The highest amount of the NextGenerationEU funds is coming Rome! How is Italy planning to use its trophy?

The NGEU programme, adopted with the aim to boost the block’s economy following the pandemic crisis, is built around the Recovery and Resilience Facility (“RRF”), which running from 2021 to 2026 will deploy a total size of 750 billion euros – of which 390 billion euros is in the form of grants, and the remaining 360 billion euros is in the form of low-interest loans.

Under the RRF, Italy is set to receive 191.5 billion euros in total over the next 5 years (68.9 billion euros in grants and 122.6 billion euros in loans).

In order to reach the overall objectives established by the Italian National Recovery and Resilience Plan (“NRRP”), an additional sum of 30.6 billion euros will be funded (by means of national dedicated resources) through a Complementary Fund established by Italian Decree-Law No. 59 of 6 May 2021, based on the multi-year budget variance approved by the Italian Council of Ministers on 15 April 2021.

A further 26 billion euros has been earmarked for the implementation of specific works and for replenishing the resources of the Development and Cohesion Fund by 2032, and a final 13 billion euros from the ReactEU will be spent in the years 2021-2023. The total sum of the funds envisaged thus amounts to 261 billion euros.

The NRRP, envisaging huge investments and a consistent reform package, was submitted by the Italian Government to the European Commission on 30 April and subsequently endorsed by the Council of the EU last 13 July.

Outline of the ITALIAN Recovery and resilience Plan

The NRRP is based on three strategic objectives that are in line with the agreed core challenges under the NGEU: ecological transition, digitisation and innovation and social inclusion. The underlying goal of the NRRP is to contribute to addressing structural weaknesses of the Italian economy by reforming and digitising both the public administration and the justice system, by improving the business environment and supporting businesses digitisation, by protecting the climate through large-scale energy-efficiency renovations and sustainable mobility, and, last but not least, by improving education and training across the country.

The three key areas around which the NRRP is designed further develops in the six following main missions.

1. ‘Digitisation, Innovation, Competitiveness, Culture’ (40.32 million euros), articulated through three key components:
   
   
   • Digitisation, innovation and security of the public administration sector;
   • Digitisation, innovation and competitiveness of the production sector;
   • Tourism and Culture 4.0.

   Main actions under this first mission include: reaching the target of 100% of people connected by 2026, ensuring fast internet connections for 8.5 million families and businesses, rolling-out optical fibre to an additional 9,000 schools, enabling connectivity in 12,000 National Health Service delivery points, committing to a digital approach for the relaunch of tourism and culture.
   
   

2. ‘Green Revolution and Ecological Transition’ (59.47 billion euros), further articulated through the following key-actions:
   
   
   • Circular economy and sustainable agriculture;
   • Renewable energy, hydrogen, grid and sustainable mobility;
   • Energy efficiency and building requalification; and
   • Protection of land and water resources.
     

      

3. ‘Infrastructure for Sustainable Mobility’ (25.40 billion euros), by means of investments in the railway network and inter modality and integrated logistics.
   
   
4. ‘Education and Research’ (30.88 billion euros), focusing on the enhancement of the provision of education services from nurseries to Universities, but also from research to enterprises.
   
   
5. ‘Inclusion and Cohesion’ (19.81 billion euros), both pursued by targeted labour policies and special interventions for territorial cohesion.
   
   
6. ‘Health’ (15.63 billion euros): the sixth and last NRRP mission which is set to develop networks of proximity, facilities and telemedicine for territorial health care assistance and to foster innovation, research and digitisation of the National Health Service.

Practical aspects

 The NRRP will be implemented through a series of legislative acts, according to a specific calendar published on the Italian Parliament’s website.

The current estimate in the distribution of NRRP resources foresees the following repartition of the total allocation of the Plan:

• 32.6% in favour of investments in construction and civil engineering works;
• 18.7% in favour of incentives and tax credits to companies; and
• 2.4% will be used for the reduction of employer contributions in favour of companies.

Endorsement of the NRRP by the European Commission and the Council of the EU, does not constitute a control under a State aid perspective. Compliance with State aid provisions is still required by recital 8 of Regulation 241/2021 establishing the Recovery and Resilience Facility. The State aid regime is thus regarded as being complementary to the RRF and the national plans stemming from it.

In line with this view, the NRRP makes explicit reference to the importance of ensuring compliance with EU State aid rules, specifically when illustrating those instruments (such as the “development contracts – contratti di sviluppo”) of financial support for investments to be granted to SMEs with a view of improving their supply chains productivity.

NRRP funds are open to all companies, subject only to eventual specific requirements linked to the sectors to which the fund is linked.

Decisions on the specific modalities and procedures to access the NRRP funds will be established by the authorities competent for each mission envisaged under the Plan. There is no general guidance available at present.

The key sectoral interventions envisaged in the NRRP are overall aimed at reducing territorial, generational and gender gaps. The Plan indeed addresses significant investments for young people and women, as well as allocating 82 billion euros specifically to Italy’s Southern regions. Therefore, for businesses that in various capacities will participate in the projects financed by the NRRP, this will translate into the inclusion of provisions that will condition the execution of projects to the hiring of young people and women, including through training or specialization contracts. In calls for tender, businesses will be required to respect specific criteria oriented towards equality objectives (e.g.: reserving certain quota for women and/or young people within the company). Fulfilling such criteria will also be regarded as a rewarding element of the tender offer submitted.

The official portal of the Italian National Recovery and Resilience Plan can be accessed here.

For further information contact Federico Marini Balestra.