REACT-EU

Following the coronavirus pandemic, the European Commission launched a comprehensive and ambitious recovery plan. In this regard, cohesion policy will play a key role in ensuring a balanced recovery, fostering convergence and making sure no one is left behind. The REACT-EU regulation was adopted on 23 December 2020.

The REACT-EU package

REACT-EU (Recovery Assistance for Cohesion and the Territories of Europe) will be one of the largest programmes under new instrument Next Generation EU amounting to EUR 50.6 billion.

This funding is entirely new: it is a top up to 2014-2020 programmes and additional to the cohesion allocations 2021-2027, bringing the total envelope of the Structural and Investment Funds higher than current levels and becoming the highest single-policy grant instrument in the EU budget.

It continues and extends the crisis response and crisis repair measures delivered through the Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative Plus and constitutes a bridge to the long-term recovery plan. Therefore, these additional resources should be used for projects that foster crisis repair capacities in the context of the coronavirus crisis, as well as investments in operations contributing to preparing a green, digital and resilient recovery of the economy.

The successful implementation of the REACT-EU will depend on 3 building blocks – its strength (financial allocation), speed (by using the existing programmes until 2023) and full flexibility of the implementation rules

Allocation

The allocation methodology for this funding takes full account of the economic and social impact of the crisis on the EU countries, reflecting the GDP drop and rise of unemployment including among young people, as well as the relative wealth of the countries.

To ensure that the additional resources can be geographically targeted at areas where support is most needed, as an exceptional case and without prejudice to the normal cohesion policy allocations, the additional resources are exceptionally not divided by categories of regions.

However, the partnership principle requiring close cooperation with regional and local authorities for the programming and implementation of these resources shall fully apply. Similarly, the focus on the less developed regions cannot be neglected and regions which need more support will receive more support.

These additional resources will be distributed to Member States in 2021 and 2022 from the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Fund for Aid to the Most Deprived (FEAD) - as well as the Youth Employment Initiative (YEI). Technical assistance measures can also be financed.

In order to provide swift support to regions, expenditure incurred from 1 February 2020 is eligible.
The final date of eligibility for this expenditure is kept on 31 December 2023, in line with the 2014-2020 legislative framework.

Thematic objective

The package will provide additional funding for existing of new dedicated programmes under the Investment for Growth and Job goal (IGJ) and for existing cross- border cooperation programmes under the European territorial cooperation goal.

From the ERDF, the additional resources shall primarily be used to support investment in products and services for health services and to provide support in the form of working capital or investment support to SMEs.

In order to create the right conditions for recovery, it should also be possible to support investments contributing to the transition towards a digital and green economy as well as in infrastructure providing basic services to citizens, or economic measures in the regions that are most dependent on sectors most affected by the crisis (e.g. tourism, culture, hospitality services etc.).

From the ESF, the additional resources shall primarily be used to support job maintenance, including through short-time work schemes and support to self-employed. The additional resources shall also support job creation, in particular for people in vulnerable situations, youth employment measures, skills development, in particular to support the twin green and digital transitions, and enhanced access to social services of general interest, including for children.

Implementing process

To provide the maximum possible assistance to the Member States, the implementing conditions for these additional resources are very generous and flexible.

• No national co-financing is required for this funding.  That means that the EU will provide 100% support if Member States so wish. 
• A high level of pre-financing is proposed to ensure that the lack of liquidity does not impose a bottleneck to the quick roll-out of this support. Member States will be encouraged to use this additional high pre-financing to provide advance payments to beneficiaries.
• This allocation can be spent in any category of region, the scope of support is wide and transfers among ERDF and ESF are always possible
• There is no ex-ante conditionality or thematic concentration