Impact Policy Tracker

EU's Recovery and Resilience Facility

Launched in 2021 as the core component of NextGenerationEU, the (RRF) is the European Union’s largest-ever financial instrument to mobilise capital for reforms and investments across Member States. Designed as a temporary mechanism running from 2020 to 2026, it provides up to €648-723 billion in grants and loans to help countries mitigate the economic and social impacts of the COVID-19 pandemic; accelerate the green and digital transitions; strengthen resilience; and stimulate sustainable growth.

The RRF operates as a performance-based financing instrument: funds are disbursed only when a government successfully completes the milestones and targets agreed in its National Recovery and Resilience Plan (NRRP), ensuring effectiveness and accountability. To benefit from support under the Facility, EU governments submitted National Recovery and Resilience Plans outlining the reforms and investments they will implement by the end of 2026, with clear milestones and targets. Each plan was required to allocate at least 37% of spending to green measures and 20% to digital measures, anchoring national strategies in EU priorities.

To finance the Facility, the European Commission raises capital directly in the capital markets on behalf of the EU. This enables Member States - especially those with higher borrowing costs - to access large-scale financing at favourable terms.

Proven social, environmental and macroeconomic impact: Mid-term evaluations show that the RRF has already delivered impressive and measurable outcomes, including 22 million MWh/year of energy savings, 18 million households newly connected to high-speed internet, support for 1.5 million enterprises, and training opportunities for 7 million people across the EU. Beyond these results, the Facility also generated significant macroeconomic effects: EU GDP in 2022 was 0.4% higher than it would have been without the RRF, and EU-wide unemployment was 0.2 percentage points lower, with the largest gains observed in Greece, Italy, Portugal, and Spain due to higher absorption and labour-market reforms.

Government’s Role:
Market Participant

Country:
European Union

Policy Type:
Funding Programmes

Year: 2021

Responsible Institution:
European Parliament and the Council of the European Union

Additional information:
Mid-term evaluation of the Recovery and Resilience Facility

Funding Programmes

What are funding programmes?

Funding programmes - which provide financial resources in the form of grants, loans, equity, and guarantees - can be used by governments and public institutions to address financing gaps and attract private sector participation, often through dedicated funding windows, government-backed funds, and public-private partnerships, towards businesses that place social and/or environmental impact at their core. By doing so, they help grow a pipeline of mission-oriented organisations capable of addressing systemic challenges while contributing to inclusive and sustainable economic development.

This support can take various forms: capital provided directly to enterprises to meet early-stage or growth financing needs; investments channelled through intermediary funds to reach a broader range of businesses; or blended finance models where public or philanthropic actors absorb higher risks to make investments viable for private investors. The design of these mechanisms is often catalytic, helping to build investor confidence, promote financial inclusion, and strengthen the resilience of social enterprises across diverse sectors and geographies.