European Union | Corona Fund: Financial injection with shortcomings

It had to happen quickly: To respond to the onset of the coronavirus pandemic, the European Commission launched the multi-billion euro Recovery and Resilience Facility (RRF) in 2021. A special report by the European Court of Auditors shows that while financial aid flowed to companies, many reforms intended to improve the business environment have not yet been implemented, even though they were tied to the payments. These include simplifications for business start-ups and the digitization of administration.

"There were significant delays," said Ivana Maletić, the Court of Auditors responsible for the audit, at the presentation of the report on Monday. The Court of Auditors is an independent audit authority of the EU. Four countries were selected for the sample investigation: Bulgaria, Spain, Cyprus, and Austria.

Of the €650 billion allocated to the ARF, the European Commission earmarked approximately €109 billion for reforms to improve the business environment across Europe. For the first time, joint European loans were raised for the Corona Fund.

"From a macroeconomic perspective, the instrument can be considered a success," explains Sebastian Watzka, head of the European Macroeconomics department at the Institute for Macroeconomics and Business Cycle Research, which is affiliated with the German Trade Union Confederation (DGB), in an interview with "nd." "Partly because poorer countries and those more severely affected by the pandemic received more funds." This has promoted convergence within the EU. "And it is good that common European debt could be raised," Watzka emphasizes.

But the situation is different when it comes to the Commission's political reform proposals. The European Court of Auditors found in its report that national governments took up two-thirds of the proposals, but not a single one was fully implemented. Almost half (41 percent) of the recommendations received only marginal attention. Seven percent of the demands were not addressed at all.

The implementation of many projects is delayed and even threatens to be canceled altogether. Most reforms were behind schedule. About a third (36 percent) were completed more than six months late. More than a quarter (28 percent) were still not finished by April 2025. The measures must be completed by the end of August 2026.

According to the auditors, the delays were due to various reasons, including technical complications, administrative problems, and political disagreements. In some cases, new governments took office and changed previously agreed agreements. Above all, however, there was a lack of clear standards for the allocation of funds, as well as a sanction mechanism to reclaim funds if targets are not met. A request to the EU Commission remained unanswered by the time of publication.

With regard to negotiations on the next EU financial framework, auditor Maletić emphasizes: "The deficiencies in the Corona Fund must not be incorporated into the next EU budget." And in the future , trade unions, business associations, and other interest groups must also be more closely involved in the consultations .