Dáil Éireann Debate, Tuesday - 23 June 2020
48. Deputy Louise O'Reilly asked the Minister for Finance the breakdown of the allocation for Ireland under proposals by the European Commission for a recovery fund excluding loans elements; and the estimated additional contribution by Ireland as a result of the initiative. [11884/20]
View answerAs the Deputy will be aware, on 27 May 2020, the European Commission published revised proposals for the next Multiannual Financial Framework (MFF) to run from 2021-2027 to be supplemented by a proposed temporary European recovery instrument “Next Generation EU”.
The total amount being proposed for the period 2021-2027 is €1.85 trillion in commitments (2018 prices) - €1.1 trillion for the MFF and €750 billion for “Next Generation EU”.
It is proposed that the “Next Generation EU” financing will be raised by “temporarily” increasing the Own Resources ceiling to 2.00% of EU Gross National Income (GNI) allowing the Commission to borrow €750 billion on the financial markets to fund measures over the period 2021 - 2024. €500 billion of “Next Generation EU” financing will be in the form of grants to Member States, with the remaining €250 billion as loans. This additional funding to be channelled through EU Budget programmes, will be repaid back between 2028 and 2058 drawing on future EU Budget contributions from Member States or the Own Resources of the Union.
The Commission favours the introduction of new Own Resources to facilitate the repayment of the market finance raised and to help reduce the pressure on national budgets. They have indicated that they will propose additional new Own Resources (such as an extension of the Emissions Trading System based own resources to the maritime and aviation sectors, a carbon border adjustment mechanism, a single market levy and a digital tax) at a later stage of the 2021-2027 financial period.
The European Commission has produced a needs assessment underpinning their proposed “Next Generation EU”. In this needs assessment the European Commission estimate that Ireland’s contributions to the Next Generation EU package would be the second highest in Net % GDP terms in the EU - with an allocation of 0.4%. They estimate that Ireland may potentially receive a total of up to €2 billion in grants ( with a further €1 billion in loans available ) under the recovery package from 2021 to 2024, potentially requiring contributions from Ireland of €18.7 billion from 2028 to 2058. The Commission proposals are detailed and are still under consideration at EU level and in consultation with the relevant Government Departments to assess the implications for Ireland’s priorities at an overall and sectoral level and to assess the implications for Ireland’s contributions to and receipts from the EU Budget.
In terms of initial assessment of the “Next Generation EU” package, it is understood that Ireland’s allocation would be just under €2 billion in grants between 2021 and 2024 to include:
- €354 million in rural development – Green Deal, F2F, Biodiversity Strategy;
- €215 million from ReactEU (essentially Cohesion Programmes)
- €132 million from the Just Transition Fund;
- €1.209 billion from the new Recovery and Resilience - investments and reforms, including in relation to the green and digital transitions and the resilience of national economies.
Further receipts should be available to Ireland under competitively awarded programmes under the “Next Generation EU” package, but this is difficult to estimate at this point.
Heads of State and Governments discussed the Commission’s MFF and “Next Generation EU” proposals at European Council on 19 June, however, no agreement was reached. There is now considerable time pressure on European Council to reach political agreement (requiring unanimity) on the revised package by July to facilitate negotiation with and consent from the European Parliament in time to ensure that the next MFF can come into operation from 1 January 2021.
