Europe’s largest economy is a latecomer: In Germany, the economy grew more slowly than anywhere else in the EU last year – only by 2.8 percent. The other member states are recovering faster from the severe slumps that the 2020 pandemic brought them. The reason for the leisurely pace in Germany is that important industrial sectors are suffering severely from the global supply bottlenecks, for example in the case of semiconductors. After all, the disappointing development has an advantage. Germany will probably receive 2.7 billion euros more from the EU’s Corona aid pot. The show calculations by the Brussels think tank Bruegel.
The so-called Recovery and Resilience Facility, the most important program from the €806 billion Corona Fund, will distribute a total of €338 billion in non-repayable grants to member states by the end of 2026. According to previous estimates, Germany should account for 25.6 billion euros, but now it will be more like 28.3 billion euros, a tenth more, as Bruegel economist Zsolt Darvas has calculated.
The increase results from the rules for the utility. As the heads of state and government the fund decided in summer 2020, they determined that 70 percent of the grants should be distributed on the basis of historical values. The population and per capita income in 2019 as well as the average unemployment rate between 2015 and 2019 were looked at. None of these variables reflect the consequences of the pandemic, which only began in early 2020. The situation is different for the remaining 30 percent of the subsidy amount: Here, the distribution depends, among other things, on how much a country’s economic output fell in 2020 and how quickly it recovered in 2021.
The Commission published estimates of how much each state is likely to be entitled to from this 30 percent package, based on its fall 2020 growth forecast. For Germany, that was 9.3 billion euros. Together with EUR 16.3 billion from the fixed allocation, this makes a total of EUR 25.6 billion. However, the authority will not make the final decision on the 30 percent package until this summer, when reliable data for growth in 2020 and 2021 is available. However, Bruegel researcher Darvas used the values for 2020 and 2021 from the Commission’s most recent economic forecast, which was presented a week ago, and thus prejudged this calculation. The result is that Germany will receive twelve instead of 9.3 billion euros from the 30 percent package, an increase of 2.7 billion euros.
France and Romania lose
Like all member states, Germany had to go to the Commission submit planswhich reforms and state investments the money from the Corona pot should support. It’s about building renovation and electric buses, about new after-school care places and subsidies for the chip industry. Of course, critics complain that Berlin is using the EU aid to finance initiatives from the national economic stimulus package that was previously decided – so these are not new, additional projects.
In addition to Germany, five other countries are to receive more from the 30 percent block because they are lagging behind in terms of growth: Spain, Portugal, Malta, Austria and the Czech Republic. In Spain the plus is even 7.7 billion euros, in Portugal it is 1.6 billion euros. On the other hand, there are also losers who have to do without grants because of their rapid growth. France and Romania, for example, will record losses of a little more than two billion euros.