What is the financial impact of EU COVID-19 measures on the Netherlands?
The EU has been taking measures since March 2020 to cushion the financial and socioeconomic consequences for the EU member states of the COVID-19 pandemic. Our summary of the measures can be read here.
The EU measures are relevant to the Netherlands for several reasons. The potential benefits include additional income that will enable it to increase expenditure. The measures could also entail costs if, for instance, the Netherlands has to make higher contributions to the EU or, together with other member states, has to guarantee expenditure at EU level. The measures’ impact on the Netherlands is summarised in figure 1.
A more detailed summary of the costs and benefits to the Netherlands of the EU COVID-19 measures is provided in this table. Below we take a closer look at the measures that benefit the Netherlands. More information on the costs is provided in the table linked to above.
One benefit to the Netherlands is the income received directly from EU programmes. Figure 2 shows how much the Netherlands is receiving, and can still receive, from these programmes.
Direct financial benefits
The EU’s Horizon 2020 research programme provides funding to develop vaccines and new treatment methods. Dutch universities and businesses had received €17.9 million from it as at 1 October 2020 (Source: calculation by the Netherlands Court of Audit, Under the CRII programmes (CRII and CRII+), unspent pre-financing of the structural funds will not be recovered. In the case of the Netherlands, this produces an additional budget to support, amongst other things, SMEs, healthcare systems and the labour market of about €13 million in total (Source: Coronavirus Response Investment Initiative (CRII)). The Next Generation EU recovery plan will provide the greatest benefit to the Netherlands in the next two years, in total approximately € 6.75 billion. These funds do not have to be repaid. They are allocated for investment in economic recovery and sustainable growth measures. Under the recovery plan, the Netherlands will be able to claim € 417 million (2018 prices) in additional funding for structural funds programmes in 2021 (Source: https://www.consilium.europa.eu/en/press/press-releases/2020/11/18/covid-19-presidency-and-parliament-reach-political-agreement-on-react-eu/).
Stronger financial position
Relaxation of Stability and Growth Pact rules
A relaxation of the rules of the Stability and Growth Pact (SGP) has enabled the Netherlands and other EU member states to let their annual budget deficit and public debt exceed the limits in the SGP (3% and 60% of GDP respectively). The European Commission will not impose sanctions if they do so.
Based on the figures in Statistics Netherlands’ November 2020 baseline projection, the budget deficit will amount to 6.1% of GDP in 2020 and 4.6% in 2021. Public debt will rise from 48.7% in 2019 to 56.7% in 2020 and 59.0% in 2021.
Figure 3: The Netherlands’ budget deficit may now exceed the -3% SGP limit without the European Commission imposing a sanction.
Figure 4: The Netherlands’ public debt may now exceed the 60% SGP limit without the European Commission imposing a sanction.
Relaxation of state aid rules
The European Commission’s temporary framework for state aid measures, which will be in force until the end of June 2021, allows member states to grant more state aid. The Netherlands has notified the Commission that it had used the framework to grant approximately € 28 billion in state aid as at 13 November 2020 (Source, calculation by the Netherlands Court of Audit. This amount comprises aid approved by the Commission to support KLM and public transport. Besides the temporary framework for state aid measures, member states can make use of regular aid mechanisms such as block exemption, which the Commission does not need to approve. A summary of the state aid rules in force is available here.
Figure 5 shows the approved state aid granted under the temporary framework during the COVID-19 pandemic in comparison with 1) state aid actually granted, including aid granted under block exemption schemes, and 2) aid granted to the financial sector in recent years. The state aid framework had similarly been relaxed for the financial sector during the financial crisis. As only the approved state aid granted during the COVID-19 crisis is currently known, actual expenditure might be lower.
State aid expenditure
|Aid granted ex financial setor||Aid granted financial sector||Approved COVID-19 crisis aid|
Figure 5: The Netherlands has granted considerably more state aid to combat the COVID-19 crisis than its customary state aid expenditure. It had done the same to overcome the financial crisis. Source: for corona figures European Commission press releases, for non-corona aid Eurostat.
Non-financial benefits: vaccines and other measures
The European Commission stated in the EU strategy for COVID-19 vaccines that it would conclude contracts with COVID-19 vaccine manufacturers on behalf of the member states. A considerable proportion of the €2.7 billion budget provided by the Emergency Support Instrument (ESI) will be used to buy vaccines. The European Commission is financing some of the preliminary expenses from the ESI in exchange for the right to buy a given number of vaccines at a given price within a given time frame. Based on its relative population size in the European Union, the Netherlands is entitled to buy 3.89% of the total number. The Commission has signed agreements with 6 manufacturers for 1.3 billion doses in total, with options on a further 660 million doses. Based on the above percentage, the Netherlands is entitled to more than 50 million doses.
More information on the EU’s purchase of vaccines is available here.
Other measures taken by the EU that do not have a direct monetary value include the repatriation flights coordinated by the EU and the suspension of customs duties on medical equipment.