The impact of EU funds on Covid-19 crisis management
Before the implementation of additional allocations such as the recovery fund, one of the first instruments put in place by the EU was the possibility for states to redirect their own European funds to deal with the Covid-19 crisis. Let's see how this process played out, in Italy and in other countries.
The impact of EU funds on Covid-19 crisis management
Before the implementation of additional allocations such as the recovery fund, one of the first instruments put in place by the EU was the possibility for states to redirect their own European funds to deal with the Covid-19 crisis. Let’s see how this process played out, in Italy and in other countries.
In recent months, the Covid crisis has put increasing pressure on the response capacity of both individual Member States and the European Union: first and foremost concening healthcare, with the need to ensure access to protective equipment, expand intensive care, and research and distribute vaccines. Then there are the economic and social issues: with lockdowns affecting consumption and production, businesses needed subsidies and loan guarantees.
Due to its very nature, the pandemic requires coordinated responses among EU countries that are both rapid and effective. Since the first weeks of the crisis, the European institutions have put various instruments in place. Among these, the most high-profile are the suspension of the Stability Pact, the Next Generation EU plan, the SURE funds to mitigate unemployment risks, a special ESM credit channel, the interventions of the European Investment Bank, and the purchase of securities by the ECB.
Within this framework, among the first measures launched were the Crii and Crii+ (or Coronavirus Response Investment Initiative) packages. These are not additional resources, but rather the possibility of redirecting existing European funds for the 2014-20 cycle to emergency-related expenses – from the purchase of medical supplies to support for businesses and social welfare.
This has been a decisive strategy: from the beginning of the crisis to mid-January 2021, it has led to a net increase of 6.8 billion euro in healthcare at the EU level, and more than 3.5 billion in support for affected businesses. More results will be reported in mid-2021. So far, they appear to have been immensely helpful for governments in dealing with the pandemic, especially in the early months.
Monitoring the reallocation of these resources is crucial, especially when it comes to answering the question: what impact have European funds had in managing the crisis? The European Commission’s publication of specific datasets allows us to evaluate, country by country, the role that European funds have played in the management of the crisis.
The reallocation of EU funds in the medical sector
The crisis has made it necessary to shift resources towards personal protective equipment, medical supplies and other health infrastructure. European funds have played a decisive role, though not an easy one to monitor. As emphasised by the Commission, the existing classifications date back to before the emergency and it is therefore very difficult to trace how countries have used the margins granted by the Crii and Crii+ packages.
Since May 2020, the Commission has introduced new classifications for Covid-19, but their use is not mandatory. There is therefore always a risk of producing an incomplete analysis. Another monitoring strategy, made possible by the datasets published by the Commission, is to isolate funds categorized as health-related and observe what has changed between 1 February 2020 to the present (the data collected for the purposes of this analysis is for January 15, 2021).
This method allows us to understand some trends. In 2020, a total of 7.2 billion (a net increase of 6.8 billion) was reallocated to the health sector.
How did this shift occur? The category of intervention with the largest increases is health infrastructure. The reallocation was 4.5 billion, almost constantly increasing. This is a sign that interventions in this sector (marked as intervention category 053) have been given priority by EU countries. Funds have also increased for programs promoting access to health services, a rather broad category that has likely allowed greater flexibility in the emergency phase.
Minor but nonetheless significant redeployments can also be observed in the area of e-health interventions. For these programs there is 177 million euro incoming and 139 million outgoing. This would seem to indicate a restructuring of funds in this category in order to optimize interventions specific to the Covid crisis.
Comparing EU countries, the greatest volume of reallocation in the health sector was in Spain (2.7 billion in inflows, 95 million outflows) and Italy (1.37 billion in inflows, 33 million outflows), followed by P