Covid recovery billions could have done more for EU businesses
EU countries only partially addressed problems with the business environment by implementing the reforms and investments they had pledged in return for money from the EU’s Recovery and Resilience Facility (RRF), according to a new report by the European Court of Auditors (ECA). While some reforms have started to deliver improvements, most have been delayed, and only a small part of those completed so far have yielded significant results.
In 2021, to mitigate the economic fallout from the Covid-19 pandemic and foster sustainable economic recovery, the EU established the RRF by providing funding of €650bn. To receive the money, EU countries had to commit to a set of investments and reforms in key sectors. These measures had to address all or a major part of the structural challenges resulting from the EU’s country-specific recommendations (CSRs) of 2019 and 2020, which included the business environment.
“The EU has used the pandemic recovery money as a carrot for EU countries to undertake important business-environment reforms, but the results are mainly not there yet,” said Ivana Maletić, the ECA Member leading the audit. “The RRF could help make it easier to do business, but its potential has not been fully exploited.”
In the two years before the pandemic, the EU issued 82 recommendations to member states to improve their business environments, such as promoting private investment, improving access to finance, simplifying tax systems, and reducing the regulatory burden. Subsequently, all member states’ national recovery plans included 157 reforms and 254 investments linked to these recommendations. The estimated costs of these measures under the RRF – chiefly for investments – is around €109bn.
While member states largely addressed about a quarter of the recommendations through reforms and investments, no recommendation was implemented in full. In addition, around half were addressed only marginally or not at all, leaving some structural issues unresolved. For example, 7 % of the recommendations have been completely ignored. The auditors recently concluded that around a third of the recommendations on labour market reforms under the RRF have not been addressed by any reform. Given the results of these two audits, one of the RRF’s key objectives of addressing all or a significant subset of the challenges identified in the recommendations remains unmet.
Most of the reforms in the four countries that the auditors visited faced delays, and more than a quarter were not completed by April 2025, when the audit was finalised. As all RRF measures must be completed by the end of August 2026, further delays pose risks as regards completion and the achievement of results. The reforms implemented in the member states that were audited generally delivered the expected outputs, such as the adoption of legislation. However, the effects of a legal change may take years to be felt on the ground. In practice, only about a third of the completed reforms showed significant results at this stage, and even then, their impact may be diminished by the short timeframe of measures, their weak link to the policy area concerned, or the possibility of their being reversed. The impact of RRF business environment measures on countries’ progress in addressing the recommendations reveals a mixed picture, as they contributed to progress in only half of the cases examined. The auditors note that progress on implementing the recommendations resulting from RRF measures is still slow, albeit better than in the labour market area.
Background information
In the EU, the lockdowns and social-distancing measures imposed in response to the pandemic profoundly disrupted business and trade. This disruption had a short-term impact, mainly in 2020, and was followed by a rebound in economic activity in 2021. The RRF is still being implemented, and the majority of business environment reforms included in the countries’ plans are yet to be completed. As part of the yearly coordination of member states’ economic policies (known as the European Semester), the Council of the EU adopts CSRs and asks countries to address the challenges that have been identified. In line with the RRF Regulation, national recovery plans are required to address all or a significant subset of those challenges.
The auditors examined whether the RRF business environment reforms were successful in addressing the challenges the CSRs posed to member states, and assessed whether implementation of the reforms achieved the intended objectives in Bulgaria, Spain, Cyprus and Austria.
Special report 21/2025, “RRF support for an improved business environment: Only partially addresses country-specific recommendations, but some first results contributed to progress in their implementation”, is available on the ECA website, together with a one-page overview of the key facts and findings. All ECA publications on the RRF are available here.