Europe to the rescue? EU funds and the COVID-19 crisis – who gets what, how and why

by: in General Corona Arts and Social Sciences Business and Economics Law
EU Corona response

In recent weeks, the divisions between North and South, as well as the creation of European corona bonds have dominated most European debates. At the same time, there has been contradictory information regarding the financial aid mobilised by Brussels in response to the COVID-19 pandemic. The objectives of this brief analysis are twofold. First, it seeks to clarify and provide an overview of what European Union (EU) financial resources have been mobilised so far to fight the pandemic, what is their distribution and towards whom. Secondly, it discusses the problematic aspects surrounding the financial support offered by Brussels and the Member States. Overall, I argue that although the current European rescue package is significant in size, when designing and presenting it, EU institutions and Member States faced several communication, financial and politico-administrative obstacles, often of their own making. This might explain, at least partially, why so many members of the European public are still sceptical or have a negative attitude towards the EU’s response to the coronavirus crisis.


There have been multiple debates and public outcries about the European Union’s (EU) slow response in dealing with the COVID-19 pandemic. In parallel, discussions focused on the skirmishes between Italy and the Netherlands, echoed the lasting scars of the recent Eurozone crisis, and simplistically framed as the new divide between the North and the South. Whilst such conflicts tended to dominate the news, there were several initiatives taken by the European Union in order to address the immediate and medium- and long-term effects of the current global health crisis. Until the end of April 2020, the European Union sought to mobilise through its different instruments and mechanisms around € 1.5 trillion. This is a substantial amount of money mobilised, in less than two months, to address the economic and healthcare related pressure of the pandemic. In addition, Brussels has adopted an escape clause that allows countries to breach the 3% national budget deficit rule (set under the Stability and Growth Pact), and adopted other measures such as easing State Aid rules and offering more flexibility in the use EU Structural Funds. An overview of the financial resources available (by end of April 2020) at the EU level is provided. This is followed by a discussion on the problematic aspects around the development and use of the current rescue package. Several conclusions are drawn whilst also pointing to the next envisioned steps for recovery.

What EU funds have been mobilised so far and where do they go?

The Annex below provides an overview of the financial resources raised so far by the EU and expected to tackle the healthcare and economic effects of the pandemic. In making sense of these resources, several points can be raised. Firstly, there are several types of resources mobilised reflecting the different approaches and mandates of EU institutions. For instance, two monetary policy measures have been adopted by the European Central Bank (ECB) – the Pandemic emergency purchase programme (PEPP) and the Asset Purchase Programme (APP). These amounts (approx. € 870 billion) represent more than half of the € 1.5 trillion examined here. They seek to mitigate risks to the Eurozone area and can be accessed under the form of asset purchases and securities, available until the end of 2020. In addition to this, there are several loans and guarantees (approx. € 242 to 248 billion) that will be offered to Small and Medium Sized Enterprises (SMEs) and Mid-Cap companies. These are guaranteed by Member States and the EU budget and are managed and overseen primarily by the European Investment Bank. In addition, another € 240 billion represent the funds that Eurozone member states further commit to the European Stability Mechanism (ESM), whereas another € 100 billion form the Support to mitigate unemployment risks in an Emergency (SURE), an instrument framed as an intra-European expression of solidarity.

Secondly, the remainder of the funds (approx. € 70.5 billion) are actual resources from the common European budget. Therefore, only 5% of the envisaged financial support for fighting COVID-19 are truly supranational in character and managed by the European Commission together with the Member States. Most of these resources follow the logic of the existing frameworks and regulations especially those regarding the European Structural and Investment Funds. It is against this background that the European Commission adopted the Coronavirus Response Investment Initiative (CRII) and the CRII+ initiatives. The initiatives provide additional support by making it easier to access the current available and remaining Structural Funds (2014-20). Nevertheless, a scandal erupted on the distribution of the CRII funds (€ 37 billion) and of the remaining Structural Funds for 2014-2020 (€ 28 billion). Several analysts criticised the Commission for giving more money to Poland and Hungary than to the hard-hit Italy and Spain. Nevertheless, what these analysts failed to understand was that these funds adhered strictly to the Cohesion Policy development logic and its formulas for distribution and the existing available resources unspent by each country, in relation to what was originally established for the 2014-20 period.

Thirdly, in terms of distribution and as counter-argument to the criticisms on the distribution of CRII funds, it seems that most of the European rescue package adopted seems to focus on the Euro area members. This is partly warranted given the size and the overall significance of the economies of Germany, France, Italy and Spain for the EU as a whole. However, this may mean that non-Euro member states, particularly those from Central and Eastern Europe, might benefit less from the long-term distribution and European financial efforts against the effects of the coronavirus crisis.

Finally, based on the evidence gathered in the Annex below, it can be said that a substantial amount of the funds will be spent on healthcare and on economic recovery. In terms of who actually gets this money - national governments, banks and SMEs - seem to be among the biggest final beneficiaries. Of course, national governments will themselves finance the needs of health personnel and other workers affected by the pandemic. It also must be noted that most of the financial resources are yet to be operational or disbursed, with few exceptions such as the funding for the EU Civil Protection mechanism (rescEU) and the Emergency Support Instrument (ESI) (approx. € 3.1 billion). When compiling and describing the structure of these resources, several problematic issues have been identified.

Problematic aspects regarding the EU funds used against COVID-19

Brussels has faced considerable criticism on the timeliness of its response. This was in spite of its limited competences for coordinating public health crises. Equally, it could be argued that the EU has fallen victim to scapegoating and politicisation of the crisis coming from Member States. Despite all this, other critical points can be made about the rescue funds mobilised and the EU’s role in the process.

Primarily, European institutions and national governments have presented information about these financial resources in a highly fragmented and confusing manner. In other words, it is not simple to obtain a global and coherent overview about these resources. This tends to reflect the overall institutional and procedural complexity of the European Union, including potential inter-institutional clashes for power and legitimacy. At the same time, the debate on the recovery has been highly politicised in Member States. As much as the European Commission would have liked to be seen as a coordinator and manager of many of these funds, the European Council has mostly been in the limelight, reflecting its increasing institutional weight, since the Lisbon Treaty was enacted a decade ago. Furthermore, the technocratic approach adopted towards launching and disbursing these funds, described by unintelligible and sophisticated acronyms, overshadowed the need for more political empathy, and a much-needed language of solidarity throughout this period. Lastly, the EU legislative and policy process was rather slow and arguably ill equipped in responding to emergencies.

Secondly, the coronavirus triggered an unprecedented crisis for the EU. Not only did it bring back memories of the Eurozone struggles, but it also re-enacted the core-periphery divisions of the time, with framings of the “frugal” North and the “lazy” South re-emerging. At the same time, new East-West divisions seem to arise. Based on the distribution of the EU funds against COVID-19, it wrongly seemed that Central and Eastern European countries (CEECs) benefiting more from the immediate emergency funding, in particular the CRII funding of the EU Commission. As explained above these followed the logic of Structural Funds which accounts for the differences in distribution between countries. Nevertheless, on a medium- and long-term basis, the monetary policy of the European Central Bank (via the PEPP and APP instruments) will target economic revival mainly in the Euro area. This may prove highly disadvantageous for those CEECs that have not yet adhered to the Eurozone, and might lock-in current advances in terms of socio-economic convergence made so far by countries in the area. At the same time, this could provide more ammunition to the illiberal elites in CEECs that might increase further resentment towards the EU.

Thirdly, a highly financialised logic seems to be behind much of the current proposed aid. For instance, the Pan-European guarantee fund - loans for SMEs (€ 200 billion) and the Guarantees for SMEs and mid-cap support (€ 40 billion) are based on the logic of the increasingly influential financial instruments. Once again, this may be prove problematic given the existent debate between countries on the benefits of grants vs loans/guarantees. At the same time, the important role of the European Central Bank (ECB) and of the European Investment Bank (EIB) group in the rescue package may raise questions about the economic reasoning advanced by these institutions, as well as, how accountable they are vis-à-vis the European public. Moreover, many of the above presented funds do not really exist in physical terms. They are based on a logic of security and asset purchasing from Member States (by the ECB) and on the idea of trying to incentivise the banking and the private sector to support loans for the relief. This also follows the logic of a multiplier effect and it uncertain at this stage if these investments can actually be raised.

Lastly, questions remain about the institutional and administrative capacity of both European and national institutions in managing and quickly disbursing this funding for those in need. Indeed, the EU Commission has simplified and made rules more flexible for the current Multi-Annual Financial Framework (MFF) 2014-2020. Nevertheless, the administrative capacity of local level bodies and the coordination abilities of Brussels will be put to the test in the disbursement and absorption of many of the funds that make up this rescue package. The same administrative capacity issues might affect the implementation of the upcoming European budget / MFF 2021-2017 that is expected to double in size (approx. € 2-2.5 trillion).

Conclusions, next steps and open questions

At the latest European Council, on the 23rd of April 2020, EU heads of state and government agreed on a new recovery plan. In the next few months, the Commission could incorporate parts of the current € 1.5 trillion rescue package in the post-2020 European budget. Therefore, the size of the European rescue package is still under development. Nevertheless, questions remain about the obstacles discussed above. For instance, using the EU budget as one of the main instruments to finance the fight against the economic and social impact of COVID-19, in the upcoming years, warrants a separate discussion, specifically on whether or not the logic and design of the MFF are fit for purpose.  

Overall, up to the end of April 2020, the EU managed to mobilise a significant amount of EU funds, a rescue attempt overshadowed by conflicts between European countries. However, design and presentation issues have marred the current EU rescue package. Both EU institutions and Member States faced several communication, financial and politico-administrative obstacles, often of their own making, when developing a financial aid package to tackle the crisis. In part, this might explain why so many members of the European public are still be sceptical or have a negative attitude towards the EU’s and its response towards the coronavirus crisis.


European Union funds mobilised against COVID-19 (end of April 2020) 



Structure / Distribution

Description / Rationale

Pandemic emergency purchase programme (PEPP)


€ 750 billion

Asset purchase programme of private and public sector securities. Adopted and managed by the European Central Bank (ECB)

Non-standard monetary policy measure to counter serious risks to the monetary policy of the Euro area. Applies to Euro area countries only. Adopted on 18 March, available until end of 2020.

Asset Purchase Programme (APP)

€ 120 billion

Temporary envelope of additional net asset purchases from the wider APP. Adopted and managed by the European Central Bank (ECB)

First monetary policy response of the European Central Bank (ECB). Applies to Euro area countries only. Adopted on 12 March, available until end of 2020.

Support package for jobs and workers, businesses and member states


€ 540 billion

€ 100 billion - Support to mitigate unemployment risks in an Emergency (SURE)

€ 200 billion – Pan-European guarantee fund - loans for SMEs managed by the European Investment Bank (EIB)

€ 240 billion - Pandemic Crisis Support - loans to all Euro area Member States up to 2% of their GDP (managed via the European Stability Mechanism – ESM)

To minimise the economic effects of the COVID-19 pandemic and support jobs and workers, businesses (SMEs especially) and Member State governments. Parts of this financial package apply only to Euro area members.

Guarantees for SMEs and mid-cap support

€ 40 billion

€ 20 billion - dedicated guarantee schemes for banks

€ 10 billion - working capital support for SMEs / mid-caps

€ 10 billion – dedicated asset-backed securities for banks

This funding aims to assist Small and Medium Sized Enterprises (SMEs) and Mid-Cap companies. The financing is backed up by guarantees from the European Investment Bank Group and the European Union budget. The European Investment Bank group, with support of financial intermediaries in Member States and national promotional banks, will manage the money.

Coronavirus Response Investment Initiative (CRII)

€ 37 billion

The distribution is based on the current Cohesion Policy distribution formulas across Member States (including UK). Current distribution between countries available here.

Support for healthcare systems, small and medium-sized enterprises (SMEs) and labour market. The funds come from the unallocated EU budget. The Initiative has been launched on 13 March and is managed by the EU Commission with the Member States.

Remaining EU Structural Funds 2014-2020

€ 28 billion

The distribution is based on the current Cohesion Policy distribution formulas across Member States (including UK). Current distribution between countries available here.

Funds from the not yet allocated 2014-2020 MFF available to some Member States for the crisis’ response. The EU Commission with the Member States manages these funds.

EU Budget 2020

€ 3.1 billion

€ 2.7 billion – Emergency Support Instrument


€ 415 million – EU Civil Protection mechanism (rescEU)

Additional funding to the 2020 budget approved by the EU Commission and Parliament for purchasing medical supplies, boost production of test kits, field hospitals, patient transfers between countries and repatriation.

COSME / INNOV FIN – funding for SME’s

€ 1 billion

€ 1 billion support from the European Fund for Strategic Investment (EFSI) channelled via the COSME and INNOV FIN programmes.


Multiplier effect logic € 1 billion from Commission => € 2.2 billion from European Investment Fund (EIF) => € 8 billion via banks

The funds aim to support around 100.000 SMEs around the EU. The 1 billion is provided by the European Commission to the European Investment Fund (EIF) which will then provide € 2.2 billion guarantees to financial intermediaries (banks) in Member States that would help raise € 8 billion for loans / guarantees for SMEs in need.

EU Solidarity Fund

€ 800 million

In progress

(Italy has submitted the first application for support on 27 April 2020)

Support for the hardest hit countries for public health measures. According to the EU Commission, support will be decided on a case-by-case basis.

Research funds and support to develop treatments and vaccines

€ 380 million

€ 48.2 million - 18 projects for vaccines and treatment via Horizon 2020

€ 90 million for therapeutics and diagnostics via the Innovative Medicines Initiative (IMI)

€164 million for SMEs and start-ups for innovative solutions via the European Innovation Council 

€ 80 million to support CureVac – vaccine developer

Financing the research and development of treatment and vaccines via specific research projects, initiatives and vaccine developers.

European Globalisation Adjustment Fund (EGF) 2020

€ 197 million

In progress

Supporting dismissed workers and self-employed workers, across the EU Member States, as a response to the pandemic, from the 2020 budget of EGF.


€ 1,520,477 million

(€ 1.5 trillion)


Coronavirus Response Investment Initiative Plus (CRII +)

Non-financial measures

-Additional flexibility on the allocation and use of EU Structural Funds (e.g. less stringent monitoring / auditing).

-New measures for temporarily removing the existing conditions on which regions are entitled to receive support / allowing resources to be redirected to those regions most adversely affected by the crisis.

-Allowing transfers between the ESI funds (European Regional Development, Cohesion Fund and European Social Fund).

-Flexibility and simplification of instruments and further support for the Common Agricultural Policy (CAP) and Common Fisheries Policy (CFP).

-More support for the Fund for European Aid to the Most Deprived (FEAD) – including food, basic material assistance and protective equipment.

-Temporary and exceptional measure - member states can request up to 100% financing from the EU budget between 1 July 2020 and 30 June 2021 for Operational Programmes dealing with the pandemic.

Sources: Author’s compilation based on:

European Council / Council of the EU - (Accessed 29 April 2020)

European Commission – (Accessed 29 April 2020)

European Central Bank sources (Accessed 29 April 2020) (APP) (PEPP)

European Investment Bank - (Accessed 29 April 2020)

European Investment Fund - (Accessed 29 April 2020)

European Parliament - (Accessed 29 April 2020)