On 26 May, European Commission President, Ursula von der Leyen presented its €750 billion recovery instrument called NextGeneration EU. The aim is to support the EU Members States as they try to manage the crisis and to promote investments in line with European priorities of climate neutrality, faster digitalization of economies, and social cohesion, by relying in large part on the inter-EU Member State transfer mechanisms that are central to the European model. Finance is to come from European debt issuance rather than from the individual Member States. The plan is seeking to convince the more frugal Member States, which are the most reluctant to adopt any form of debt mutualization. European solidarity will nonetheless be put to the test, as governments must unanimously adopt the measures, and the EU’s 27 national parliaments also have to ratify one of the measures central to the financing mechanism.
This plan is to take up the baton from the emergency measures put in place after the health crisis struck, namely the EUR 540 billion emergency plan. The European Commission has opted to integrate this recovery plan into the European budget and not create an ad hoc mechanism (e.g. an intergovernmental fund, as done previously). The structural instruments must also ensure member states act cohesively and align their individual response actions with the EU priorities of climate neutrality, digital transformation and social cohesion.
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