The European financing of the French recovery plan
08 September 2021
CONTEXT
On April 21, 2020, the European Commission and the European Council presented a set of priority actions to tackle the effects of the Covid-19 crisis. This roadmap for recovery aims to develop a strong investment plan to help Member States re-launch their economy.
Photo credits: European Commission
On May 27, 2020, Commission President Ursula von der Leyen proposed to MEPs to strengthen the financing capacities of states through the revision of the Multiannual Financial Framework (MFF) and the implementation of a new recovery instrument, Next Generation EU, with 750 billion euros to be borrowed by the Commission on behalf of the European Union (EU).
The European Parliament and the Council adopted, in December 2020, the regulation setting the EU MFF 2021-2027 with a budget of 1,074.3 billion euros, combined with 750 billion euros from Next Generation EU.
Following the adoption of the February 10, 2021 regulation establishing a technical support instrument, Member States had until April 30, 2021 to submit their national recovery plans. These plans aimed to set out reform and investment programs through 2026 in six priority action areas:
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The ecological transition,
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Digital transformation,
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Smart, sustainable and inclusive growth and employment,
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Social and territorial cohesion,
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Health and resilience,
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Policies for the next generation.
Bruno Le Maire presented the French National Recovery and Resilience Plan (NRRP) to the Commission on April 28, 2021.
The French NRRP aims to achieve three main priority objectives: greening the economy, making the productive system more competitive, and strengthening social and territorial cohesion. France wished to receive 39.4 billion euros from the EU to finance the 100 billion euro Plan.
On June 23, 2021, the Commission adopted the proposal for a Council implementing decision stating that "the assessment of the recovery and resilience plan of France (…) is approved”.
On July 13, 2021, France formally received an agreement from the Economic and Financial Affairs Council (Ecofin) allowing it to use a first part of the European funds.
On August 19, 2021, the European Commission allocated 5.1 billion euros to France as a first disbursement, representing 13% of the total amount allocated to the Member State. Before the end of 2021, an additional 3.41 billion euros should be allocated to France, if the planned reforms and measures are implemented.
Joint investment for the future of the EU27
Next Generation EU is an instrument allowing all Member States to access the financial resources necessary for their recovery thanks to the European Union's borrowing capacity. The European Commission has committed itself to borrow the necessary amounts for the 27 Member States at more advantageous rates compared to the national capacity.
The recovery plan, described as the EU's Marshall Plan, will be partly financed by a set of EU own resources such as the carbon border adjustment mechanism, the revised EU emissions trading system and the digital tax[1].
The funding of the recovery plan is thus closely linked to a set of central EU policies such as the Green Deal – cf. Fit for 55 presented on July 14, 2021 by the European Commission – and the digital strategy.
Priorities defined in the national France Relance plan
The national France Relance plan is structured around nine components identified as priorities to ensure the resilience, digitization and greening of the economy. The public authorities, with the support of the private stakeholders whose expertise will be required to carry out the French economic recovery, have committed to implement the following investment and reform priorities:
Each of these priorities can be broken down into a precise objective and series of specific policy initiatives and investments. Focus on the investments and reforms defined by France in the field of green energy and technologies:
Funding schedule[2]
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By 31 December 2022: an amount of 24.3 billion euros is available to be legally committed
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1st January-31 December 2023: a further amount of 15 billion euros is available to be legally committed
These payments will be granted to France on the condition that the State achieves the objectives defined in the NRRP, attesting to the implementation of reforms and investments.
Contribute to the implementation of the French recovery plan
Lighthouse Europe is boutique consultancy specialized in European strategy and public affairs, based in Paris and Brussels. We assist our clients in the analysis of French and European policy priorities, particularly in the digital and environmental sectors.
France’s influence in the EU decision-making process will be even more important as the Member State will assume the Presidency of the Council of the European Union from January to June 2022. If you would like to learn more about how the French recovery plan and distribution of EU funds may impact your business, please contact us.
More information: info@lighthouseeurope.com
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By Thara Safi Couplet
[1] These own resources should be implemented from 2023.
[2] Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the recovery and resilience plan for France COM/2021/351 final, Article 2