Flanders and the national Recovery and Resilience plan

Introduction

The European Semester 2021 was an exceptional cycle, in which the recovery and resilience plans of the Member States took centre stage. These plans fit within the Recovery and Resilience Facility (RRF), which will allow the European Commission to make €672.5 billion (in 2018 prices) in loans (€360 billion) and grants (€312.5 billion) available between 2021 and 2026 to support reforms and investments undertaken by Member States. As stated on the RRF-webpage, the aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.

The Recovery and Resilience Facility is at the heart of NextGenerationEU, the temporary instrument put in place by the European Commission to cope with the crisis caused by the coronavirus. The European Commission issues bonds to finance this instrument. It is the first time in history that the European Union has itself and for the Member States, borrowed money on the capital markets.

Flanders’ recovery plan ‘Flemish Resilience’

From the start of the COVID-19 crisis, Flanders decided to support affected citizens and companies during this difficult period. The Government of Flanders spent €1.5 billion on direct support for families and companies through various support mechanisms. This amount came on top of additional spending on, among other things, healthcare and direct support from the Federal Government.

The Government of Flanders shifted gear very quickly from crisis management to thinking about recovery. On 30 April 2020, it launched an Economic Recovery Committee and on 16 May 2020 this was supplemented by a Social Recovery Committee composed of experts in various fields. These committees compiled their recommendations into a report on 14 July 2020. The Government of Flanders set to work on this, which ultimately, in September 2020, led to Flanders’ recovery plan, 'Flemish Resilience', the most ambitious investment plan ever launched by a Government of Flanders.

Through ‘Flemish Resilience’ Flanders is investing an additional €4.3 billion this year and in the coming years to restore the economic and social fabric. The recovery plan has seven ambitions which have been translated into 35 clusters and 180 recovery projects. Of the 4.3 billion, 2.25 billion will come from EU financing through the Recovery and Resilience Facility.

At www.vlaanderen.be/vlaamseveerkracht the Government of Flanders provides a complete overview of the progress of the recovery plan projects.

Flanders’ contribution to the National Recovery and Resilience Plan

At about the same time as Flanders was preparing its recovery plan, the EU launched the Recovery and Resilience Facility (RRF). Each EU Member State has been offered a grant from this RRF and for Belgium this grant amounted to 5.92 billion. Due to the fact that the RRF is a 'performance based' instrument, where results must be delivered, the grants will not be paid out automatically. To claim the funds, Member States were required to prepare recovery and resilience plans. These plans must focus on investments and reforms, which must respond to the challenges of socio-economic policy, and to the green and digital transitions. By focusing precisely on the implementation of structural reforms, the recovery plan also links up with the European Semester and the country-specific recommendations, which have always been an important priority of the Government of Flanders. Since 2010, Flanders has been the only region in the European Union to systematically draw up its own reform programme.

The Federal Government commenced work on the National Recovery and Resilience Plan in October 2020. During the period from October 2020 to the end of April 2021, intensive consultations took place between Belgium's various Governments and draft plans were prepared and discussed.  At the end of April, Belgium submitted the National Recovery and Resilience Plan to the European Commission. In terms of content, 6 axes were defined: (1) climate, sustainability and innovation, (2) digital transformation, (3) mobility, (4) social inclusion and community, (5) economy of the future and productivity and (6) public finance. These axes, in turn, break down into 17 components which are each made up of investments and reforms. On 23 June 2021, the European Commission published its proposal for a Council Implementing Decision and submitted it to the Council for discussion. On 13 July 2021, the ECOFIN Council adopted the first batch of Council implementing decisions on the approval of national recovery and resilience plans, including that of Belgium. This paves the way for a 13% pre-financing to Belgium.

Flanders played a major role in shaping the National Recovery and Resilience Plan. It participated actively in all inter-federal consultation structures and always had a seat at the table in consultations with the European Commission. It also focused strongly on providing information to stakeholders. The Government of Flanders organised a digital event on 11 December 2020, in which hundreds of stakeholders took part. It also involved the social partners within the framework of the Flemish Economic and Social Consultative Committee (VESOC) and, last but not least, the Flemish Parliament was also kept regularly informed.

Flanders will receive the largest share of the funds provided to Belgium (€5.92 billion), amounting to €2.25 billion (approx. 38%). This will enable Flanders to finance just over half of its 'Flemish Resilience' recovery plan with these European resources. Flanders focused heavily on the projects' consistency with the country-specific recommendations and their contribution to the green and digital transitions. According to the Regulation, 37% and 20% of the funds had to contribute to the climate and digital transitions, respectively. Flanders has done very well in this regard, with 50% for climate tagging and 27% for digital tagging.

Twenty-nine projects from Flanders have been included in Belgium's National Recovery and Resilience Plan which fit into the 6 axes of the Plan. Here again, Flanders has achieved an excellent balance with 11 reforms and 18 investments, yet again proving that investments and the implementation of structural reforms go hand in hand. In addition, Flanders is participating in a number of inter-federal projects, such as the broad roll-out of 5G.

Jan Jambon presents Flemish contribution to RRP.jpg
A recent study by the Committee of the Regions looked at the recovery and resilience plans of 8 EU Member States. This study showed, among other things, that in Belgium the federated states played a central role in the National Recovery and Resilience Plan.

Flanders has recently supported several initiatives from the RLEG and Regions for EU Recovery alliances to emphasise the importance of regions in EU decision-making and implementation of EU policy. For example, in December 2020 Flanders co-signed a letter addressed to the European leaders and the heads of government of the current Council Trio Presidency (Germany, Portugal and Slovenia), in which the regions commit to “make a joint effort to strengthen the role of regions in the EU's post-COVID recovery decision-making process” and ask “to be actively involved in the preparation and implementation of the Recovery and Resilience Facility and the national plans adopted in this framework”. To date, the letter has been co-signed by 31 European regions.

Flanders and the Technical Support Instrument

In previous years Flanders already made optimal use of the Structural Reform Support Programme and is currently doing the same with the Technical Support Instrument (TSI). TSI is an instrument of the European Commission to assist EU Member States in planning and implementing reforms through training, studies, advice and the deployment of experts. In the TSI cycle 2021, 3 important reforms put forward by Flanders in relation to the Recovery and Resilience Plan were supported by the European Commission: (1) facilitating the digital transformation in education in Flanders, (2) promoting and developing green skills in Flanders, (3) developing the hydrogen value chain and facilitating access to networks in Flanders. In October 2021, Flanders will again try to submit good projects in the context of the TSI call 2022 with a view to receiving additional support for reforms.