The Legal Service of the Council of the European Union validates the legal basis of the European Commission’s proposal to borrow 750 billion euros on the markets on behalf of the EU27 to finance the actions foreseen in the framework of the Next Generation EU, in an opinion dated 24 June.
“The Treaties allow the Union legislator to establish a mechanism such as the one proposed in the Next Generation EU, provided that it incorporates a number of safeguards” aimed at preserving the principles of “neutrality” and “budgetary balance”, the experts say in their 67-page opinion, of which EUROPE has a copy.
According to them, the “exceptional character” of the Covid-19 post-pandemic crisis, which the Next Generation EU aims to tackle, and its “limited duration” constitute such guarantees.
Funds raised on the markets will constitute ‘external assigned revenue’ in order to protect the own resources system of the EU budget. The experts also recommend adjusting the amended own resources proposal, which increases the margin under the own resources ceilings, to include provisions for substantial liquidity management.
Article 122 TFEU. Due to the temporary and exceptional nature of the Next Generation EU, the EU Council’s legal experts validate the use of Article 122 TFEU as the legal basis for the Recovery and Resilience Facility, the best endowed instrument of the European plan, which will help Member States to relaunch and modernise their economies (see EUROPE 12494/2).
This legal basis authorises the EU Council, in a spirit of solidarity, to take appropriate measures in response to an exceptional situation beyond the control of the Member States.
On the other hand, the EU Council Legal Service points out that Article 122 TFEU does not allow direct assistance to non-Member States to the extent that the measures provided for do not have a direct consequence on Member States. The legislative proposals providing for assistance to non-Member States under the Next Generation EU should therefore be adapted.
The Legal Service also considers that, in view of the employment-related requirements of Article 122 TFEU, the criteria for allocating EU financial assistance through the Just Transition Fund (JTF) and the scope of the EU4Health programmes (see EUROPE 12494/5, 12495/7), Horizon 2020 and the RescEU civil protection mechanism (see EUROPE 12494/6) “are defined in a too broad manner” and should be linked more closely to the impact of the pandemic.
Finally, the legal experts are of the opinion that the Next Generation EU does not infringe Article 125(1) of the Treaty prohibiting the EU from directly financing the operating costs of a Member State and sub-State public entities. (Original version in French by Mathieu Bion)