The accountability of pan-European public borrowing: Italy and next generation EU

Key Points

• Italy's National Recovery and Resilience Plan is the largest national plan under the EU’s response to the Covid-19 pandemic. On 13 April and 7 November 2022, Italy received the first and second instalments from the European Commission under Next Generation EU, each worth €21 billion (net of pre-financing) in grants and loans. In December 2022, Italy requested the payment of the third instalment of €19 billion (net of pre-financing).

• According to the Italian Court of Auditors, the implementation of the national recovery plan in 2023 seems delayed. The European Commission noted the hold-up and extended its assessment period until the end of April to allow Italy to meet the targets necessary to release the third tranche of €19 billion.

• The European Commission has recently challenged Italy’s decision to use EU recovery funds to revamp Florence’s historic football stadium and build new sport facilities near Venice, thereby further delaying the disbursement of the requested funds.

• Members of the Italian and European parliaments have asked questions to the Italian government and the European Commission respectively to clarify whether these stadium projects are eligible to receive EU funds.

• These incidents illustrate the growing prominence of pan-European public borrowing, as it creates liabilities, such as the guarantee provided by the EU budget headroom to Next Generation EU. This warrants a high degree of accountability to citizens and elected representatives