Yesterday the Commission presented the mid-term evaluation of the Recovery and Resilience Mechanism (MRR), the EU recovery instrument at the heart of the €800 billion NextGenerationEU plan.
He Recovery and Resilience Mechanism o MRR was created in February 2021 with unprecedented scale and ambition, and with the dual objective of helping Member States recover from the COVID-19 pandemic and strengthening their resilience, making our economies and societies more ecological, digital and competitive. In short, it is about being prepared for the future. It has also been vital in addressing pressing problems, such as the knock-on effect of Russia’s war of aggression against Ukraine.
In their recovery and resilience plans (RRPs), Member States planned reforms and investments:
- in line with the EU’s green, digital and social policy priorities, and
- adapted to address the national challenges outlined in the European Semester through country-specific recommendations (CSRs).
The mid-term evaluation marks the mid-term of the RRF and indicates how this mechanism has achieved its objectives to date.
Recovery and Resilience Mechanism: a real difference in practice
Member States are carrying out the reforms and investments contemplated in their RRPs. By the end of 2023, the Commission had already deemed more than 1,150 milestones and objectives satisfactorily met. These steps in the implementation of reforms and investments have translated into changes for the better and tangible practical results.
With the help of Recovery and Resilience MechanismFor example, more than 28 million megawatt hours (MWh) of energy consumption have been saved. More than 5.6 million new households have access to the internet through very high-capacity networks, and almost 9 million people have benefited from protection measures against climate-related disasters, such as floods and forest fires.
To date, almost €225 billion in funds have been paid to Member States from the Recovery and Resilience Mechanism or MRR. €67 billion in pre-financing was disbursed to boost the implementation of reforms and investments and alleviate the short-term effects on Member States’ budgets of the COVID-19 crisis and, subsequently, the energy crisis .
The Commission and Member States, together with the European Parliament and the Council, have worked closely to achieve these results.
Recovery and Resilience Mechanism: effective help for the EU’s economic recovery
The Commission estimates that around half of the planned increase in public investment between 2019 and 2025 is due to investments financed from the EU budget, and in particular the RRF. Unlike previous crises, public investment in Europe increased during the COVID-19 pandemic and subsequent energy crisis, rising from 3.0% in 2019 to an estimated 3.3% in 2023. In 2024, the public investment reaches 3.4% of GDP.
Most of the plans were prepared quickly in 2021, thus paving the way for substantial pre-financing, and implementation also began quickly. Economic activity returned to pre-pandemic levels and unemployment fell to record lows of around 6%.
Economic modeling carried out by the Commission indicates that NextGenerationEU could increase real EU GDP by up to 1.4% in 2026 compared to the scenario of no such recovery instrument. These results do not include the significant expected pro-growth effect of the reforms contemplated in the recovery plans, an effect that occurs in the long term. Employment in the EU is expected to increase by up to 0.8% in the short term.
The Recovery and Resilience Mechanism is an agile instrument
Member States have used the RRF strategically to address old challenges and respond to new ones.
By the end of 2023, the Council had endorsed revisions to the 27 plans to maximize their impact in a changing context. They were updated to help address rising energy prices as a result of Russia’s war of aggression against Ukraine, high inflation and supply chain disruptions.
In Greece, Slovenia and Croatia, plans were also updated to contribute to the response to natural disasters, which, apart from the human suffering they caused, made it difficult to implement certain reforms and investments.
These updates significantly increased the amount of EU support to our economies by almost €150 billion, including more funding for 23 REPowerEU strands and €125.5 billion of additional aid in the form of loans. In total, it is expected that the Recovery and Resilience Mechanism provide 650 billion euros of financial aid to our economies.
Recovery and Resilience Mechanism is a boost to carry out structural reforms
Member States have used the RRF to record great progress in meeting the country-specific recommendations made under the European Semester. The fact that the Recovery and Resilience Mechanism be results-based, as payment of EU funds depends on meeting agreed milestones and objectives.
It has demonstrated its ability to stimulate the implementation of long-awaited reforms in many different areas, especially in support of the ecological and digital transitions and to improve social and institutional resilience. Furthermore, with the implementation of the REPowerEU strands, we expect planning and permitting procedures to be streamlined, especially for renewable energy and energy efficiency projects.
The percentage of 2019-2020 country specific recommendations (CSRs) in which Member States had recorded at least “some progress” increased between 2021 and 2023 from 52% to 69%. This represents a considerable improvement compared to previous years.
Recovery and Resilience Mechanism: a great boost to the ecological transition
He Recovery and Resilience Mechanism o MRR is a fundamental instrument to accelerate the EU’s ecological transition. All Member States have exceeded the 37% climate target, with some Member States dedicating more than 50% of their total plan to green plan objectives. In addition, the MRR supports social and employment policies, contributing to a fair ecological transition.
Charged to the chapters of REPowerEU of the recovery plans, another €60 billion in RRF funds will be allocated to the ecological transition. This will help save energy, accelerate clean energy production and diversify the EU’s energy supply, while boosting the manufacturing capacity of the net zero emissions industry.
Planned acceleration of the implementation of the Recovery and Resilience Mechanism
Plan revisions influenced the pace of execution of existing plans. However, execution continued to progress throughout 2023, with the number of payment requests submitted by the end of 2023 having doubled, from 27 to 54.
This positive trend is expected to continue as Member States drive implementation, knowing that the MRR lasts until 2026. The Commission is currently assessing eighteen payment applications. Twenty more are expected to be presented in 2024. With this in mind, the Commission plans to disburse more than €100 billion in new payments until the end of the year.
While it lasts, the MRR will promote, through national plans, the realization of numerous investments and reforms that will bring about changes for the better for citizens, businesses and the EU in general. The mid-term evaluation is accompanied by snapshots by country that show the most emblematic projects and reforms with the greatest impact contemplated in each recovery plan.
Lessons learned from the Recovery and Resilience Facility
The mid-term evaluation highlights the broad support of Member States and other stakeholders for the fact that the Recovery and Resilience Mechanism is based on performance.
Payment based on progress and results achieved, rather than depending on costs incurred, provides predictability and accountability to both Member States and the Commission. Rapid implementation and disbursements indicate that the RRF has supported Member States in times of crisis, and that the unique combination of investments and reforms contributes to making our economies better equipped for the future.
The mid-term evaluation also points out some aspects that could be improved. Sufficient flexibility is necessary in the formulation and execution of recovery and resilience plans to ensure their added value is maintained and their smooth implementation. Adequate administrative capacity in Member States is essential for the rapid implementation of the Recovery and Resilience Mechanismas well as the close participation of regional and local authorities, and also of the social partners.