Home Europe News How the government used EU funds to manage the Covid crisis

How the government used EU funds to manage the Covid crisis

In recent months, the Covid crisis has put increasing pressure on the responsiveness of both Member States and the European Union: primarily in the health care sector, with the need to ensure that protection of access to protective equipment, expansion of special care services, and research and distribution of vaccines. . Then there are social and economic questions: with door locks affecting consumption and production, businesses need to subsidize and guarantee loans.

Due to its nature, the pandemic requires rapid and effective coordinated measures between the EU countries. Since the first weeks of the crisis, European organizations have come up with a variety of tools. Among these, the most prominent are the suspension of the Stabilization Agreement, the EU’s Next Generation plan, the SURE fund to mitigate unemployment risks, a special ESM credit channel, the Bank’s interventions. European Investment Bank and ECB securities purchase.

In this framework, among the first measures given are the packages Crii and Crii + (or Coronavirus Response Investment Initiative). These are not additional sources, but allow the redirection of existing European funds for the 2014-20 cycle to emergency related expenses – from the purchase of medical supplies to support. for businesses and social welfare.

This is a decisive strategy. From the beginning of the crisis to mid-January 2021, it resulted in a net gain of 6.8 billion euros in the healthcare sector at the EU level and more than 3.5 billion in support for affected businesses. . Other results will be reported mid-2021. So far, they have proved extremely useful for governments in dealing with pandemics, especially in the early months.

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Monitoring the reallocation of these resources is very important, especially when answering the question: What impact did European funds have in crisis management? The publication of specific datasets by the European Commission allows us to evaluate by country, the role of European funds in crisis management.

Reallocation of EU funds in the health sector

The crisis has made the shift of resources to personal protective equipment, medical supplies and other medical infrastructure necessary. European funds played a decisive role, although not an easy one to follow. As emphasized by the Committee, the existing classifications existed before the emergency and it is therefore difficult to keep track of countries that used the profits provided by the Crii and Crii + packages. Come on.

As of May 2020, the Commission introduced new classifications for Covid-19, but their use is optional. Hence, there is always the risk of generating an incomplete analysis. Another monitoring strategy, carried out by the Commission’s published data set, is to isolate funds classified as health related and observe what has changed from February 1, 2020 to. present (data collected for the purposes of this analysis are for January 15, 2021).

This approach allows us to understand some of the trends. By 2020, a total of 7.2 billion (net increase of 6.8 billion) has been reallocated to the health sector.

How did this change happen? The category of intervention with the largest increase is health infrastructure. Reallocation is 4.5 billion, almost constantly increasing. This is an indication that interventions in this area (identified as type 053) have been prioritized by EU countries. Funding has also increased for programs to promote access to medical services, a sizable portfolio capable of allowing more flexibility during emergencies.

Small but significant implementations can also be observed in the field of electronic health interventions. For these programs, there were 177 million euros coming in and 139 million euros going. This appears to indicate a restructuring of the funds in this category to optimize interventions specific to the Covid crisis.

Comparing the EU countries, the largest redistribution volume in the health sector is in Spain (2.7 billion inflows, 95 million flows out) and Italy (2 billion inflows, 683 million outflows), followed by Poland, Romania, Ireland, Greece and France. .

In 4 countries (Czech Republic, Finland, Netherlands and Sweden), the funding amount for medical intervention categories has not changed from 1 1/2/2020 to present. As a result, these countries do not appear to have taken advantage of the flexibility that the Crii and Crii + packages allow to respond to the Covid crisis, at least when it comes to healthcare. One reason is perhaps the most ethical countries in the use of EU funds have lower margins than those allocated by the 2014-20 budget. Hungary, Estonia and Austria stabilize health-related funds or reallocate them to other regions.

Funding for health care and money transfers between different regions

A key aspect of the Crii + package is the EU’s ability to transfer money between different regions. Normally, according to EU regulations governing the European funds, it is not permitted to transfer allocations allocated to less developed regions to more developed ones.

The pandemic has led to a reconsideration of this limitation, as it is primarily the most economically active urban areas and territories affected by the first contagion.

As a result, increased funding for the health sector has occurred in all regions, but to a much greater extent in more developed regions. Compared to January 31, 2020, healthcare funding has increased by 30% in less developed regions, 169% in transitional regions and 255% in more developed regions.

For Italy, the increase is 89% in the less developed regions. This figure started at 435 million euros in health-related interventions, before nearly doubling to 823 million euros. The increase is 216% in developing regions (from 18 to 58 million) and 394% in more developed regions (from 230 million to 1.1 billion).

The reallocation of EU funds to economies and businesses

Aside from the health sector, another important aspect of this crisis has to do with the economy. The flexibility ensured by the Crii and Crii + packages has allowed a huge shift of funds to support businesses. Between 1 February 2020 and 15 January 2021, approximately 11 billion euros were reallocated, a net increase of more than 3.5 billion euros.

As we have seen in the health sector, we can reconstruct these numbers by comparing the variation in funding between different intervention categories. Unlike some categories related to the medical field, in this case we have about 24 different types of intervention. Includes effective investments in small and medium enterprises (category 001) to research and innovation for large companies (002); from resources to improve energy efficiency and the environment (catalogs 068, 069, 070), to resources that help workers and businesses adapt (106).

The largest positive reallocations are registered in Listing 001, possibly due to the broad definition. Many interventions involving SMEs can be precisely focused on effective investments.

Compared to the EU countries, Italy participated in the redeployment of the largest sources of capital (+2.9 billion inputs and -1.6 billion outputs). On 1 February 2020, all interventions related to businesses in Italy were worth 7.1 billion euros, while the reallocation of capital to the sector brought this value to 8, 4 billion.

Followed by Greece, with 1.3 billion entries and -82.8 million entries. In contrast, there are four countries where business sector funding has not changed significantly: Finland, Luxembourg, the Netherlands and Sweden. As pointed out, these countries – which have tightened a large portion of their EU funds – have less room to maneuver and use only very little of the capabilities allowed by the Crii and Crii + packages.

Funding for businesses and money transfers between different regions

The ability to transfer capital from one sector to another has also been widely used to support businesses. Again, across Europe, almost all regional types experienced increases, albeit to varying degrees.

In contrast to health reallocation, business aid increases most in less developed regions. These regions saw a 6.3% increase (from 43 to 45.7 billion euros), followed by the transition (+ 5.1%) and most developed (+2, 6%).

The stronger funding increase in less developed regions can be attributed to the difference between the immediate impact of the health crisis and the impact of the economic crisis. The former had a much stronger initial impact on the more developed regions. However, the less developed regions are not affected by the economic consequences of the pandemic: these regions are often heavily dependent on economic activities in more advanced regions, and thus have been proven to be. their economy slows down. This only increases the risk of increasing divisions within individual states.



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