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Having the cake, but slicing it differently: how is the grand EU recovery fund allocated?

Posted On: Jul 23, 2020   |   Posted By: Bruegel

The grand EU budget deal reached by the European Council on 21 July 2020, which includes a one-time €750 billion recovery fund named ‘Next Generation EU' , is unprecedented. For the first time in its history, the EU will borrow from capital markets to finance expenditures throughout the Union.
The NGEU deal includes some notable modifications compared to the Commission's original proposal. It reduces the overall amounts of grants and guarantees and increases the amount of loans. It abolishes certain instruments, including all proposed funding for non-EU countries. And it alters the cross-country allocation method of the largest instrument, the Recovery and Resilience Facility .
In Table 1 I compare the overall amounts available for the various recovery instruments with the original proposal of the Commission.
In this post, I focus on the changes in the allocation key for the recovery instruments that was decided. Overall, the allocation key has shifted from favouring...

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