EU finance shame exposed: Germany using recovery fund for existing not new projects
WHO warns of 'over 500k' Covid deaths in Europe by spring
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The European Network for Economic and Fiscal Policy Research (EconPol) announced today the central findings of a new study on national recovery and resilience plans. It revealed that the two nations ranked worst for funnelling coronavirus cash from the EU’s Recovery and Resilience Facility (RRF) into pre-existing plans.
The RRF is aimed to mitigate the social impact of the pandemic on member states.
The European Commission says that it is designed to “implement reforms and investments that are in line with the EU’s priorities”.
It makes available €723.8billion (£617.8billion), comprising €385.8billion (£329.3billion) in loans and €338billion (£288.5billion) of grants.
However, EconPol said that analysis shows that there are “substantial variations” between different countries as to how this money is spent.
The share of investment for new projects is the smallest in Austria, where just 19 percent is earmarked for fresh schemes.
Germany ranks only marginally higher, on 20 percent.
Belgium, on the other hand, has the highest share, with 77 percent of investment going into new projects.
Spain is on 40 percent, while Italy and Portugal invest 64 percent of their funding in new projects.
Mathias Dolls, one of the co-authors of the study, commented: “This suggests that the EU funds are mainly used to replace national spending that governments would have made anyway.”
Daniel Gros and Francesco Corti, the other co-authors of the study, said: “The idea of the funds provided by the Recovery and Resilience Facility was to finance new projects to supplement, not to supplant national efforts.”
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The RRF came into effect on February 19 this year, and will last until December 31, 2026.
According to a transparency tool first published by the EU last week, many EU states have used the mechanism to borrow billions.
In some cases, the amount is a large proportion of the country’s GDP.
Greece’s funding accounts for over 16 percent of its GDP, 13 percent in Romania, and nearly 11 percent in Italy.
Germany is set to receive €25.6billion (£21.9billion) in total from the RRF over the lifetime of the recovery plan.
The country’s plan will invest in modernising hospital infrastructure, decarbonisation of the economy and digital improvements.
Meanwhile, Austria is expected to receive €3.5billion (£3billion) in grants under the RRF.
Much of the funds will be in green investments.
European nations are currently experiencing a fresh wave of Covid infections as the continent heads into winter.
Last week, the Netherlands announced a nationwide lockdown until January 14 amid concerns about the rise in the number of cases of the new Omicron variant.
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