EU States Spurn €74bn in Unused Covid Recovery Loans

The European Union’s (EU) efforts to stimulate economic recovery through the Recovery and Resilience Facility (RRF) have been hindered by the lack of uptake of €74bn in Covid recovery loans. This unused funding could have contributed to the EU’s GDP growth, with estimates suggesting a potential loss of €0.5-€1.1bn in additional output by 2026.

The RRF was launched in 2021 with a total size of €723bn, which was later reduced to €648bn in 2023. As of November 2024, approximately €225bn had been disbursed to member states, leaving a significant portion of the funding untapped. The Commission’s forecast suggests that the RRF could lift EU GDP by 2-3% by 2026, but the unused €74bn reduces the ceiling of this boost by approximately 0.5-1% of the total projected increase.

The impact of the unused loans will not be evenly distributed across EU member states. Countries that have already tapped into a large portion of the RRF, such as Italy, Spain, and Greece, will feel a smaller marginal impact. In contrast, countries that have taken little or no RRF money, including Belgium, Finland, Ireland, the Netherlands, Poland, and Sweden, could miss out on up to €2-€3bn of additional GDP if they had accessed the €74bn.

The policy implications of the unused loans are significant, as the Commission’s forecast of a 2-3% GDP boost by 2026 hinges on the full implementation of the RRF program. The €74bn gap reduces the potential GDP growth, potentially lowering the EU’s post-pandemic growth trajectory to the lower end of the 2-3% range.

In terms of timing, the RRF’s legal deadline is June 30, 2026, and the Commission’s target of 54% disbursement by the end of 2024 leaves a narrow window for the remaining €423bn, including the €74bn loan, to be mobilized. Delays or continued reluctance to meet reform milestones will cement the GDP shortfall.

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