European Council conclusions on the recovery plan and multiannual financial framework for 2021-2027

On 21 July 2020, the European Council adopted conclusions on the recovery plan and multiannual financial framework for 2021-2027. EU leaders have agreed to a comprehensive package of €1 824.3 billion which combines the multiannual financial framework (MFF) and an extraordinary recovery effort under the Next Generation EU (NGEU) instrument. The MFF, reinforced by Next Generation EU, will also be the main instrument for implementing the recovery package to tackle the socio-economic consequences of the COVID-19 pandemic.

The size of the MFF - €1 074.3 billion - will allow the EU to fulfill its long-term objectives and preserve the full capacity of the recovery plan. New proposal brings some changes and cuts in the areas of health, migration, external action, InvestEU, HORIZON. The Just Transition Fund has been more than halved to €17.5bn - from the €40bn proposed in May by the EU Commission.
Next steps: European Parliament must give its consent to the next long-term EU budget.
EUbudget 2021-2027

Recovery fund

Next Generation EU will provide the Union with the necessary means to address the challenges posed by the COVID-19 pandemic. Under the agreement the Commission will be able to borrow up to € 750 billion on the markets. These funds may be used for back-to-back loans and for expenditure channelled through the MFF programmes. Capital raised on the financial markets will be repaid by 2058. €390 billion from the package will be distributed in the form of grants to member states and €360 billion in loans.

The amounts available under NGEU will be allocated to seven individual programmes:

  • Recovery and Resilience Facility (RFF)
  • ReactEU
  • Horizon Europe
  • InvestEU
  • Rural Development
  • Just Transition Fund and
  • RescEU.

Allocation from the Recovery and Resilience Facility (RRF)

The plan ensures the money goes to the countries and sectors most affected by the crisis: 70% under the grants of the Recovery and Resilience Facility will be committed in 2021 and 2022 and 30% will be committed in 2023 .

Allocations from the RRF in 2021-2022 will be established according to the Commission’s allocation criteria taking into account member states’ respective living standards, size and unemployment levels.

For 2023 allocations, the unemployment criterion will be replaced by the drop in GDP in 2020 and 2021.

Governance and conditionality

In line with the principles of good governance, member states will prepare national recovery and resilience plans for 2021-2023 . These will need to be consistent with the country-specific recommendations and contribute to green and digital transitions. More specifically, the plans are required to boost growth and jobs and reinforce the “economic and social resilience” of EU countries. The plans will be reviewed in 2022. The assessment of these plans will be approved by the Council by a qualified majority vote on a proposal by the Commission. The disbursement of grants will take place only if the agreed milestones and targets set out in the recovery and resilience plans are fulfilled.

If, exceptionally, one or more member states consider that there are serious deviations from the satisfactory fulfillment of the relevant milestones and targets, they may request that the President of the European Council refer the matter to the next European Council.

Climate action

30% of the total expenditure from the MFF and Next Generation EU will target climate-related projects . Expenses under the MFF and Next Generation EU will comply with the EU’s objective of climate neutrality by 2050, the EU’s 2030 climate targets and the Paris Agreement.

Rule of law

The Union’s financial interests will be protected in accordance with the general principles embedded in the Union Treaties, in particular the values referred to in Article 2 TEU. The European Council also underlines the importance of the respect of the rule of law. Based on this background, a regime of conditionality to protect the budget and Next Generation EU will be introduced.


Lump sum rebates on the annual gross national income-based contribution will be maintained for Denmark, Germany, the Netherlands, Austria and Sweden .

Own resources

EU leaders agreed to provide the EU with new resources to pay back funds raised under Next Generation EU. They agreed on a new plastic levy that will be introduced in 2021. In the same year the Commission is expected to put forward a proposal for a carbon adjustment measure and a digital levy, both of which would be introduced by the end of 2022.

The Commission would then come back with a revised proposal on the EU emissions trading scheme (ETS), possibly extending it to the aviation and maritime sectors. There may also be other new resources, such as a financial transaction tax. The proceeds of the new own resources introduced after 2021 will be used for early repayment of NGEU borrowing.

A €5 billion Brexit reserve will be established to support the member states and economic sectors hardest hit by Brexit.

European Council conclusions, 17-21 July 2020

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Great work, @andreja. How do you think we could connect this big picture with our own activities as a community? What should we be looking at?

More funding opportunities withint the next EU’s 7-year budget, if there will be no major cuts, proposed by the Council, to main programmes and activities of our interest. For now the Parliament does not accept the Council’s political agreement on the 2021-2027 MFF, they disapprove of the cuts made to future-oriented programmes and EP will have a final say before the 2021-2027 budget can enter into force. So probably there will be some changes within the MFF, including higher amounts on future-oriented MFF programmes like Horizon, InvestEU, LIFE, Erasmus+. EP highlights that flagship programmes are now at risk of experiencing an immediate drop in funding from 2020 to 2021; points out, furthermore, that as of 2024, the EU budget as a whole will be below 2020 levels, jeopardising the EU’s commitments and priorities, notably the Green Deal and the Digital Agenda; insists that targeted increases on top of the figures proposed by the European Council must single out programmes relating to the climate, the digital transition, health, youth, culture, infrastructure, research, border management and solidarity (such as Horizon Europe, InvestEU, Erasmus+, the Child Guarantee, the Just Transition Fund, Digital Europe, the Connecting Europe Facility, LIFE+, EU4health, the Integrated Border Management Fund, Creative Europe, the Right and Values programme, the European Defence Fund, the Neighbourhood, Development and International Cooperation Instrument (NDICI) and humanitarian aid). So we have to wait for the final agreement.
In the upcoming negotiations between Parliament and the Council, an agreement should be reached by the end of October at the latest for a smooth start of the EU programmes from 2021. In the case however that a new MFF would not be adopted on time they will adopt the programmes on the basis of the existing MFF, as foreseen by the Treaty (Where no Council regulation determining a new financial framework has been adopted by the end of the previous financial framework, the ceilings and other provisions corresponding to the last year of that framework shall be extended until such time as that act is adopted).

From the Recovery fund the money goes to the countries and the amount will depend on their national recovery and resilience plans for 2021-2023, so it will be harder to get some of that since these calls for proposals will target projects on low-carbon technologies and processes that contribute to mitigating climate change, etc. But it will depend on each call so probably there will be some possibility too within the employment, jobs, research, social innovation topics, etc.