Briefing - Powering national financial instruments with Next Generation EU - 09-04-2025
In the EU context, financial instruments represent measures for financial support provided from the EU budget – in addition to traditional grants – to address one or more specific EU policy objectives. While these instruments can take various forms, they are largely grouped into equity investments, loans or guarantees, and can be used in combination with grants. In policymaking, financial instruments are of great value, as they produce a leverage effect that unlocks public and – most importantly – private resources beyond the initially invested capital. Financial instruments can be set up at different levels of governance. The Next Generation EU (NGEU) recovery instrument, worth up to €712 billion, was set up to help Member States emerge more resilient from the pandemic while fostering the green and digital transitions. It does so through its main spending tool – the Recovery and Resilience Facility (RRF) –in the form of grants and loans. Moreover, NGEU combines loans and grants, which maximises the value added of this EU policy response focused on recovery and resilience. Through the individual national recovery plans that Member States needed to develop to tap into the RRF, NGEU can finance, among other projects, investment and reform measures creating national financial instruments. These measures address – to a varying extent – the country-specific recommendations that are relevant to financial instruments. The six selected reform measures range from strengthening capital markets in Slovenia to adopting laws allowing the use of guaranteed loans to improve energy efficiency in Greece. The 13 chosen investment measures, amounting to roughly €13.9 billion, include equity growth instruments for businesses in Bulgaria, financial instruments for digital innovation in Latvia, and guarantees for student loans in France. Eight Member States have not introduced financial instrument measures in their recovery plans, since this is not a requirement. Experts emphasise that the RRF has led to the uptake of some financial instruments, particularly regarding energy efficiency, which was deemed a positive trend.
Source : © European Union, 2025 - EP