The National Recovery and Resilience Plans: Towards a Next Generation of Fiscal Coordination?

Abstract

The Recovery and Resilience Facility reflects unprecedented solidarity through common financing paired with an innovative governance framework. Member states can access grants and loans through the formulation of National Recovery and Resilience Plans, under a set of conditions that include minimum allocation targets and addressing country-specific recommendations. The analysis evaluates whether the governance of the Recovery and Resilience Facility mitigates one of the longstanding weaknesses of the Economic and Monetary Union architecture: fiscal coordination. Assessing the prevalence of green, digital, and social priorities in the (a) National Recovery and Resilience Plans, (b) the country-specific recommendations, and (c) party manifestos through a quantitative and qualitative text analysis shows some convergence toward supranational preferences, albeit only in the green domain. I provide preliminary evidence at the stage of the formulation of the plans of the effectiveness of the Recovery and Resilience Facility fiscal policy coordination by testing whether recovery agendas in the National Recovery and Resilience Plans reflect EU or national priorities. Deviating from the limited implementation of country-specific recommendations within the European Semester, the analysis indicates the governance of the Recovery and Resilience Facility orients the National Recovery and Resilience Plans toward fostering a green recovery. Findings contribute to the assessment of how pandemic recovery instruments innovate EU fiscal governance and longstanding discussions on the ineffectiveness of fiscal coordination within the Economic and Monetary Union, informing the ongoing debate on the reform of the Stability and Growth Pact and a permanent successor to the Recovery and Resilience Facility.