EU funds: how many will come to Italy?

How much EU funding will Italy be eligible for in this programming period? A frequent and not so simple question, which we try to answer.

EU funds: how many will come to Italy?

First, a premise is in order: the question is not as simple as it seems. Why?

Because the answer depends on several factors, parameters and estimates that can be considered in the count.

Let’s see together which ones.

The time factor

A first factor of variability lies in the data itself.

• Data can be expressed at constant prices (i.e., considering the “value of one euro” on a given date) or at current prices (i.e. considering current value of the euro). Very often 2018 is used as the reference point for values given in constant prices (the year in which the first allocations were made for 2021-2027 programming), while the value in current prices varies (by definition) over time. Especially over large numbers, inflation creates discrepancies related to the type of price measure and the base year used for monetary values;
• The values of the allocations may undergo changes over time, due to the specifics of individual programs, changes that may occur during their implementation, and the way funds are used. The founding regulations of the various programs contain undoubtedly “official” allocations, but discussions between institutions and adjustments implemented during operational execution can result in discrepancies that, at least for some time, are not recorded in institutional communications and publications: without this undermining the “official” value of the source data. The Community Financial Framework expressly provides room for flexibility in the management of major budget items.

For these reasons, it is important to consider data on financial allocations (including those reported within this Guide) as indicative orders of magnitude.

A question of definitions

The complexity in defining “available funds” lies not only in the data, but also in what-and how-is included in the count of those funds.

Certainly, among the “EU funds due to Italy” one must consider the Structural Funds assigned to it. However, there are many other elements, the inclusion or non-inclusion of which in the count may be subject to different (legitimate) interpretations:

• Under the Structural Funds, the following may be included in the count national co-financing share (since it, too, contributes to the amount of funds available for projects financed by the Structural Funds) or not (since the origin of the funds is national and not Community);
• I agricultural and rural development funds (EAFRD and EAGF) can be calculated as “funds accruing to Italy” (as they actually represent a major share of the EU funds redistributed to individual countries) or not (as some forms of intervention follow very specific modalities, such as direct payments to farmers and agricultural market support measures);
• Italy, like all other European countries, benefits from the directly managed funds, insofar as they are not specifically allocated to a specific country. It is possible to include an estimate of this potential benefit in the count (since directly managed European funds are an important resource for organizations in our country) or not (since these funds are not “dedicated” to Italy);
• I Recovery Instrument special funds (NGEU / Next Generation EU) can be counted among the “funds due to our country,” because in fact they are; or not, because of their exceptional nature. In fact, NGEU funds are an “extra” to the EU financial framework and belong neither to the category of Structural Funds nor to that of directly managed programs. The latter aspect lumps them in with REACT-EU program funds, which are often described as a separate category;
• The nature of the Recovery Instrument produces additional “gray areas” for the purpose of calculating available funds. You may or may not include in the calculation: 1) the contributions of the national supplementary fund of NGEU (which report to NGEU and serve to finance the same projects, but are of national origin); and 2) the loan component of NGEU (which is specifically earmarked for Italy, but whose use is discretionary and implies a return of funds by our country).

A data analysis and response

Knowing the different possible interpretations when answering this (seemingly simple) question about community funds is a way to deepen one’s understanding of their structure and operation. This lengthy foreword is therefore -probably- more useful and interesting than the answer to the question itself.

However, let us attempt to provide a more direct answer, keeping in mind all the factors just described. We will use rounded values, to emphasize the structurally indicative nature of this information. The estimate is based on a special budget guide of the European Commission(which we have discussed here ), on national government sources (as far as national contributions are concerned) and on a GDP and per capita weighting (as far as quantification of directly managed funds is concerned).

This calculation includes all the elements subject to possible interpretation, described above. Because it adopts a particularly broad definition of “European funds” and because the activation of the “loan component” of NGEU is discretionary (it is an option that may be used only in part), we can estimate that EU project funds available to Italy in this programming period will amount to about 350 billion euros.

EU funds: how many leave and how many arrive

What has been written so far answers the question: of how much funding will benefit Italy in this programming period?

But it does not answer a question that is, in fact, even more relevant: how much funding will benefit Italy in this programming period?

The answer to this second question is even more complex and has to do with the absorption capacity (which we have discussed here ).

A capacity to fully utilize the potential expressed by the available funds and to which all Europrojectors contribute, more or less consciously, by preparing fundable projects of good quality.