THE STATE OF THE EUROPEAN UNION REPORT. Europe in a period of transition

THE STATE OF THE EUROPEAN UNION 56 Let’s not forget that the Recovery and Resilience Fa- cility, approved in February 2021 6 and used to channel most of the NGEU funds, not only favours green and digital transformation but also social cohesion within the EU. An important part of the European aid envisaged in the national recovery plans should be dedicated to lessening the impact of the pandemic on layers of society that are most vulnerable to this crisis and the sectors most affected by the reconversion which is going to take place in the economy. We would have to pay particular attention to the energy poverty issues that might be derived from the green transformation. Help will still be required by families, workers and small businesses with no other alternative but to withstand the temporary increase in the energy costs caused by the transition to renewable energy. There should also be special treatment for sectors that are going to take longer to recover due to the char- acteristics of the pandemic (tourism) or that are going to need more intense restructuring in the light of the new transition processes that are under way. The MS are aware that it is important for the change in production model to also be socially fair for it to be successful. The “Yellow Vest protest” experience in France has been a good lesson in this respect. This explains why the EU has planned to set up a compensatory Social Climate Fund and a Just Transition Mechanism that will be fed by several EU funds includ- ing the NGEU. This fund, which will benefit the regions most affected by the green transition, will be dedicated, among other things, to promoting diversification of jobs and businesses in the most affected regions. Much of the discussion among MS that will arise around the Fit for 55 package is probably going to look at the ideal size of these compensation funds to guarantee their goals appropriately. 6  Regulation (UE) 2021/241 of the European Parliament and Council of 12 February 2021 establishing a Recovery and Resilience Facility, DOCE 2021 L 57/17. The digital transition Another transition that the NGEU funds are attempting to stimulate is the digital transition, obliging national recovery and resilience plans to assign at least 20% of the funds they receive to this goal. As previously men- tioned, the digital sector has developed the most during the covid-19 crisis. It has brought about a contactless economy and consumption without leaving the house that was very useful during lockdown. Good European digital infrastructures have made these tasks easier. However, modernisation of the European economy involves accelerating the digitalisation process even fur- ther and transforming traditional production models.This will lead to an increase in productivity thanks to greater investment in new technologies, such as those derived from developing artificial intelligence. In this respect, on 9 March 2021, the Commission presented its document “Europe’s digital decade” where it showed the EU’s new vision regarding the digital trans- formation of the European economy before 2030. The EU’s goals in this field include setting up a true digital single Market that provides the same rules for all companies operating in the Union. It also intends to promote the democratising effect of digitalisation, al- lowing SMEs and self-employed people to access certain technology on almost equal terms as large companies. Let’s not forget that the digital giants have gained the most from the economic crisis caused by the pan- demic, with a worrying concentration of profit in a very small number of businesses. This makes it necessary to manage possible situations of oligopolisitic domination and some cases of intra-attribution from the major digi- tal companies because their new ways of creating value (data economy) have made international taxation rules obsolete. The above does not prevent us from maximising the EU’s potential in this field as it is one of the regions in the world that generates the most data, prioritising, for example, the improvement of the algorithms that are produced on EU soil.