April 10, 2020, accessed April 25, 2020 .
  8. ↑ EU wants to mobilize 100 billion euros for short-time work. In: spiegel.de. April 2, 2020, accessed April 25, 2020 .
  9. ↑ Fight against corona crisis: EU and member states have mobilized 3.4 trillion euros. In: Der Spiegel. April 20, 2020, accessed April 25, 2020 .
  10. ↑ Kurz und Co. want "Loans for Loans" , zdf.de, May 23, 2020, accessed August 25, 2020
  11. ↑ Union is storming against corona bonds. In: n-tv.de. April 9, 2020, accessed April 25, 2020 .
  12. ↑ Merkel approves EU debts on a grand scale for the first time. In: tagesspiegel.de. Retrieved August 4, 2020 .
  13. ^ Victor Mallet (Paris), Guy Chazan (Berlin), Sam Fleming (Brussels): The chain of events that led to Germany's change over Europe's recovery fund. In: Financial Times. May 22, 2020, accessed on May 24, 2020 .
  14. ↑ WORLD: Merkel-Macron-Plan: The “thrifty four” present an alternative . In: THE WORLD . May 23, 2020 ( welt.de [accessed May 27, 2020]).
  15. ↑ Deutsche Welle: Coronavirus: France, Germany propose € 500 billion recovery fund. May 18, 2020, accessed May 24, 2020 (UK English).
  16. ↑ InvestEU. In: European Council. Retrieved May 25, 2020 .
  17. ↑ Speech by President von der Leyen at the plenary session of the European Parliament on the new MFF, own resources and the plan for the reconstruction of the economy. In: European Commission . May 13, 2020, accessed May 25, 2020 .
  18. ^ Speech by President von der Leyen at the European Parliament Plenary on the EU Recovery package. European Commission , May 27, 2020, accessed on May 27, 2020 .
  19. ↑ Europe's moment: Repair and prepare for the next generation. European Commission , May 27, 2020, accessed on May 27, 2020 .
  20. ^ Financing the Recovery plan for Europe. European Commission , May 27, 2020, accessed on May 27, 2020 .
  21. ↑ tagesschau.de: What the EU summit decided. Retrieved July 21, 2020 .
  22. ↑ Daniel Stelter, manager magazin: Reconstruction funds: Germany and France put prosperity at risk - manager magazin - politics. Retrieved July 21, 2020 .
  23. ↑ COVID-19: Council agrees its position on the Recovery and Resilience Facility Retrieved November 15, 2020.
  24. ^ Recovery and Resilience Facility. Retrieved February 10, 2021 .
  25. ↑ Investment initiative to deal with the Corona crisis. European Council, accessed on 10 February 2021 .
  26. ↑ The program InvestEU: Questions and Answers. EU Commission, accessed on February 10, 2021 (English).
  27. ↑ investEU. Retrieved February 10, 2021 .
  28. ↑ https://ec.europa.eu/echo/what/civil-protection/mechanism_en
  29. ↑ Oliver Picek, Spillover Effects from Next Generation EU in: Intereconomics, Review of European Economic Policy, Volume 55, 2020, No. 5, pp. 325–331.
  30. ↑ Ulrich Ladurner: "The debate about an EU reform gets new momentum" Die Zeit from May 24th, 2020
  31. ↑ "Of course we have to help Italy - but intelligently" manager-magazin.de of April 4, 2020
  32. ↑ a b c Tobias Kaiser: "This bill shows where the Merkel-Macron billions are going" welt.de of May 25, 2020
  33. ↑ EU recovery fund should support aerospace sector: France's Le Maire . In: Reuters . May 19, 2020 ( reuters.com [accessed May 24, 2020]).