Thread by @gregclaeys

Main elements of EU Recovery Plan:
- €1100bn for 2021-27 MFF
- €750bn for #NextGen recovery instrument ie 560bn for the Recovery and Resilience Facility (ex. BICC it seems) + 55bn for ReactEU (top-up to cohesion funds) + 31bn for Solvency Support Instrument (equity fund) 1/n

In addition, the communication (ec.europa.eu/info/sites/inf…) mentions a doubling of InvestEU (including for strategic invt), 9.4bn for EU4Health, 40bn for the JTF, but not totally clear what is in the MFF and what is in the NextGen recovery instrument (most probably from MFF) 2/n

As usual we need to be careful about summing up these numbers: the MFF number is for 7 years but the length of the NextGen programme (borrowing and spending) is not mentioned in this document, we will have to wait for other docs. It seems the details will be in "COM(2020)442" 3/n

Now we have more documents: ec.europa.eu/commission/pre…, there is even a whole "website for the MFF proposals" ;-) 4/n

The details are in this doc (ec.europa.eu/info/sites/inf…). Next Generation will start in 2021 and last until end 2014. In the €560bn of the Recovery and Resilience Facility, 310bn will be grants and 250bn loans. In 2020 11.5bn of current MFF money will be used to start spending 5/n

- ReactEU (5bn in 2020, 50bn for 2021-24): similar to cohesion funds but with different allocation, geared towards most hit by COVID crisis.
- Solvency Support Instrument (5bn in 2020, 26bn 2021-24)
- Provision for InvestEU Guarantee fund increased to €15.3bn (for next MFF) 6/n

So what do I make of all of this at this stage?
1) This is a quite significant plan and more importantly the EC is not using any wizard multiplier to reach the overall number, that's great news
2) The 2021-27 MFF €1100bn are not new and are in line with previous discussions 7/n

3) But the borrowing of €750bn of #NextGen over the next 3 years is new and is a big deal. In particular €500bn in grants is significant, as it represents 3.5% of EU GDP (more or less 1.2% per year). That's good! And it will be reimbursed much later from 2028 to 2058 8/n

This intertemporal smoothing through LT borrowing will finally increase the stabilisation property and macro impact of the EU budget, which is something we have been recommending for years. Great news on that front! 9/n

4) Given the length of the borrowing, another good element is that it means that we don't really know how much each country will pay to repay this debt and what the net benefits/contributions will be, which breaks down in part the poisonous "juste retour" logic 10/n

5) I still have some doubts about the relevance of the €250bn in new EU loans to MS. It's good to go bigger than for SURE because, as I said last week (bruegel.org/2020/05/the-eu…), the volume is crucial for the effect to be more than marginal on national public finances 11/n

6) Overall, I think the most important thing in today's proposal is that it shows that it is possible to borrow at a macro-significant scale at EU level to increase spending in EU programmes when there is a crisis (without using fake multipliers). This is the game changer. 12/n

Now, let's see how member states will react to the @EU_Commission's proposal. The ball is now in the EU Council's court and there will be tough discussions taking place in the next months. Let's hope this step forward is not followed by two steps back. 13/13 END