A closer look at the Recovery and Resilience Facility

Bouncing back: the role of the Recovery and Resilience Facility in the post-COVID-19 revival

Published on: 14/06/2021
Recovery and Resilience Facility

The outbreak of COVID-19 in early 2020 changed the economic, social and budgetary outlook of the European Union and indeed, the world, in unimaginable ways. Nations began calling for an urgent and coordinated response both at Union and at national level to cope with the enormous economic and social consequences of the crisis. Now, as countries begin to cautiously ease restrictions and open up their economies once more, there is an increased focus on the need to mitigate the medium and long-term consequences of the pandemic. The ability of the Member States to do this will depend on their capacity to put forward sustainable and growth- enhancing reforms and investments to speed up the recovery and strengthen their long-term growth potential.

The Recovery and Resilience Facility, an innovative tool to support the EU

Ambitious reforms and investments at the national level require similarly ambitious EU support. It is for this reason that the Recovery and Resilience Facility (the Facility), an innovative EU-wide framework providing direct financial support to Member States, was established as the centrepiece of the NextGenerationEU recovery instrument. Following approval by the European Parliament and its entry into force on 19 February 2021, the Facility aims at “promoting the Union’s economic, social and territorial cohesion by improving the resilience, crisis preparedness, adjustment capacity and growth potential of the Member States, by mitigating the social and economic impact of [the] crisis, in particular on women”[1]. In order to achieve these objectives, the Facility will make €672.5 billion in loans and grants available to support national reforms and investments, with a scope that revolves around six main policy areas. These areas, also referred to as pillars, are: green and digital transition (the so-called “twin transitions”); economic cohesion, productivity and competitiveness; social and territorial cohesion; health, economic, social and institutional resilience; and policies for the next generation.

To be eligible, Member States have to prepare and submit their draft recovery and resilience plans (RRPs) to the Commission. The plans should set out a comprehensive and coherent package of reforms and investments within the scope of the Facility and in pursuit of its objectives, which will then be assessed by the European Commission. But how do the RRPs fit in with other plans and programmes that the Member States have to submit to the European Commission? Are there not too many obligations to fulfil in the middle of what is a very busy period for public administrations? Recognising this, the European Commission has temporarily adapted the yearly European Semester cycle for economic policy coordination, thus minimising the burden on the Member States. Countries will be able to submit their national RRPs in a single integrated document together with their National Reform Programmes (NRPs), thus providing a comprehensive overview of the reforms and investments that they will undertake in line with the objectives of the Facility, while addressing relevant recommendations stemming from the 2020 Country Specific Recommendations. It is also worth mentioning that the Commission strongly encourages Member States to use this opportunity to include any investment and reform within the seven European flagship areas in their plans (Power up, Renovate, Recharge & Refuel, Connect, Modernise, Scale-up, and Reskill & Upskill), as significant investments in these areas are likely to bring tangible benefits for the economy and citizens across the EU.

Digital transition, a way to strengthen Europe’s competitiveness, resilience and position as a global player

While Member States will encompass their national agenda of reforms and investments in the RRPs, designed in line with all the abovementioned pillars, the plans will be mainly centred around the so-called twin transitions: digital and green. In particular, a minimum of 20% of expenditure on investments and reforms contained in each national plan should support the digital transition, as it will be key to the relaunch and modernisation of the EU’s economy. To fully benefit from the Facility’s support, seven major intervention fields for this pillar have been defined by the Commission to guide Member States’ investments and reforms in the digital realm: Connectivity, Digital-related investment in R&D, Human capital, eGovernment, Digital public services and local digital ecosystems, Digitalisation of businesses, Investment in digital capacities and deployment of advanced technologies, and Greening the digital sector.

Within these intervention fields and the digital transition pillar more broadly, there are key areas for investment and reform that the Commission would like to encourage in the Member States, based on how they help to champion the seven abovementioned flagship areas. These areas are as follows:

  • Improve connectivity: As mentioned under the flagship area “Connect”, improving connectivity is necessary to ensure the fast rollout of rapid broadband services to all regions and households, including fiber and 5G networks. This would also be in line with the EU’s 2025 5G and Gigabit connectivity objectives. Additionally, enhanced connectivity and better networks will pave the way for the deployment of future-proof clean technologies, one of the objectives of the “Power up” flagship area. Indeed, positive societal spillover effects are expected from these investments, as mentioned in the NextGeneration EU.
  • Develop digital skills at all levels: The flagship area “Reskill and upskill” stresses the fact that Member States need to ensure that citizens can participate in society and actually take advantage of the digital transition. To do this, reforms in the area of basic and higher education, skills and lifelong learning are required, with special attention to be paid to disadvantaged groups, such as women and young people. Finally, it will also be important to provide civil servants with new skills and competences to foster the digital transformation of the public administration, as put forward in the “Modernise” flagship area.
  • Digitalise businesses: Developing adequate digital skills, as stressed in the “Reskill and upskill” flagship area, is also fundamental to support the labour market. Digital skills help create the capacity for the development and deployment of crucial digital technologies. This flagship aims to facilitiate the sustainable take-up of digital solutions and foster a cyber-resilient digital transformation across all sectors.
  • Build and deploy cutting-edge digital capacities: Reforms and investments in emerging technologies such as artificial intelligence, high performance computing and quantum computing are deemed essential to ensure productivity and give Europe a competitive advance on the market, as mentioned in the “Scale-up” flagship area. Positive spillover effects are also likely to be seen in the “Recharge and Refuel” flagship area, which aims at accelerating the use of sustainable, accessible and smart transport, and in the “Renovate” area, which aims at improving Europe’s energy and resource efficiency.
  • Transform the public administrations:  Finally, the “Modernise” flagship area focuses on the transformation of the public administration thanks to the use of new generation digital tools that will improve administrative processes and facilitate online interactions with citizens and businesses. Such transformation should also be of interest to the justice and healthcare systems.

A focus on the digitalisation of the public sector: what could be next?

The pandemic and its ongoing consequences on our lives and economies have highlighted the importance of digitalisation across all areas of EU economy and society. In this difficult context, we have all (re)discovered the importance of eGovernment for access to essential public services, but we have also adapted to new ways of life,  from remote working and eLearning to eCommerce. These rapid changes towards a more digitalised reality are likely to become more structural in the future and therefore the reforms and investments put forward by the Member States should take them into account. Looking at the public sector, and taking stock of the main Country Specific Recommendations (CSRs) issued in 2019 and 2020, there is still progress to be made in the development of a public administration that is fit for the future.

For instance, the recent crisis highlighted the potential benefits in implementing a European Digital Identity (eID) for identification and authentication by national and cross border users vis-a-vis governments and private actors at EU level, enabling safe access to online digital services and ensuring control over their online identity and data. Indeed, in an increasingly “online” world, it would also be prudent to develop a personal data strategy, allowing citizens to monitor the use of their personal data held by public administrations. In turn, public administrations would also need to ensure the digitalisation, interconnection and interoperability of registries and services for exchange of evidence -document or data- between national and European public administrations in compliance with the Once Only Principle -as also stressed by the Single Digital Gateway Regulation, article 14-, with the creation, when needed, of common data spaces -as underlined by the EU Data Strategy. This would also benefit other sectors, such as healthcare and justice, but also customs and tax administrations, setting the stones for the creation of a real data economy. To do so, it would also be critical to foster the development of innovative GovTech solutions by SMEs and start-ups, thus helping to boost the digital transformation of local, regional and national public administrations.

It is finally worth mentioning that the Recovery and Resilience Facility will not address all these challenges in isolation. The Facility will be complemented by funding available through other EU programmes, for instance the Horizon Europe programme for research and innovation, the Connecting Europe Facility for digital infrastructure, and the Digital Europe Programme. Under the latter, the NIFO project will keep providing support, guidance, training material and expert advice to European national administrations to facilitate the implementation and alignment of their National Interoperability Framework (NIF) with the European one (EIF), thanks for instance to the EIF Toolbox, as well as monitoring the state-of-play of digital public administration and interoperability, given their paramount importance to achieve the ambitious goals set by the EU digital transition.

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[1] Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility.