INCENTIVES ALERT: European Union Unveils €750 Billion Stimulus Proposal

European Union Unveils €750 Billion Stimulus Proposal

New funding to include more than €560 billion in grants and loans to support businesses and individuals through Member States

As a direct response to the economic crisis caused by the COVID-19 pandemic, the European Commission has proposed a stimulus package of more than €750 billion in grants, loan financing, and other financial mechanisms.

Known as ‘Next Generation EU’, the funding will be primarily through borrowing on the financial markets. The funds will be repaid over time through future budgets, beginning no sooner than 2028.  Repayments could be prolonged until 2058.

In a release from the European Commission, the Next Generation EU will have three major pillars to support businesses and individuals during these challenging economic times These pillars include the following:

1. Support to Member States with investments and reforms:

  • €560 billion in a new Recovery and Resilience Facility for the most affected regions of Member States, which will include a grant facility of up to €310 billion and will be able to make up to €250 billion available in loans.
  • Under the REACT-EU policy programme, the funding will provide an additional €55 billion for socio-economic initiatives, including levels of youth unemployment.
  • €40 billion for the Just Transition Fund up to assist Member States in accelerating the transition towards climate neutrality.
  • €15 billion increase in funding for the European Agricultural Fund for Rural Development.

2. Kick-starting the EU economy by incentivising private investments:

  • Aiming to unlock €300 billion in solvency support for companies, the funding would create a new Solvency Support Instrument with a budget of €31 billion.
  • €15.3 billion for the InvestEU programme to mobilise private funding in investment projects across the region.
  • €15.3 billion for a new Strategic Investment Facility through the InvestEU programme to generate investments of up to €150 billion.

3. Addressing the lessons of the crisis:

  • €9.4 billion to establish EU4Health, new health programme to strengthen health security and prepare for future health crises.
  • €2 billion in supplemental funding for rescEU, the EU’s Civil Protection Mechanism.
  • €94.4 billion for Horizon Europe to fund vital research in health, resilience and the green and digital transitions.
  • Supporting Europe’s global partners through an additional €16.5 billion for external action, including humanitarian aid.
  • Other EU programmes will be strengthened to align the future financial framework fully with recovery needs and strategic priorities.
  • Other instruments will be reinforced to make the EU budget more flexible and responsive.

Next Generation EU, along with the EU budget for 2021-2027, will be addressed at the level of the European Council by July.  Ultimately, the programme will need to be approved by the Member States.

For additional information on these programmes, along with other emergency relief mechanisms around the world, please visit Hickey’s real-time tracking microsite: https://incentives.hickeyandassociates.com

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