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The European Commission has today (22 June) adopted a positive assessment of Italy’s recovery and resilience plan. This is an important step towards the EU to disbursing €68.9 billion in grants and €122.6bn in loans under the Recovery and Resilience Facility (RRF). This financing will support the implementation of the crucial investment and reform measures outlined in Italy’s recovery and resilience plan. It will play a key role in enabling Italy to emerge stronger from the COVID-19 pandemic. The RRF – at the heart of NextGenerationEU – will provide up to €672.5bn (in current prices) to support investments and reforms across the EU. The Italian plan forms part of an unprecedented coordinated EU response to the COVID-19 crisis, to address common European challenges by embracing the green and digital transitions, to strengthen economic and social resilience and the cohesion of the Single Market.

The Commission assessed Italy’s plan based on the criteria set out in the RRF Regulation. The Commission’s analysis considered, in particular, whether the investments and reforms set out in Italy’s plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience. Securing Italy’s green and digital transition The Commission’s assessment finds that Italy’s plan devotes 37% of total expenditure on measures that support climate objectives. The plan includes investments to finance a large-scale renovation programme to increase the energy efficiency of buildings. It also provides for measures to promote the use of renewable energy sources, including hydrogen. The plan places a special emphasis on reducing greenhouse gas emissions from transport, with investments in sustainable urban mobility and railway infrastructure.

The Commission’s assessment finds that Italy’s plan devotes 25% of its total allocation to measures that support the digital transition. Measures to support Italy’s digital transition include investments to support the digitalization of businesses and the expansion of ultra-fast broadband networks and 5G connectivity. Investments are also targeted towards the digitalisation of the public administration, with measures planned for the general public administration, health, justice, and education sectors. Reinforcing Italy’s economic and social resilience The Commission considers that Italy’s plan includes an extensive set of mutually reinforcing reforms and investments that contribute to effectively addressing all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Italy by the Council in the European Semester in 2019 and 2020. The plan includes measures to contribute to the sustainability of public finances, increase the resilience of the healthcare sector, improve the effectiveness of active labour market policies, and improve education outcomes.

The plan is also expected to boost investment with a view to reduce regional disparities, increase the effectiveness of the public administration and the efficiency of the justice system, improve the business environment and remove barriers to competition. The plan represents a comprehensive and adequately balanced response to Italy’s economic and social situation, thereby contributing appropriately to all six pillars referred to in the RRF Regulation. Supporting flagship investment and reform projects The Italian plan proposes projects in six European flagship areas.

Commission President Ursula von der Leyen (pictured) said: “Today, the European Commission has decided to give its green light to Italy’s €191.5bn recovery and resilience plan. This unprecedented level of investment, coupled with crucial reforms will help rebuild the Italian economy and prepare it for the future. I am proud that NextGeneration will help the Italian people look to the future with confidence and ambition. Now is the time to deliver. We will stand by you every step of the way to ensure that the plan will be an Italian and European success.”

These are specific investment projects, which address issues that are common to all member states in areas that create jobs and growth and are needed for the twin transition. For instance, Italy has proposed to provide €12.1bn for energy efficiency in residential buildings, €32.1bn for sustainable mobility, and €13.4bn to support the digitalisation of businesses. The assessment also finds that none of the measures included in the plan significantly harm the environment, in line with the requirements laid out in the RRF Regulation. The control systems put in place by Italy are considered adequate to protect the financial interests of the Union. The plan provides sufficient details on how national authorities will prevent, detect and correct instances of conflict of interest, corruption and fraud relating to the use of funds.

An Economy that Works for People Executive Vice President Valdis Dombrovskis said: “Italy’s plan will give a structural boost to its economic growth and help to reduce social and regional differences. Ambitious reforms of the public administration and justice system – including through digitalisation – along with improvements to the business environment will do a great deal to remove barriers that are holding up growth. Efforts to reduce tax evasion and make public spending more efficient will make Italy’s economy fairer and more sustainable. We also welcome the plan’s social aspects, particularly for providing social housing, the measures to benefit southern regions, and its focus on improving education and job opportunities. It will also help to protect the climate by raising energy efficiency of buildings, boosting sustainable transport and promoting renewable energy. We look forward to the plan bringing about real change on the ground once it is put fully into effect.”

Next steps

The Commission has today adopted a proposal for a decision to provide €68.9bn in grants and €122.6bn in loans to Italy under the RRF. The Council will now have, as a rule, four weeks to adopt the Commission’s proposal. The Council’s approval of the plan would allow for the disbursement of €24.9bn to Italy in prefinancing. This represents 13% of the total allocated amount for Italy. The Commission will authorize further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in the recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.

Economy Commisioner Paolo Gentiloni said: “After an unprecedented crisis, Italy today has a unique opportunity to build a better future. Italy has presented a plan for reforms and investments that will enable the country to address problems that have held back economic development and social progress for far too long. A more effective public administration, more efficient legal proceedings, increased competition: we are no longer talking about a book of dreams but about key elements in a detailed work programme. At the same time, Italy will carry out crucial investments in sustainable mobility, renewable energy, the digitalisation of businesses and the roll-out of 5G and ultra-broadband, unleashing new opportunities for all parts of the country. If Italy can make a success of NextGenerationEU, it can mark the start of a new chapter of stronger growth and sustainable development. Achieving that success must be the number one priority for the years to come. Europe will be at Italy’s side every step of the way.”

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