EU budget and recovery funds likely to be agreed next month, Spain plans maximumtake-up

by Altruistic_Camel

Daiwa Securities

  • As expected, yesterday evening’s teleconference of leaders failed to resolve the impasse over the forthcoming seven-year EU budget and associated recovery grant and loan programme (Next Generation EU). Hungary and Poland -which have been the biggest net beneficiaries of the current multi-year budget –continued to block progress in protest at attempts to link disbursement to the adherence to conditions related to the ‘rule of law’.
  • We continue to expect a solution to be found next month, perhaps at the summit on 10 December, to allow the recovery funds to be implemented next year. And we also expect Hungary and Poland to give their consent and participate in Next Generation EU in due course, not least due to the significant amount of money (almost €80bn) that those countries would then be able to raise under the scheme.
  • Other member states also clearly expect progress in due course, with Spain today the first euro area member state to announce its intention to take advantage of the maximum amount of grants and loans available under the scheme. For Spain, that could reach more than €150bn in current prices over the coming five years, with a little more than half of that to be available in grants. Only Italy –which could in due course raise close to €200bn in current prices –would be able to receive more.
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