The Recovery and Resilience Facility Under Next Generation EU: A Breakthrough in Economic Policy Coordination and Policy Programming

Next Generation EU, specifically its Recovery and Resilience Facility (RRF), has been a groundbreaking new experiment for the EU. From the speed of the reaction at the EU level with an agreement between leaders a few weeks after the COVID-19 crisis erupted, the size of the instrument (being the largest EU fund ever created), to the RRF's design features (including the performance nature of the instrument, its leverage on reforms, and its method of financing), it is a fundamentally novel EU instrument. Aimed at both recovery and resilience, it first led to a firm common response to a simultaneous economic downturn across the EU, ensuring rapid macroeconomic stabilization and preservation of public investment levels, in contrast with previous crises. It has also planted the seeds of a significant increase in the resilience of the EU economy by fostering the implementation of major structural reforms in line with the common priorities of the EU. Lessons about absorption capacity, incentives, flexibility, and governance will all advance future program design in the EU and beyond.