Post-COVID business reforms show little impact, EU watchdog says

A €109 billion COVID loan investment to reform the EU’s business environment suffered from poor design, slow and inconsistent rollout, and could perform even worse in future, the EU’s financial watchdog warned on Monday.

The findings, published in a new report by the European Court of Auditors (ECA), are another blow to the European Commission, which has repeatedly praised the programme, and plans to replicate its approach in its new €2 trillion budget proposal for 2028-2034.

Under the COVID scheme, known as the Recovery and Resilience Facility (RRF), EU countries receive funds in exchange for implementing EU-friendly reforms or specific projects, such as building a new railway. The full €650 billion loan is implemented through national plans negotiated between Brussels and national governments.

In its report, ECA found that the €109 billion scheme has so far delivered little return on its investment in business reforms, citing unambitious plans and lagging implementation. 

“Without a proper design… even significant funding will not deliver results,” said Ivana Maletić, from ECA.

By law, national recovery plans should effectively address all – or at least a “significant subset”– of the EU’s reform recommendations. In practice, the auditors found that none of the plans fully did so: Only 26% of recommendations were largely addressed, 41% were marginally addressed, and 7% were ignored.

ECA member Ivana Maletić said the numbers vary significantly from country to country, but the Commission approves the plans regardless of how well they are designed. “How is this fair?” she asked as she presented the report to journalists.

The audit of Austria, Bulgaria, Cyprus, and Spain found that only seven out of 25 agreed milestones were completed on time.

Going forward, “we already have some indication that ambitions are really going down,” said Maletić, as the EU is rushing to spend hundreds of billions before the loan expires in 2026.

This is the latest in a string of critical ECA reports accusing the COVID recovery scheme of lacking transparency and being prone to misallocation.

“It’s the most difficult thing we’ve had to audit because [Commission officials] disagree with every single thing we say,” ECA president Tony Murphy told Euractiv in July.

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