5G, AI, cybersecurity and renewable energy sources are set to boost investment under the EU’s coronavirus recovery plan

The European Commission is proposing billions of euros in financial aid for advanced technologies and green investments to help the EU emerge from the coronavirus crisis.

Technologies such as 5G, artificial intelligence, cloud, cybersecurity, supercomputing and renewable energy are likely to benefit from the €750 billion pan-European support package presented today – which is in line with the Commission’s policy priorities in place before the pandemic hit the region, causing thousands of deaths and serious economic losses.

“Urgent action is needed to stimulate the economy and create the conditions for an economic recovery led by private investment in key sectors and technologies. These investments are particularly key to the success of Europe’s green and digital transformation,” reads the fact sheet on today’s draft budget – which is presented as a broader “recovery plan” for Europe.

“Investments in key sectors and technologies, from 5G to artificial intelligence, from clean hydrogen to offshore renewables, are key to Europe’s future,” it added.

On the Green Deal front, he praises:

• A massive wave of renovation of our buildings and infrastructure and a circular economy creating local jobs;

• Implementation of renewable energy projects, especially wind and solar, and the launch of a clean hydrogen economy in Europe;

• Cleaner transport and logistics, including the installation of one million electric vehicle charging points and increasing the uptake of rail travel and clean mobility in our cities and regions;

It also plans to allocate more financial support to the Just Transition Fund to support retraining and help businesses seize the economic opportunities offered by digitalization and the transition to a green economy.

The Commission estimates that at least €1.5 trillion would be needed to restart the EU economy in the wake of the pandemic crisis in 2020-2021 alone – which is why the budget proposals include a revision of the 2014-2020 Multiannual Financial Framework as well as the 2021-2027 financial framework.

The Commission proposes to borrow €750 billion from financial markets through a bond issue for the Next Generation EU fund, to be channeled through EU programs in 2021-2024, with the loan expected to be repaid over a “long term” period of time in future budgets EU” (not before 2028 and not after 2058).

Three investment pillars are proposed for this fund: one focusing on supporting EU Member States through direct investment and reforms; a second one focusing on boosting the EU economy by encouraging private investment; and a third one aimed at drawing lessons from the COVID-19 crisis, with a particular focus on healthcare, as well as emergencies and foreign aid.

Under the first pillar, digital and green technologies are set to benefit from the proposed €560 billion Recovery and Resilience Facility, which will provide EU Member States with financial support for related investments and reforms, including a grant instrument of up to €310 billion and up to €250 billion available in loans.

“Support will be available to all Member States, but will be focused on those most affected and where resilience needs are greatest,” the Commission said today.

It also proposes an additional €15 billion for the European Agricultural Fund for Rural Development to “help rural areas make the necessary structural changes in line with the European Green Deal and achieve ambitious targets in line with the new Biodiversity and Farm to Fork strategies” .

Under the second pillar, the new solvency support instrument aims to mobilize private resources to support what the Commission describes as “viable” European companies in the sectors, regions and countries most affected. It wants this support to be operational from 2020 and proposes a budget of €31 billion that aims to unlock €300 billion of solvency support for companies in all sectors of the economy (to “prepare them for a cleaner, digital and resilient future”, as that puts it).

More money has also been allocated to the InvestEU investment programme, which the Commission says should reach €15.3 billion over the budget period, aiming to boost private investment in projects across the EU.

It also proposes the creation of a new Strategic Investment Facility under InvestEU, which is expected to generate up to €150 billion in investments to strengthen the resilience of “strategic sectors”, especially those linked to the green and digital transformation. €15 billion is to come from the Next Generation EU fund.

Under the third pillar, the Commission will allocate €9.4 billion to a new health programme, EU4Health, which aims to strengthen health security and prepare for future health crises.

In turn, the Horizon Europe research program is to receive EUR 94.4 billion, including support for the so-called “key research” in health, resilience and green and digital transformation.

Commenting in a statement, European Commission President Ursula von der Leyen said: “The recovery plan turns the huge challenge we face into an opportunity, not only supporting the recovery but also investing in our future: the European Green Deal and digitalisation will boost jobs and growth economy, the resilience of our societies and the health of our environment. This is Europe’s moment. Our readiness to act must meet the challenges we all face. With Next Generation EU, we are delivering an ambitious response.”

As for the next steps, the Commission’s budget proposals will need to receive political approval from the European Council. This is hoped to be achieved by July, when the EU executive will want to convince member states that they have no time to waste in financing coronavirus relief.

The European Parliament will also have to express its opinion, but the Commission has scheduled the adoption of the revised 2014-2020 framework for early autumn and the adoption of the revised 2021-2027 multiannual financial framework (as well as the decision on Member States’ own resources) for December 2020, with a view to implementing the latter in January 2021.