How can the opportunities of Next Generation EU be enhanced?

Next Generation EU is an initiative that mobilises unprecedented public resources as a European solidarity mechanism to address the economic and social consequences of the COVID-19 crisis. Specifically, it mobilises a fund of €750,000 million over 6 years (€390,000 million in grants and €360,000 million in repayable loans). Its cornerstone, which accounts for approximately 90% of this fund, is the Recovery and Resilience Facility (RRF), whose purpose is to support reforms and investments to restore the sustainable and resilient growth potential of EU economies, thus encouraging job creation and promoting digital and ecological transition (to achieve EU's climate neutrality goal).

Spain will be the country that, after Italy, will receive the most funds from this initiative (€59,168 million in grants and €70,000 in loans), for which the Spanish government is preparing the "Recovery, Transformation and Resilience Plan-Spain Can", which has to be submitted to Europe by the end of April this year.

Euskadi Next is the investment programme for the recovery, transformation and resilience of the Basque Country that the Basque Government, in coordination with the three Provincial Councils and the City Councils of the three Basque capital cities, is sending to the Spanish Government for consideration as part of the allocation of the €59,168 million of its RRF. This programme identifies strategic projects and actions in eight areas: people’s health and care; lifelong learning; generation of renewable energies; sustainable mobility; digitisation and innovation of administrations, companies and value chains; urban habitat; natural habitat and prevention of natural disasters; and the circular economy.

Next Generation EU represents a real opportunity to promote recovery and undertake the important transformations necessary to address energy sustainable transition and digital, social and health transitions, especially in the current context in which debt levels have increased considerably in order to respond to the great challenges of the COVID-19 crisis. This was highlighted in the "Basque Country Competitiveness Report 2020. Resilience before, during and after the pandemic" prepared by Orkestra. But what are the key aspects to take advantage of and enhance the opportunities of Next Generation EU for the territories in Europe?

1. To facilitate the absorption of funds for all governments, which require greater agility and innovation in the mechanisms necessary to manage them. To enhance this agility, the Spanish government has approved a Decree-Law that considerably reduces administrative controls, but it remains to be seen whether this will achieve sufficient agility in the management of the funds or other mechanisms should be guaranteed.
2. To ensure the commitment of private investment, seeking to involve SMEs, because this will help projects to generate transformations in the business fabric, which bring value to the market. If the private commitment is weak, the funded projects risk failing to "overcome the valley of death", a weakness of many innovation systems in Europe.
3. To promote effective multilevel governance where the framework and rules of the game regarding the role to be played by each level of government in the management of the funds are negotiated in an effective collaboration so that the impact of these funds is more positive in the EU as a whole. To this end, it should be borne in mind that it is mainly the microeconomic level factors that have the greatest impact on growth that in developed economies and that these factors are most effectively and efficiently influenced at the regional and/or city level.
4. To align the transformation projects promoted through these funds with the medium and long-term competitiveness and development strategy in each territory. A number of mechanisms should be established to monitor and evaluate actions in order to make the necessary changes and adjustments in their implementation process to ensure the greatest possible impact on economic recovery and employment generation.

It is key that we work on these four aspects so that Next Generation EU contributes more effectively to the recovery and generation of employment in Europe and serves as an opportunity to improve the competitiveness of the Basque Country and the rest of the regions.

*This post is based on an opinion article that was published in Estrategia Empresarial (No. 616) in January 2021.