{"id":4035,"date":"2024-09-02T11:46:41","date_gmt":"2024-09-02T09:46:41","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=4035"},"modified":"2024-09-02T11:46:41","modified_gmt":"2024-09-02T09:46:41","slug":"we-are-lagging-behind-on-nextgenerationeu","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/09\/02\/we-are-lagging-behind-on-nextgenerationeu\/","title":{"rendered":"We are lagging behind on NextGenerationEU"},"content":{"rendered":"<p><i><span style=\"font-weight: 400;\">NextGenerationEU is the first plan to provide financing through common European debt, and Italy has placed its hopes for recovery on the National Recovery and Resilience Plan (NRRP).<\/span><\/i> <i><span style=\"font-weight: 400;\">Halfway through the plans\u2019 five-year duration, what is the current status?<\/span><\/i> <i><span style=\"font-weight: 400;\">Amid delays due to the lack of interest on the part of the strongest countries and a few positive surprises, what seems to be missing most is a strategy.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Can Italy spend in the time remaining the resources of the National Recovery and Resilience Plan which, in 2020, were entrusted in hopes of \u201crelaunching\u201d a country that had been stagnant for a few decades? And what assessment can we make of the entire NextGenerationEU operation, which was supposed to be a \u201cHamiltonian moment\u201d for the EU, that had always, until then, excluded common debt from the financing of projects of continental scale?\u00a0<\/span><\/p>\n<h3><b>How is the implementation of the plans progressing?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">If you ask this question to an evaluation expert, the answer will be that we do not yet have evidence to respond. We must wait for an ex-post evaluation that, in any case, could not take place before 2028, two years after NGEU\u2019s closure, to record effects that unfold over time. However, the logic of \u201cex post\u201d evaluations resembles those that doctors sometimes perform (precisely \u201cpost-mortem\u201d), to understand what led to an outcome that was not in line with hopes. We believe, instead, that data should be collected that may be useful to correct \u2013 as the work is in progress &#8211; the course of an operation that has extraordinary political significance and great value for future generations, for whom it was conceived. In this article we therefore try to put together some initial evidence on the financial implementation of the instrument and thus reflect on the speed of implementation. We will then postpone an initial analysis of the impact to a future article and, finally, try to identify the corrections that urgently need to be discussed. We will refer both to the European \u201cResilience and Recovery Facility\u201d (RFF) and to the Italian NRRP (which, however, represents 40% of the RRF and, therefore, is decisive for the overall outcome).<\/span><\/p>\n<h3><b>A methodological premise<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">One of the main innovations of the Recovery and Resilience Plan was the linking of payment instalments due to countries to the achievement of specific results.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These are the famous milestones (which are qualitative and allow to monitor the procedural compliance and the approval of reforms that are needed for the plan) and targets (which measure the completion of investments and are, therefore, quantitative). This is a substantial change because the European Commission no longer simply waits for expenditure to be reported, as is the case with the structural funds that finance cohesion policies. This change presents an interesting insight: I do not overwhelm you with controls (first and second level in EU terminology), yet I pay you when the result is not only achieved but made available to citizens. For example, in the case of railways, the relevant fulfilment is set beyond the testing phase and coincides with the start of the operation\u2019s use. Moreover, the extent to which EU resources have reached households and businesses is considered crucial data to avoid abuse.<\/span><\/p>\n<h3><b>Europe<\/b> <b>is falling behind schedule<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">If, however, we focus on milestones and targets, we cannot fail to share the concern about the delay detected by the independent evaluator\u2019s analysis in the report released in December 2023 in \u201csupport\u201d of the mid-term evaluation that the European Commission had presented to the Parliament and the Council. As of 31 July 2023, only 11% of the 7,092 milestones and targets marking the implementation of the RRF had been achieved. And even if only those to be achieved by June were to be taken into account, less than a third (32%) had been cleared. The situation might be even more concerning if we focus on the targets that measure the completion of investments and which are more concrete and difficult to achieve: in the middle of last year, of the 329 investments to be completed by the end of 2022, only 66 had been finalised (20%); of the 455 investments to be completed by 2023, not even one had been completed as of July last year. These are worrying signs because we are lagging behind a timetable that, in the first years, is made up more of \u201cwarm-ups\u201d (formal requirements, regulations, laws to be passed) than of real \u201craces\u201d (investments requiring calls for tenders, allocations, contracts, controls, payments and testing).The Vision think tank updated the numbers presented in December 2023 with the table from the Commission\u2019s Recovery and Resilience Scoreboard<\/span><\/p>\n<h3><b>Progress on milestones and targets as of 31 June 2024 (in millions of euros and as a percentage)<\/b><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-4036\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-675x1024.png\" alt=\"\" width=\"640\" height=\"971\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-675x1024.png 675w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-198x300.png 198w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-768x1164.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-1013x1536.png 1013w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-1351x2048.png 1351w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-300x455.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1-600x910.png 600w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_1.png 2003w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Source: Data provided by the European Commission\u2019s \u201cRecovery and Resilience Scoreboard\u201d.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Overall, we are at 20%. This percentage is influenced by delays in the approval of some plans, either due to the country\u2019s lack of interest (Belgium, Ireland, the Netherlands, for which the Plan has little impact on their economy) or due to disputes with the Commission (Hungary). But even if we exclude the laggards from the calculation, we have a progress rate of 29% at more than halfway through the period. Progress is lower than the payment of resources to the individual member states. The Commission has already disbursed EUR 240 billion of the EUR 648 billion of the RRF, 37% of the total (it would have been EUR 723 billion, but most countries have not used loans). Italy, which has completed 30% of the path, has received more than half of the resources (101 out of 193 billion). All this entails a financial risk for the Union.<\/span><\/p>\n<h3><b>The differentiated financial progress in Italy<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">What is missing, however, is data on financial progress. Or, at least, there is a lack of sufficiently systematic data to try to make a comparison between countries. Partial, but significant, indications are offered by Italy. After all, one third of the entire RRF is spent in our country (which is worth, moreover, 10% of the overall GDP, i.e. 3% for the three-year period in which the expenditure is concentrated). The Italian government should be credited with not only having built up a fairly effective monitoring system, but above all with having exceeded expectations, at least as far as the speed of expenditure is concerned. As the table shows, by the end of last year, we were at a quarter of the total expenditure.<\/span><\/p>\n<h3><b>Financial progress of the NRRP as of 31 December 2023 (Italy, in millions of euros and as a percentage)<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-4038\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_2-1024x819.png\" alt=\"\" width=\"640\" height=\"512\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_2-1024x819.png 1024w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_2-300x240.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_2-768x614.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_2-1536x1228.png 1536w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_2-2048x1637.png 2048w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_2-600x480.png 600w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Source: Vision on data from the Minister for European Affairs, Cohesion Policy, and the NRRP.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Overall, by the end of 2023, we had spent just under a quarter of the available resources. It is a situation that is not entirely reassuring but not dramatic either if we consider that any spending programme accelerates the implementation process, moving from calls for tenders to allocations to construction sites and testing. These numbers are also much better than those of cohesion policies: on the same date, the programmes financed with European structural funds for the 2021-2027 period had spent less than 1% of the available resources (EUR 75 billion). However, the table above shows significant divergences and, above all, a lack of consistency (this applies to Italy, but also to other countries) between the initial set-up of the programmes and the priorities we would expect from a plan created to respond to an extraordinary shock (the pandemic). There is a marked difference between different ministries. In particular:<\/span><\/p>\n<ol>\n<li><span style=\"font-weight: 400;\"> the challenge for the Ministries of Enterprise and the Environment, which have used automatic tax incentives extensively (Industry 5.0 and renovation bonuses), is almost completed;\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> major infrastructures are progressing faster than expected, relying on central purchasing groups and large contracts (such as those entrusted to the Italian railway network manager, which accounts for 8 of the 12 largest contracts, representing a quarter of the entrusted resources);\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> on the other hand, the Ministry of Health, which, in theory, manages one of the most critical areas in a policy created to respond to the emergencies caused by the pandemic, is facing difficulties. Tax incentives are imprecise but fast, because they do not require intermediaries. It is a path to be pursued only if the incentives can be designed in a way that is consistent with the set objective.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Large-scale contracts work, and it is perhaps worth reflecting on whether it would be more advantageous to further concentrate the \u201cMarshall plans\u201d on a few large-scale projects. These projects must, however, be selected in such a way as to achieve the greatest results in terms of GDP growth.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">After all, the table below (built on certified data from the European Commission) suggests that the NRRP is, in fact, directed to a few major contracting authorities.<\/span><\/p>\n<p><b>Distribution of NRRP by Implementing Body as of June 2024 (Italy, in euros and as a percentage)<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-4040\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_3-1024x610.png\" alt=\"\" width=\"640\" height=\"381\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_3-1024x610.png 1024w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_3-300x179.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_3-768x458.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_3-1536x915.png 1536w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_3-2048x1220.png 2048w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/09\/Grillo_3-600x357.png 600w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Source: Vision on European Commission data.<\/span><\/p>\n<h3><b>The healthcare and education chapter<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Then there is the data on healthcare. In a plan created to respond to the pandemic, we devote 8% of resources to healthcare. And by mid-term, we have spent less than 5% of those resources. Similar considerations apply to the other public service that showed vulnerability during the two years of Covid: the NRPP devotes 9% of the funds to schools, and we have spent less than 20%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is an anomaly that, according to a recent study by Vision (\u201cIs the digital transition a lever for structural reforms or does it reinforce the divide\u201d), applies to the entire European Union. The great experiment that we unintentionally lived through in those years demonstrated the relevance of digital tools, through which patients, doctors, students, teachers discovered they could meet. Now, comparative analysis shows that paradoxically, it is precisely the countries that had proved most vulnerable in this respect, that have spent the least on digital technologies that could make healthcare and education more resilient.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The data seem to indicate, therefore, that the \u201cshopping list\u201d technique works, but also that this approach obviously does not produce a strategy.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In conclusion, the data on the implementation of NextGenerationEU paint a picture that offers some positive surprises and worrying confirmations. At the European level, we are lagging behind, and this seems to be the result of the NRRP\u2019s difficulty in capturing the priorities of stronger countries. Italy is progressing faster than with other policies financed by structural funds, due in part to substantial differences between spending techniques (and this should be taken into account both for a re-proposal of the NRRP and for cohesion policies). In general, national recovery and resilience plans do not seem to outline a real strategy. We will discuss this further in the next article.<\/span><\/p>\n<p><strong><em>Bio<\/em><\/strong><\/p>\n<p><em><span style=\"font-weight: 400;\">Francesco Grillo is professor at Bocconi University and fellow at the European University Institute in Fiesole. Columnist for Il Sole 24 Ore, Il Messaggero and The Guardian. Director of the think tank Vision.<\/span><\/em><\/p>\n<p><em><span style=\"font-weight: 400;\">Valerio Rosa holds a degree in International Relations from Luiss University with several experiences abroad. To date he has published some articles on IRIAD review and IMEMO (Russia). He works at the think tank Vision.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>NextGenerationEU is the first plan to provide financing through common European debt, and Italy has placed its hopes for recovery on the National Recovery and [&hellip;]<\/p>\n","protected":false},"author":7504,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"coauthors":[126,125],"class_list":["post-4035","post","type-post","status-publish","format-standard","hentry","category-non-categorizzato"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>We are lagging behind on NextGenerationEU - Rivista Eco<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.rivistaeco.com\/en\/2024\/09\/02\/we-are-lagging-behind-on-nextgenerationeu\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"We are lagging behind on NextGenerationEU - 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