
The total amount of funds available under #NextGenerationEU remains 750bn as in the original EC proposal, but the composition changes: grants fall from 500bn to 390bn while loans increase from 250bn to EUR 360bn. But the composition of cuts matter 2/

HorizonEU (research), cut by 62%; InvestEU cut by more than 80%; Just Transition Fund slashed by 2 thirds; 3 programs completely de-funded, among which Solvency Instrument, that could have allowed for EU-level solvency aid to firms in countries that could not afford it 4/
National allocations of grants remain in line with what I had shared earlier. Applying the EC’s RRF key across the whole 390 bn (as a simpification),
still gets around 30 bn in net fiscal transfers, equivalent to returned ~7 years of net contributions into the EU budget
5/


Conditionality: countries will need to start paying attention to the EC's country-specific recommendations (CSR), as that will be the benchmark against which national spending plans will be assessed under #NextGenerationEU. That means structural reforms. 6/
Governance: EC's assessment of plans needs approval by Council at qualified majority (QMV, 15 countries for at least 65% of population), in 4 weeks. Fortunately
call for veto did not go through: veto on plan + CSR would have made this look very much like an ESM programme. 7/

Disbursements is where emergency brake comes in. The assessment of milestones achievement is done by EC, but in "exceptional" cases 1 or more members can ask for referral to the Council if they consider that there are "serious deviations from the satisfactory fulfilment". 8/
This gives to some the chance to slow down disbursement process, but not to stop it, as ultimately the Commission prevails (as outlined by the sentence: "process will be in line with Article 17 TEU and Article 317 TFEU"). We dodged a bullet and Rutte can spin this electorally. 9/
Rebates: 


and all get increased rebates. Per year they will get: 1.9 bn for
, 1.1 bn for
, 565 mn for
, 377 mn for
. The German rebate is unchanged at 3.7 bn per year. Rebates total around 53 bn over the seven-year budget period. who pays? 10/








In the past,
and
have been paying respectively 30%, 22% and 15% of all rebates. If this stays the same,
would be liable for ~16 bn (~2bn per year);
for ~11bn (~1.6 per year);
for ~8bn (~1.1bn per year). For
and
this lower the net fiscal transfer effect 11/








Conclusion:
This remains a positive steps for
integration because it overcomes 2 historic taboos: (i) opposition to large size common issuance; (ii) opposition to explicit fiscal transfers (even if temporary). 12/
This remains a positive steps for

Conclusion:
However it comes at a cost. First, the increase in rebates perpetuates and worsens a problem that we know from before this MFF. In particular, Germany could have accepted a decrease in its rebate to compensate for the frugals' demands but did not. 13/
However it comes at a cost. First, the increase in rebates perpetuates and worsens a problem that we know from before this MFF. In particular, Germany could have accepted a decrease in its rebate to compensate for the frugals' demands but did not. 13/
Conclusion:
Second, the cuts to grants are concentrated on programs that would have paid for genuine EU-level public goods and hence could have help create a bridge from #NextGenerationEU towards something permanent and federal. This is a negative for the longer term imho 14/
Second, the cuts to grants are concentrated on programs that would have paid for genuine EU-level public goods and hence could have help create a bridge from #NextGenerationEU towards something permanent and federal. This is a negative for the longer term imho 14/
Overall, given where we were in March and where this #EUCO had started, this is certainly a positive and major development. At the same time, there are shadows that probably make it less ambitious (especially over a long-term integration horizon) than initially expected. end/