The Next Generation EU Financial Recovery Program

Next Generation EU is a recovery plan for the European Union, the scale of which is unprecedented in European history.  750 Billion euros are due to be put to revitalize the European Union after the shock suffered by the Coronavirus crisis, and towards the necessary re-structuralization of the Union to make it better equipped to solve tomorrow’s challenges. In the words of the European Commission President Ursula von der Leyen: “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 funds will be used to achieve the 3 key aims of the recovery program which are: “Supporting the Member States to recover”, “Kick-starting the economy and helping private investment”, and “Learning the lessons from the crisis”.

According to the current negotiation, the next generation EU recovery program will allocate 390 billion in grants (coupled with more funds allocated in the form of loans) given to the countries that have been impacted the most severally by the coronavirus crisis. The EU, constituting of the member states, will borrow this money as a whole, which is a huge step towards the fiscally unified EU.

The money will be borrowed from the financial markets using the comities’ strong credit rating and will be dispensed in from or grants and loans to the member states.  Crucially, the funds will not be passed on to the member states as a general financial injection but will be unlocked in the form of reforms, where each sector that falls under one of the objectives of the recovery plan will receive funding for a proposed plan of reform.

Amongst the overarching aims of the recovery programs is the stabilization and then subsequent growth of the EU economy; this will be achieved by investing in sectors of interest. Industries in these sectors can hope to experience accelerated progress and dynamic market growth, with the EU backing the initiatives. President Ursula von der Leyen outlined the importance of supporting struggling businesses on her introduction of the next generation EU program speech by saying: “Next-generation EU will help those perfectly healthy companies that have made the right decisions and investments over the decades but that find themselves at risk now because competition in other member states has better access to public or private money to get fresh capital”.

An investment in the EU economy of this magnitude can fast track the EU and the member states that make it up into the next age and help it grow the industries that will be crucial in tomorrow’s world.  While a healthy and strong EU, with a growing market and enough money to invest, is likely to have a net positive effect on the EU based businesses in general, it will be the businesses in key industries that might feel the helping hand of the EU commission the fastest. Ursula von der Leyen mentioned specific industries such as precision farming, AI research and development, Green energy, and healthcare that are bound to receive attention.

While the Next-generation EU is a recovery program that acts mostly on the level of the member state governments, the revitalization of dormant industries will create many opportunities for small and large businesses alike. Some businesses in sectors that are specifically targeted might see more direct aid. The influx of 750 billion euros into the EU market will however undoubtedly have a noticeable effect that will resonate all around the continent. If the Next Generation EU recovery program is successful, the EU can expect major improvements in the coming years.

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