The European post-Covid-19 recovery plan (Next Generation EU) could make life easier for businesses, but the EU Member States have not exploited its full potential, according to the European Court of Auditors in a report presented on Monday 27 October.
In 2019 and 2020, through the country-specific socio-economic policy recommendations set out as part of the ‘European Semester’ budget process, the European level has made 82 recommendations to Member States to improve the business environment (e.g. promoting private investment, improving access to finance, simplifying tax systems and reducing the administrative burden).
No fewer than 157 reforms and 254 investments responding to these recommendations have been incorporated into the post-Covid-19 national recovery plans, with a total contribution from the Recovery and Resilience Facility (RRF) of close to €110 billion.
Nevertheless, the Court notes a general lack of alignment between the country-specific recommendations on the business environment and the measures in this area included in the national recovery plans. Not only that, but in Luxembourg and Sweden, none of the measures in the post-Covid recovery plan covers the recommendations on the business environment that were addressed to them.
According to the European auditors, while a quarter of the recommendations have led to significant actions, none of them have been fully implemented. Almost half of the recommendations were only very partially taken into account, and 7% were completely ignored.
The reforms implemented in the Member States audited have generally led to the expected results, such as the adoption of legislation at national level. Nevertheless, the effects of a legislative initiative can take months or even years to be felt on the ground, the auditors caution.
According to them, only a third of the reforms carried out so far have produced substantial results. Even then, their impact is likely to be attenuated by the short period of application of the measures, their tenuous link with the policy area concerned or their potential cancellation.
In the end, “results are often slow to materialise”, summarised Ivana Maletić, the member of the Court responsible for the audit, in a press release.
Success. However, the Court notes that some reforms are fully in line with the country-specific recommendations made and are achieving convincing results. It highlights the introduction in Austria of a new legal form for young innovative SMEs, which provides for a flexible distribution of shares between investors and employees and tax incentives. With this reform, the Austrian authorities expect to create 7,500 new companies by the end of 2028.
Finally, the Court also notes that Finland has managed to implement the business environment recommendations made to it without receiving a single euro from the RRF. Hungary, which did not receive any European funds from the RRF for breaching the principles of the rule of law, has substantially succeeded in doing so.
Link to the report by the European Court of Auditors: https://aeur.eu/f/j65 (Original version in French by Mathieu Bion)