The Recovery and Resilience Facility: promoting investments and driving reforms

The Recovery and Resilience Facility (RRF), the cornerstone of the European Union’s Next Generation EU initiative, represents an unprecedented response to the COVID-19 pandemic. With €648 billion in funding, it supports reforms and investments aimed at mitigating the economic impact of the crisis while fostering long-term resilience. This chapter explores the RRF’s critical role in stabilizing the euro area by preventing financial fragmentation, maintaining public investment levels, and promoting key structural reforms. It highlights the facility’s innovative performance-based framework, where funding is released upon the achievement of specific milestones and targets in national Recovery and Resilience Plans (RRPs). These plans focus on essential EU priorities, particularly the green and digital transitions, and on the broader objectives of fostering sustainable growth and resilience. The RRF’s performance-based approach, its features promoting economic convergence, and supporting the provision of European public goods—such as climate change mitigation, digitalization, and energy security—provide useful insights for the design of future EU instruments.