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

THE STATE OF THE EUROPEAN UNION 86 digital, transition, but if it is to do so it must reach all the Member States, regions, and people, guaranteeing the principles of justice and inclusion, and addressing the costs of these transitions. It is also worth noting that when the plan refers to in- vestments it does so in the broadest sense of the term. In other words, it goes beyond traditional physical capital or the somewhat less traditional investment in intangibles since it also signals the need to incorporate investment in human capital and in natural or environmental capital, underscoring, in short, the importance of social cohesion or of certain public services as means of securing a pos- itive impact on the economy and society. For its implementation, the grants are scheduled to be disbursed in two phases. With a view to promoting a rapid recovery, 70% must be invested in a short space of time, before December 2022, prioritising the reception of resources in the countries hardest hit by the crisis, although distribution is carried out according to popu- lation, income per capita, and the unemployment rate in the period 2015-2019. According to the distribution criteria for this first tranche of subsidies, Italy, Spain, and France are the main beneficiaries, receiving over 50% of the total between them. The distribution in 2023 of the remaining 30% will be adjusted by taking into ac- count the economic contraction registered in the different countries in 2020 and 2021. As for the loans, any Member State can apply for them before December 2023 in the amount that they consider necessary up to a maximum of 6.8% of the GNI of the Member State, not forgetting that they are loans that imply greater conditionality and which, above all, count in the level of each country’s debt. So far, only seven Member States have sought resources via loans, of which Greece, Italy, and Romania have done so for the total allocated amount; the rest of the Member States can apply for the loans later if they consider it necessary. There have been fewer qualms about the plan’s grants and all the Member States have applied for virtually the full allocated amounts. Table 1. Instruments of the Recovery and Resilience Plan (in constant prices 2018) Goals Instruments Bill. € Funding Purpose Powers % 1. Support for the Member States in their investments and reforms Recovery and Resilience Facility 672.5 89.7 Green and digital investments. Economic resilience. Structural reforms. Focus on countries hardest hit by the crisis National management Grants 312.5 41.7 Loans 360 48.0 React-EU Initiative 47.5 6.3 Reinforcement of the cohesion programmes European management Just Transition Fund 10 1.3 Mitigating the socioeconomic effects of the green transition Rural Development 7 1.0 Reinforcement of rural development policy 2. Relaunching the EU economy by incentivising private investment InvestEU 5 0.7 Strategic European investments Horizon 5 0.7 Research and development in healthcare and the environment 3. Applying the lessons learned from the crisis rescEU 1 0.3 European response to emergencies Source : European Commission.