Next Generation EU: what does it mean for the Italian economy?

Introduction

What does the Next Generation EU programme include? How will this initiative impact the Italian economy?

The brief was produced with support from the European Affairs team and aims to answer these questions, estimating the effects that the European programme funds could have on the Italian economic system.

Read the key message and download the pdf for further details.

This brief estimates the impact of the Next Generation EU programme, approved by the European Council on 21 July.
The package provides a total of 750 billion euros , which the European Commission will raise by issuing securities on the financial markets, guaranteed by the European budget.
Analysing the criteria for allocating funds, Italy could receive around 205 billion euros, including 77 in grants, 126 in loans and 2 in guarantees.
Based on these simulations, it is estimated that between 2021 and 2024 the programme could lead to an average annual increase in the level of EU GDP of around 1.3%, compared to expected GDP without the Next Generation EU funding.
The benefits would be even greater for Italy: the average annual increase in the estimated level of GDP by 2024 due to the Next Generation EU funding could be up to +3.1%.
The debt to GDP ratio in Italy is also expected to fall by more than 17 percentage points in the medium term.
Thanks to the Next Generation EU funding, it is estimated that Italy could recover to the level of GDP before the global financial crisis by 2024 and the pre-pandemic crisis by 2022.
The pay-off for Italy is therefore very high , but potentially short term unless the funds are used in structural reform plans with lasting impacts in terms of productivity.
We need to develop an ambitious and credible action plan, both for accessing the funds and using them in programmes that create structural changes in the economic and institutional framework.
Institutions with a presence around the country and that already have established certification processes for the use of European funds can play an important role.
The National Promotional Institutions, such as CDP, already have reporting mechanisms for using funds (e.g. the Junker Plan), which can ensure full transparency and accountability for the use of funds.

Read the brief (Available in Italian)