When the EU launched its long-term budget (The multiannual financial framework covering 2021-2027), which was adopted 17 December 2020, together with its recovery plan NextGenerationEU (NGEU), the temporary instrument designed to boost the recovery of the pandemic, it was the largest stimulus package ever financed in Europe. The amount is a staggering EUR 2.018 trillion to help rebuild a post-COVID-19 Europe.
The NGEU plan is a more than EUR 800 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the pandemic and to start building a more resilient, sustainable and healthier society capable of better facing future global health and economic threats according to the EU’s Recovery plan for Europe.
The InvestEU Programme, which is suited to provide long-term funding to companies and to support EU policies in a recovery from a deep economic and social crisis, will receive half of its budget, corresponding to EUR 6.07 billion, from the NGEU plan.
The objective of InvestEU is to carry out investments in sustainable infrastructure, research and innovation, digitisation, SMEs and mid-caps; and social investment and skills, across the EU according to The EU’s 2021-2027 long-term Budget and NextGenerationEU. The recipients are public and private investors and project promoters, SMEs and mid-caps, service providers and recipients of microfinance. InvestEU ensures investors stay focused on the EU’s long-term priorities such as the European Green Deal and the digitisation challenge.
From headline to the SMEs accounts
It seems clear that InvestEU can provide crucial support to companies in the recovery phase, but I’m curious to see how the recovery plan will be executed in real life.
We know that the European Investment Bank (EIB) remains a privileged implementing partner for InvestEU, implementing 75% of the EU guarantee. The EIB makes money available through different instruments and provides lists of local banks with access to these funds. Moreover, the EU member states will be able to implement part of their National Recovery and Resilience Plans via InvestEU. But there’s still a long road to the SMEs accounts.
The focus from the EU on the recovery of SMEs is definitely positive and will help bring European entrepreneurs back on track. What we’re still waiting to see is the actual roll-out of the InvestEU funds – e.g., when will the SMEs receive these funds?
Finally, I’m curious to see how the EU will avoid distortive competition particularly towards private investment funds due to the recovery plan. Only time will tell.
// Daniel Hansen, CEO & Founder, OMNIA Global