In recent years, the term Next Generation EU Funds has gained prominence in the media, politics, and business circles. But do we really know what they consist of, how they are structured, and what their true scope is? Discover the ins and outs of these funds It is essential to understand how the European Union is addressing the crisis caused by the pandemic and what the specific opportunities are for Spain's economic recovery and transformation.
This article seeks to comprehensively and understandably explain what the Next Generation EU Funds are, how they are deployed in practice, and what their impact is on different sectors and territories. From the origins of this unprecedented instrument to the specific opportunities it offers for businesses, freelancers, and governments, we'll cover every angle to give you a clear and up-to-date view.
What are the Next Generation EU Funds?
The Next Generation EU Funds represent the European Union's most ambitious and coordinated response to the consequences of the COVID-19 pandemic.. They emerged in July 2020, when the European Council approved the creation of a temporary recovery instrument endowed with 750.000 millones de eurosFor the first time in history, the EU decided to issue debt jointly on behalf of all its Member States, reflecting a solidarity-based approach and a commitment to building a more resilient and sustainable common future.
The main purpose of these funds Its purpose is to cushion the economic and social blow resulting from the health crisis, boost cohesion, and facilitate the transformation of EU countries. But its scope goes beyond mere repair: it seeks to lay the foundations for a greener, more digital, and inclusive European economy in the next decade.
How Next Generation EU is structured: Main instruments
The heart of the Next Generation EU package is two major financial instruments.:
- Recovery and Resilience Mechanism (RRM).
- REACT EU.
The MRR is the fundamental pillar, managing the majority of resources, while REACT-EU serves as a complement, offering additional support to Member States for rapid response actions..
In addition, part of the funds are also channeled into other complementary programs., such as the European Agricultural Fund for Rural Development (EAFRD), the Just Transition Fund (JTF), Horizon Europe (R&D&I), InvestEU and other projects that pursue strategic missions for the continent.
The Recovery and Resilience Facility (RRF)
The MRR is undoubtedly the backbone of Next Generation EU, endowed with approximately €672.500 billion.Its mission is to support States in the implementation of structural reforms and transformative investments, focused on sustainability, digitalization and the resilience of their economies.
Spain is among the main beneficiaries of the MRR, with an allocation of nearly €140.000 billion, divided between non-repayable transfers and soft loans. According to the most recent data, around €60.000-€70.000 billion corresponds to transfers with no obligation to repay, and another €70.000-€80.000 billion corresponds to loans.
Each participating country had to design and present its own National Recovery and Resilience Plan, outlining the investments and reforms it intended to undertake by December 31, 2026. These plans had to be technically approved by the European Commission and politically approved by the Council, ensuring alignment with the objectives of ecological transition, digitalization, and social and territorial cohesion.
In the Spanish case, the Spain Can Plan articulates its roadmap around four cross-cutting axes:
- Ecological transition.
- Digital transformation.
- Social and territorial cohesion.
- Gender equality.
These axes are broken down into ten lever policies and 30 specific lines of action., ranging from education and R&D&I to social inclusion, strengthening the business community, and promoting strategic sectors.
REACT-EU: Flexibility and speed in response
The second major pillar of Next Generation EU is REACT-EU, which amounts to approximately €47.500 to €50.600 billion. This instrument was designed to expand and strengthen immediate actions to address the crisis, continuing the emergency measures that were launched from the very beginning of the pandemic.
REACT-EU funds arrive in Spain to specifically support the autonomous communities., since most of them have been assigned to them so that they can implement recovery plans through direct aid, subsidies, tenders or agreements. The main characteristic of REACT-EU is its flexibility and agility, facilitating the rapid implementation of projects to Promote the green, digital, and resilient recovery of the economic fabric.
The allocation for Spain exceeds 12.400 billion euros, focused on the hardest-hit regions and sectors that require urgent action.This fosters a cohesive recovery, and no one is left behind in the transition to the new post-pandemic economy.
How is Next Generation EU funded?
What really sets Next Generation EU apart from previous packages is the European Union's decision to borrow en bloc.The European Commission issues debt on financial markets on behalf of the 27 Member States, which increases negotiating power and lowers costs.
This joint debt allows the 750.000 billion euros to be channeled into two large formats.:
- 390.000 billion in non-refundable transfers.
- 360.000 billion in low-interest, long-term loans.
Loan repayments will be made between 2028 and 2058, and new own resources (EU tax sources) are planned to help cover these expenses, such as taxes on non-recycled plastic waste, future digital taxes, or carbon border adjustment mechanisms.
Other initiatives and complementary funds
Next Generation EU does not act in isolation, but reinforces other European Union policies.. Thus, it channels additional funds to programs as varied as:
- European Agricultural Fund for Rural Development (EAFRD): support for agricultural and rural development policy.
- Just Transition Fund (FTJ): aimed at supporting the most vulnerable regions on the path towards climate neutrality.
- Horizon Europe: the main EU research and innovation programme for 2021-2027.
- InvestEU: to stimulate investment, innovation and employment in Europe.
- rescueEU (rescEU): enhances the Union's capacity to address disasters and manage emerging risks.
These instruments contribute to a holistic recovery, ranging from industrial transformation to disaster protection or the modernization of essential services..
The specific case of Spain: allocation and deployment
Spain is among the countries that will receive the most resources from the Next Generation EU program., behind only Italy and ahead of France and Germany in overall allocation. The Spanish Recovery, Transformation, and Resilience Plan has been highly rated by European authorities, focusing investments on areas with the greatest capacity for transformation:
- Ecological transition (39,12% of the first phase funds, 2021-2023).
- Digital transformation (29%).
- Education and training (10,5%).
- R&D+i (7%).
- Social inclusion and territorial cohesion.
In the initial period, nearly 70.000 billion will be mobilized, with a strong concentration on reforms and projects that require greater urgency.Starting in 2022 and 2023, loans are expected to be activated to drive additional investments and strengthen public and private programs to ensure the sustainability of the recovery.
Calls, grants and access mechanisms
The management and distribution of Next Generation EU funds in Spain It is carried out through various means:
- Calls for grants and direct aid for businesses, self-employed individuals, local authorities, and autonomous communities.
- Public tenders for contracts for the execution of specific projects.
- Agreements and collaborations with social, territorial and business stakeholders.
Each administration (central government, autonomous communities and local entities) manages its own calls, depending on the assigned powers. Therefore, interested companies and citizens should pay attention to official portals and bulletins in their geographic and sectoral areas to access financing opportunities.
Requirements and conditions to access the funds
Requirements to benefit from the Next Generation funds They depend on the type of aid, but usually include:
- Be an SME, self-employed, or legal entity in accordance with current regulations.
- Comply with the criteria of the General Subsidies Law.
- Be up to date with tax obligations and with Social Security.
- Not exceeding the limits of aid received in recent years ("minimis").
- In the case of the Digital Kit, perform a digital self-diagnosis test.
- For projects subject to programs like the MRR, have an Anti-Fraud Plan and ensure transparency in management.
In all cases, it is required that the funds be allocated to investments or reforms aligned with the European objectives of sustainability, digitalization and inclusion.Transparency and compliance with the law are prioritized, including fraud prevention and social and environmental impact assessment.
Impact on SMEs, self-employed workers and the business community
The digitalization and modernization of small and medium-sized enterprises is one of the clearest priorities of Next Generation EU.Specific programs such as the Digital Kit allow SMEs and self-employed individuals to access direct benefits to finance their digital transformation, from online presence and e-commerce to customer management and cybersecurity.
The aid reaches the entire business community, regardless of size, sector or location., provided the requirements are met and projects are submitted that are aligned with the plan's objectives. In addition, there are accredited agents (Digitalization Agents) who facilitate the implementation of solutions and support companies throughout the process.
The approach is inclusive, seeking to promote a cohesive recovery and ensure that no sector or region is left behind in the transformation process..
Control, transparency and fight against fraud
The deployment of Next Generation EU funds involves strict oversight mechanisms.. States and entities participating in the execution of projects must have anti-fraud plans and ensure the proper use of resources. The regulatory bases for the calls for proposals detail the obligations regarding information, execution, and accountability.
The European Commission and national bodies carry out regular audits, evaluating the progress of the milestones and objectives defined in the national plans. Failure to meet objectives, double funding, or irregularities may result in the return of funds or exclusion from future calls for proposals.
Future opportunities and challenges
This instrument represents a historic opportunity to modernize the Spanish and European economy.The volume of resources, the flexibility of the lines of action, and the focus on ecological and digital transformation generate very high expectations, but also challenges in management, coordination, and execution.
The success of Next Generation EU will depend on the ability to identify key projects, mobilize private investment, and appropriately channel funds toward the most needy sectors and groups.To achieve this, public-private collaboration and institutional transparency will be key aspects.
The commitment to innovation, sustainability, and territorial and social cohesion is at the heart of this plan. The challenge will be Seize the opportunity to build a more resilient, competitive economy, adapted to the challenges of the 21st century..
The Next Generation EU Funds have become a key element in the recovery and transformation of the European economic and social landscape following the pandemic. Their design, ambition, and scope mark a turning point in the way the European Union addresses global challenges. In the Spanish case, these resources are intended to be the driving force behind reforms and investments that boost digitalization, sustainability, cohesion, and innovation, offering real opportunities for businesses, administrations, and citizens. It is crucial to stay informed and actively participate in the raising and management of these funds to make the most of this historic opportunity..