Germany and Austria use European Recovery Fund Mainly to Replace National Spending

Germany and Austria are using the EU’s Recovery and Resilience Facility primarily to finance existing or planned projects rather than to invest in new projects. This is the central finding of a new study by the research network EconPol Europe. “This suggests that the EU funds are mainly used to replace national spending that governments would have made anyway,” says Mathias Dolls, scientific coordinator of EconPol and co-author of the study.

“The idea of the funds provided by the Recovery and Resilience Facility was to finance new projects to supplement, not to supplant national efforts,” says Daniel Gros and Francesco Corti, CEPS and co-authors of the study. An in-depth analysis of the national recovery and resilience plans reveals substantial variations across countries. The share of new investment projects is smallest in Austria (19 percent) and Germany (20 percent). Belgium has the highest share with 77 percent. In Spain the share amounts to 40 percent, and in Italy and Portugal, it is 64 percent.

The EU Recovery and Resilience Facility is part of the NextGenerationEU program and provides a total of EUR 723.8 billion to support reforms and investments in the member states. The facility aims to mitigate the economic and social impact of the coronavirus pandemic and to prepare member states for the green and digital transitions ahead.