We all know the impact that COVID-19 had on the international economy, but we may not be aware of some of the aid that was put in place to correct the economic problems derived from the pandemic, such as the Next Generation funds.
The Next Generation funds, also known as Next Generation EU, have been one of the most widely used funds to date, both now and in the future. The aim of these funds, as part of the EU funding programme, was to help member states with a recovery fund of 750 billion euros and a long-term EU budget of 1.1 trillion euros for the period from 2021 to 2027. If you would like to find out more about the Next Generation funds, we invite you to read this article and let us know what you think.
What is the main objective of the Next Generation funds?
Next Generation funds aim to help Member States recover from the economic effects of the pandemic by funding projects in key areas such as digitisation, green transition, social and territorial cohesion, competitiveness, economic resilience and others.
They are distributed to Member States through specific programmes based on national recovery plans, which must be approved in the first instance by the European Commission. Each Member State must use the allocated funds to finance projects that are in line with the objectives and priorities set out in its national recovery and resilience plan following COVID-19.
The Next Generation EU recovery fund consists of €750 billion and has been instrumental in helping Member States invest in major projects and promote sustainable and resilient recovery across the region. In addition, EU funds have also been used to support Member States in implementing fiscal stimulus measures and to provide financial assistance to the countries most affected by the pandemic.
The importance of the EU in the distribution of Next Generation funds
The EU has used its lending capacity to provide member states with access to funding at low interest rates and has provided loans through the European Stability Mechanism to help the most affected countries.
We can say then that EU funds have been crucial in helping European economies recover from the effects of COVID-19, or at least that was one of the objectives, although ultimately it is up to each country to develop skills and ways of maintaining and distributing these funds.
Investment in key areas and fiscal stimulus measures have helped to maintain economic activity and mitigate the impact of the pandemic in many sectors. The EU’s ambitious response has demonstrated the importance of European cooperation and solidarity in times of crisis. Obviously, each country presents different conditions and effects post-COVID-19, so funds have been tailored to the needs of each Member State.
It seems like yesterday, but it has been 4 years since the outbreak of the COVID-19 pandemic, and although the economic and health situation has been improving over the months, we can state that the pandemic has had a significant impact on Europe’s economy, generating an unprecedented economic recession.
This is why the past implementation of containment measures and restrictions at national and European level, such as business closures and the suspension of travel and events, has negatively affected many economic sectors and has led to job losses and a decrease in economic activity. To alleviate this, grants such as the Next Generation funds were put in place.
How did the pandemic affect business in the European Union?
According to European Commission data, in the pandemic years the economy declined by many points, by around 9.6% in the early years, which undoubtedly meant that many businesses closed, inflation rose, and the economy was in full recession.
‘The pandemic affected different sectors unevenly. The tourism, hospitality and entertainment sectors were the hardest hit, as travel restrictions and business closures have led to a significant decline in economic activity in these sectors.
There was also some impact on the supply chain and demand for goods and services, which has affected production and trade. This has led to the allocation of various funds within the EU. The Next Generation funds are a clear example.
EU and Next Generation funds have been instrumental in helping European economies recover from the effects of COVID-19. The pandemic turned the world upside down, and many businesses could not cope with the consequences. Economic activity across the region was severely diminished.
Next Generation Funds in Spain
In Spain, Next Generation funds are an opportunity to boost economic recovery and advance the country’s transformation towards a more sustainable and digital economy. Spain is expected to receive a total allocation of €140 billion in funds, of which €72.7 billion will be allocated to grants and €67.3 billion to loans. These are the base statistics but will obviously undergo some changes over the years.
The distribution of funds in Spain has been designed to ensure an equitable distribution among the regions and sectors most affected by the pandemic. The autonomous communities and municipalities will have an important role in the selection and implementation of projects, and it is expected that investment in projects will contribute to job creation and strengthening the competitiveness of the Spanish economy.
It is important that the economy heals now that the effects of COVID-19 are diminishing. This is all about the Next Generation funds, many people are aware of the consequences the pandemic has had on the economy, but few have any knowledge of the support that has been put in place. We hope that this article has answered some of your questions and provided some basic information about the EU’s Next Generation funds.
