Fewer subsidies and more loans, increased discounts for frugal and a mechanism to allow even a single state to block funds to a country if there were doubts about the effective implementation of the reforms. These new changes revolve around the new negotiation proposal on the Recovery Fund and the EU budget put on the table by the President of the European Council, Charles Michel. But the situation is still stalled and on Sunday at 12 there will be a new round.
The total volume of the Recovery remains fixed at 750 billion, but the balance between loans and grants is changed: the former rise from 250 billion to 300, while the subsidies drop from 500 to 450 billion. In particular, the InvestEU investment program (which drops from 30.3 billion to 11.5) and above all the 26 billion of the instrument for the solvency of companies, which is eliminated, paid for it. Less money also for ReactEU (from 50 to 45 billion), for the rural fund (from 15 to 10) for Horizon (from 13.5 to 11.5), for Health (from 7.7 to 5 billion) and the humanitarian assistance fund (from € 15.5 billion to 5). However, the “Recovery and Resilience Facility” is growing, ie the mechanism to support reforms in countries: from 560 billion to 625 billion.
On the reform controls front, Michel decided to insist on the so-called “emergency brake” proposed last night, but with a further correction to satisfy Rutte. The Council remains empowered to approve reform plans by qualified majority, but as far as monitoring is concerned, it will work like this: the Commission will take care of it, but “one or more Member States” will be able to raise doubts about the reforms of another country and ask the prime minister to address the issue “without delay”. In the meantime, “no decision on payments can be made until the Council or Ecofin” have made their views known.
The “rebates” also slightly increase, the discounts in the share of contributions to the budget of the Frugal Countries. And as regards the criteria for the distribution of resources, the mechanism 70-30 remains: 70% of the resources will be distributed according to unemployment levels 2015-2019, while the remaining share will be available only from 2023 based on the drop in the GDP in the 2020-2021 period. This morning Michel presented the new compromise draft in a mini-meeting with Angela Merkel, Emmanuel Macron, Giuseppe Conte, Pedro Sanchez and Mark Rutte. Instead, shortly after 11 o’clock the plenary meeting began for the discussion at 27 on the points of the new compromise.
Finally, a novelty that could be of interest to Italy: the funds will be available only from 2021, but they can be used retroactively for reforms adopted starting from February 2020, provided that they “respect the objectives”.