In December of 2020, the leaders of all European Union countries, the European Parliament and the European Commission agreed on a Recovery Plan to help repair the economic and social damage brought about by the COVID-19 pandemic.
Through the EU’s long-term budget, together with the temporary NextGenerationEU instrument, a total of € 2.018 trillion will help build a greener, more digital and more resilient Europe.
What is in the EU Recovery Plan?
The long-term EU budget, which was topped up to meet the COVID-related challenges, ensures that more than 50% of the Recovery Plan is dedicated to modernisation, through research and innovation, climate and digital transitions, and preparedness, recovery and resilience.
This forward-thinking package, in line with the European Green Deal, will fight climate change. 30% of the EU budget will be spent on this priority. It will also pay specific attention to biodiversity protection.
NextGenerationEU will provide an additional €806.9 billion, of which € €723.8 billion (in current prices) will be delivered through the Recovery and Resilience Facility (RRF) in the form of loans and grants to support the structural reforms and investments undertaken by EU countries. The European Commission has also implemented a new Technical Support Instrument (TSI) to provide tailor-made expertise for EU countries to design and implement reforms. Read more about the TSI and some of the reform projects being supported.
The European Semester, which is the framework to coordinate and monitor economic policy, has also been adapted as it is closely linked to the Recovery and Resilience Facility, and will ensure that structural reforms are an integral part of the recovery for each country.
To access the Recovery and Resilience funds, each EU member country has provided a national recovery and resilience plan, in which at least 37% of expenditure is allocated to climate and 20% to digital investments and reforms, and which must be implemented by 2026.
The Recovery Plan for Ireland
Europe’s recovery from the economic, financial and social consequences of the COVID-19 pandemic is of vital importance to Ireland’s economic interests, particularly as the country is also being impacted by Brexit.
In its Autumn 2022 Economic Forecast, the European Commission predicted that Ireland’s economy will grow by 7.9% in 2022, then to moderate to 3.2% in 2023 and 3.1% in 2024 on the back of lower purchasing power and uncertainty weighing on investment. Net exports, particularly of multinational corporations, are expected to remain resilient and be the main driver of growth.
According to the forecast, GDP is expected to grow in the EU by 3.3% in 2022 (3.2% in the euro area) and to drop back to 0.3% in 2023 in both the EU and the euro area. By 2024, economic growth is forecast to progressively regain traction, averaging 1.6% in the EU and 1.5% in the euro area.
What’s in the Recovery Plan for Ireland?
NextGenerationEU, the EU’s temporary recovery instrument, includes specific supports for sectors important to Ireland, such as agriculture, to secure food supplies and protect the income of farmers.
- Ireland is set to receive an estimated €1 billion in Recovery and Resilience Facility grants. There will also be €89 million available in 2021 under REACT-EU and €85 million from the Just Transition Fund.
- Ireland will also receive almost €1.4 billion in Cohesion Policy allocations from the latest long-term EU budget, as well as just over €8.3 billion in direct payments from the European Agricultural Guarantee Fund (EAGF). There will also be €2.25 billion available through the European Agricultural Fund for Rural Development.
- The European Commission recently disbursed €2.47 billion in financial support to Ireland as a first transfer under the SURE instrument. The support will be provided in the form of loans granted on favourable terms and will assist Ireland in covering the costs related to its Temporary COVID-19 Wage Subsidy Scheme.
- The Commission has approved two Irish schemes worth €10 and €7 million to Ireland’s coach tourism and entertainment sectors, which were badly hit by the pandemic. It has also approved a €45 million Irish scheme to support companies active in the beef sector and a €60 million Irish scheme to support small and medium-sized enterprises (SMEs) affected by the coronavirus pandemic. In July 2021, the Commission approved a €9.5 million Irish scheme to support not-for-profit entities in the context of the coronavirus outbreak. And, in August 2021, the Commission approved a €11.5 million Irish scheme to support companies active in the events sector and a €15 million Irish scheme to support commercial bus operators affected by the coronavirus outbreak.
- Ireland will also be the largest recipient of the €5 billion Brexit Adjustment Fund.
Delivering Ireland’s Recovery Plan
The Irish Government carried out a public consultation on their Recovery and Resilience Plan in February 2021. This consultation sought input on which areas Ireland should prioritise for investments and reforms, and which country-specific recommendations are considered the most relevant for Ireland’s plan.
This feedback was integrated into the draft plan which was submitted by the Irish Government to the European Commission on 28 May 2021.
On 16 July 2021, the Commission adopted a positive assessment of Ireland's recovery and resilience plan. Presenting the assessment, President von der Leyen said: "It is a well-balanced plan of investments and reforms. It will help Ireland to achieve the green and the digital transition. And in parallel, it will improve the labour market, the business environment and the provisions of social and affordable housing, just to name a few examples. As I said, we are giving our green light today to this far-sighted plan. The approval is an important milestone for the disbursement of close to €1 billion over the next years."