EU green ambitions are strongly reflected in budget

Significance

Overall, some 30% of the budget will involve climate-related spending. One of the key reforms concerns the EU’s own resources mechanism to finance spending, with plans to introduce a plastic levy and a tax on carbon emissions, as well as potentially a tax on technology firms and financial transactions.

Impacts

• Some countries have introduced or plan to introduce a digital tax; this puts pressure on Brussels to implement an EU-wide tax.
• Upskilling schemes in areas such as digital services and renewable energy will likely play a prominent role in recovery programmes.
• The spending opportunities provided by Next Generation EU will help the survival prospects of the Spanish and Italian coalitions this year.
• It will be a challenge for national governments to find the human capital and industrial capacity to initiate recovery programmes quickly.