German Recovery and Resilience Plan – An exemplary role in Europe?

The 25.6 billion euros in grants awarded to Germany aim at helping the country to become greener, more digital, more economically and socially resilient and counteract the impact of the pandemic on economy and society. The German Recovery and Resilience Plan (“GRRP”) which describes Germany’s plan to reach these goals was approved by the European Council in mid-July. According to the European Commission, the plan has an exemplary role in Europe.

Outline of the plan

The GRRP focuses on six different areas: climate policy and energy transition, digitalisation of the economy and infrastructure, digitalisation of education, strengthening social inclusion, strengthening a pandemic-resilient healthcare system, modern public administration and reducing barriers to investment.

Within these six objectives, most emphasis is put on climate protection and digitalisation which account for 52% (digitalisation) and 42% (climate objectives), respectively of the total funds spent. According to the German government, GRRP is a balanced mix of reforms and investments.

Within climate objectives there are three main areas of action: hydrogenization, investments in climate-friendly mobility and climate-friendly construction and renovation.

Within digitalisation, the focus is on industrial transformation and infrastructure (including public services and hospitals) as well as education. Apart from these two key objectives the GRRP also addresses social inclusion, the need for a healthcare system that is more resilient to pandemics as well as a modern public administration. In addition, the scheme intends to reduce barriers to investment and to prevent a further increase of taxes.

Beneficiaries and payout procedure

GRRP is coordinated by the Federal Ministry of Finance, while the applications for monetary support are to be submitted to the sector ministries, which also grant the permit notice. The funds are open to many different beneficiaries, there is no limitation to specific groups or companies. However, the decisive question is whether the requesting companies and state authorities meet the goal of the plan because the disbursement of funds is performance-based and will reflect progress on reforms and investments set out in the plan.

The disbursement follows the German federal budget code (Haushaltsordnung). In addition, a lot of measures in the plan are based on funding guidelines (Förderrichtlinien), which determine detailed specifications on funding objectives, projects and types of beneficiaries eligible, type and maximum amount of funding, application guidelines, project approval and payment conditions.

By virtue of the European Councils approval, Germany can receive 2.3 billion euros of its total grant as an upfront payment.

Further information on the German Recovery and Resilience plan can be found here.

Please contact Dr. Stephan Waldheim and Tamy Tietze if you have any questions.