The Legacy of NextGenerationEU and the Future Multiannual Financial Framework: Centralisation, Constitutionality and a Flawed Performance Model
15/09/2025
Abstract
This article analyses the deployment of NextGenerationEU funds in Catalonia within the Spanish framework, as well as their evolution and translation into the new Multiannual Financial Framework (MFF) 2028–2034. The NextGenerationEU funds, created in response to the Covid-19 pandemic under Article 122 of the Treaty on the Functioning of the EU, were presented as a temporary and exceptional instrument. In practice, however, they have established a far-reaching institutional and legal precedent. Far from being limited to the management of a health crisis, they have opened the door to European borrowing and to a shift of budgetary competences from parliaments to executives, both at European and state level, within a framework of opaque bilateral negotiations.
The article examines the effects of the Recovery, Transformation and Resilience Plan (PRTR), which has revealed significant dysfunctions: centralisation of decision-making, marginalisation of regional authorities with their own competences, and a deficient management and control system that has burdened beneficiaries with bureaucracy without ensuring genuine improvements in the quality or impact of investments. It also highlights the absence of true performance mechanisms: the milestones and targets defined prioritise the execution of expenditure over tangible results, undermining the transformative potential of the funds.
The European Commission’s proposal for the 2028–2034 MFF, which allocates nearly 50% of the budget to National and Regional Partnership Plans (NRPPs), consolidates this model and confirms that the exceptional nature of NextGenerationEU has become a permanent structure. This raises constitutional, institutional, and competence-related challenges, with particularly significant implications for Catalonia.
Introduction and context
On 16 July 2025, the European Commission presented its proposal for the next Multiannual Financial Framework 2028–2034, the European Union’s budget, which will take on a radically different structure compared with previous frameworks. Largely influenced by the experience of the Recovery and Resilience Facility funds, NextGenerationEU, the proposal foresees allocating almost 50% of resources to National and Regional Partnership Plans (NRPPs), which would take a form very similar to the current Recovery and Resilience Plans through which the NextGenerationEU funds were channelled.
One of the major innovations of the forthcoming budget will be that a large proportion of the funds that until now had their own programming, including those allocated to Cohesion Policy and the European Social Fund, will fall under the umbrella of the NRPPs. This will mean that the channelling of funds will be carried out through the approval of bilateral plans between the European Commission and each Member State, defining the ways in which investments will be undertaken.
NextGenerationEU funds reached Spain – the second largest beneficiary after Italy – following the approval in April 2021 of the Recovery, Transformation and Resilience Plan (PRTR), aimed at overcoming the negative economic effects of Covid-19. The approval of a national plan such as the PRTR was a specific requirement for obtaining the funds. These plans defined a new format in which, through a roadmap of reforms and investments, funds would be transferred “in advance”, with disbursements made as milestones and targets were achieved. In other words, on paper it was a performance-based instrument, in which the objective was the implementation of these reforms and investments rather than public spending per se.
For the first time in the history of the EU, the Union borrowed almost doubling the funds in circulation, together with the ordinary funds of the 2021–2027 Multiannual Financial Framework. NextGenerationEU funds were therefore presented as a learning exercise in contrast to the austerity measures of the 2008 financial crisis, in order to avoid falling into a recession derived from the 2020 pandemic. However, these funds present multiple problems which, despite having been portrayed by the press as a panacea for the Spanish economy, demand critical reassessment. In this sense, given the Commission’s new proposal to reproduce a similar model with the ordinary budget, it is worth revisiting them in order to understand the potential consequences if this proposal succeeds.
Catalonia is the main recipient of NextGenerationEU funds in Spain at the regional level, with 16% of the territorialised funds, representing 75% of the NextGenerationEU funds allocated across Spain. Between 2021 and 2025, Catalonia has received over €9,000 million, of which €4,341 million were transferred to the Government of Catalonia for subsequent distribution and management. The remaining €5,191 million were distributed directly by the Spanish Government in the form of direct procurement in Catalonia, direct allocations to Catalan entities, and resolutions of national calls with beneficiaries in Catalonia – including in areas of exclusive Catalan competence such as agriculture, culture, tourism and trade. The number of beneficiaries of NextGenerationEU funds in Catalonia amounts to 164,768, according to data published on 30 June 2025 by the Ministry of Economy, Trade and Enterprise’s monitoring tool ELISA (2025) [1].
NextGenerationEU funds thus mark a paradigm shift in the functioning of European financing. And they do so not only by opening the door to borrowing (a formula which, in principle, should only be repeated in exceptional cases), but also in three fundamental respects: (1) the use of the emergency clause of the Treaty on the Functioning of the European Union as a channel to finance aspects not directly linked to the emergency in question; (2) the centralisation of decision-making and fund management; (3) the performance-based disbursement model and the overall management system of the funds.
The (un)constitutionality of the NextGenerationEU funds
As outlined above, the NextGenerationEU funds were conceived as a response to the Covid-19 crisis. However, as Leino-Sandberg and Ruffert (2022)[2] pointed out, a detailed analysis shows that the mechanism took advantage of the emergency context to establish an instrument that goes far beyond a temporary response to the pandemic. Its design opened the door to European Union borrowing to finance investments in the Member States, with far-reaching constitutional implications.
Until 2020, the unwritten rule prevailed that any deepening of fiscal integration or the possibility of EU borrowing would require an amendment to the Treaties or the approval of a new one. The pandemic became an opportunity for greater integration, since in a context of crisis, defending the conditionality of financing could be perceived as a lack of solidarity in an emergency. In previous crises, such as the euro crisis or the refugee crisis, the EU also took the opportunity to increase integration, resulting, among other things, in the creation of the European Banking Union, the European Semester, or the strengthening of Frontex (Schimmelfennig, 2024) [3].
Legally, the NextGenerationEU funds are justified on the basis of Article 122 of the Treaty on the Functioning of the European Union (TFEU), which provides for exceptional measures to address specific crises. As Leino-Sandberg and Ruffert (2022) note, the European Council, pressed by the crisis context, may not have been the most appropriate forum to devise a long-term solution for the EU without parliamentary control. The outcome has been a profound alteration of the EU’s traditional redistribution mechanisms, with a system of almost unconditional transfers of public funds to Member States.
This approach clashes with the principle of conferral, according to which the competences of the EU can only be exercised where foreseen by the Treaties, while the remainder rests with the Member States. Moreover, Article 122 TFEU does not override Article 125 TFEU, known as the no-bailout clause, which seeks to ensure that Member States pursue sound budgetary policies and that, when borrowing, they remain subject to market discipline. This requirement of fiscal discipline is essential for the sustainability of Economic and Monetary Union. For this reason, Article 125 prohibits the Union or Member States from establishing financial assistance mechanisms that might reduce the incentives of recipient States to maintain responsible fiscal policy. The only exception to this rule would be the authorisation of financial assistance when absolutely necessary to protect the stability of the Eurozone as a whole, and always under very strict conditions.
Historically, conditionality has been a permanent feature and has generally been accepted as a sine qua non condition for receiving European economic support. By contrast, with the NextGenerationEU funds there has been a substantial change: although their design does not provide for them to be used to finance the recurring expenditures of Member States’ budgets, they are being spent on projects and measures that would normally be financed by governments through ordinary national budgets (Leino-Sandberg and Ruffert, 2022).
The legal architecture of the NextGenerationEU funds unfolds on two levels. Firstly, Article 122 TFEU justifies the creation of the Recovery Instrument (EURI Regulation) without defining how funds will be distributed among Member States, but authorises, through a Council Decision on the system of own resources, the raising of loans on the capital markets up to a value of €750 billion, of which €390 billion is allocated to grants and the rest to loans. Secondly, Regulation (EU) 2021/241 establishes the Recovery and Resilience Facility (RRF), responsible for the distribution of funds. In this way, the NextGenerationEU funds are inscribed within the Union’s emergency architecture, even though much of the resources are not allocated to addressing the emergency, thereby circumventing the rigidities of Cohesion Policy.
The Council’s legal argument is that the mechanism is exceptional and temporary. But in operational terms, it has become a more attractive alternative than Cohesion funds for executive authorities and beneficiaries, given that the level of co-financing provided reaches up to 100% in many cases. If the funds had been allocated exclusively to expenditure derived from the pandemic, their justification under Article 122 TFEU would have been more robust. However, the predominant use of resources for structural political objectives calls into question their legal coherence. Furthermore, the RRF’s allocation criteria are not only based on the impact of Covid-19, but on pre-existing socio-economic variables, further highlighting this inconsistency. Therefore, the RRF can be understood as a redistribution programme designed to advance a range of political objectives beyond the justification of exceptional crisis situations (Leino-Sandberg and Ruffert, 2022).
This raises a question that goes beyond the specific constitutional issue. If, in a pandemic, channels of financing have been authorised that do not strictly comply with the Union’s constitutional structure nor with its principles of oversight, what guarantees the exceptional nature of measures that may be taken in the context of military crises, which are not so far removed from present reality? The risk is that Article 122 may become a legal loophole to create an extraordinary competence of the Council that could be exercised without the scrutiny of the European Parliament and that might end up establishing permanent structures not foreseen in the TFEU. Indeed, this past May, the Commission already made use of this loophole to authorise the SAFE package of military loans, invoking Article 122 and attempting to bypass approval by the European Parliament, which has since brought a case before the Court of Justice of the European Union (CJEU) seeking the annulment of the SAFE Regulation.
At the same time, the NextGenerationEU funds have also blurred the boundaries of Cohesion Policy. If everything can be justified as a response to a crisis, the door is opened to the financing of objectives increasingly distant from its original logic. This has already been seen with the mid-term review of the current budget (MFF 2021–2027), where the possibility of allocating available Cohesion funds to the military sector has been relaxed if their dual civil-military use can be justified.
The structure of the NextGenerationEU funds was initially presented as a one-off and exceptional measure, and not as a precedent for a permanent structure. However, the Commission’s proposal for the forthcoming 2028–2034 Multiannual Financial Framework allocates almost half of the EU budget to National and Regional Partnership Plans, replicating the NextGenerationEU model, and confirms that what was meant to be temporary has become structural.
Centralisation in decision-making
Regulation (EU) 2021/241 establishing the Recovery and Resilience Facility set as a requirement the submission of a National Recovery and Resilience Plan in order to channel the NextGenerationEU funds. In the Spanish case, the Recovery, Transformation and Resilience Plan (PRTR) was approved in June 2021, with the possibility of retroactively financing certain actions from January 2020. The Plan had to align with the Union’s priorities, allocating at least 37% of the funds to the green transition and 20% to the digital transition, with a final implementation deadline set for 31 August 2026. The PRTR’s design was based on a combination of reforms and investments, with the former responding to the country-specific recommendations arising from the European Semester.
However, in drafting the PRTR, the Spanish State limited the participation of sub-state authorities to a merely executive role, without granting them any genuine co-decision power in defining the Plan (Gimeno and Feliu, 2021) [4]. In practice, this has translated into a model in which execution responsibilities are distributed, but the political and strategic benefit remains centralised in the Spanish Government. The principle of solidarity is thus invoked, but without ensuring effective participation in decision-making.
This approach is particularly problematic in the case of Catalonia. The Statute of Autonomy recognises the Government of Catalonia’s full competences in the management of European funds within its areas of responsibility (Article 190). Moreover, Article 114 stipulates that, in areas of exclusive competence, it is for the Government of Catalonia to specify the objectives for which state and European Union territorialised funds are allocated, as well as to regulate the conditions of their award and management, including their processing and granting. In areas of shared competence, it is also for the Government of Catalonia to set out by regulation the objectives for which state and EU territorialised funds are destined. This is in addition to the management of funds in those matters where the Catalan Government holds purely executive competence.
Nevertheless, under the design of the PRTR these competences of the Catalan Government were undermined. Not only was this competence-based premise not fulfilled at the conceptualisation stage of the Plan, but the structure with which the Plan was defined has also meant that Catalonia’s exclusive competences have been subordinated to state management and control: agriculture, housing, tourism, urban planning, commerce, among others, have been channelled through projects directly controlled and managed by the corresponding ministries, in which the Catalan administration has acted at most as an intermediate managing body, or has even been bypassed altogether. The result has been an inefficient and improvised system that has compromised both the agility required by the Regulation’s deadlines and the regulatory and anti-fraud compliance of beneficiaries.
In addition, the opacity and bilateral nature of negotiations between the Spanish Government and the European Commission have further reinforced the role of the executive, reducing the space for parliamentary scrutiny. Thus, the NextGenerationEU funds have not only shifted a substantial part of budgetary prerogatives towards the executive at European level but have also consolidated this same dynamic at the national level (Leino-Sandberg and Ruffert, 2022).
Funding management system and the performance model
The performance-based implementation model, that is, one linked to the achievement of pre-defined milestones and targets, is, at first glance, very attractive. It allows expenditure to be presented not as a merely accounting exercise but as an investment aligned with a higher political strategy—in this case, that of the European Union. However, in the case of the NextGenerationEU funds, this approach has proved only apparent.
The annex to the Council Implementing Decision approving the PRTR runs to more than 400 pages, listing the milestones and targets of each of the planned reforms and investments. To a large extent, these are aggregated milestones which ultimately prioritise the execution of expenditure rather than the quality of investments. Performance models require a prior exercise of needs assessment which, in this case, was not undertaken with sufficient depth.
The system of milestones and targets (M&T), inspired by New Public Management, seeks to focus on results rather than on the Commission’s direct control of measures. The aim is to promote efficiency and effectiveness, shifting the focus from the measures themselves to their outcomes. This approach is reflected in the conception of the PRTR: each component of the Plan has its defined investments and reforms, accompanied by milestones and targets to be met during and at the end of implementation. But in many cases, no tangible results independent of expenditure are assessed. For example, targets may consist in spending a given amount of money under a specific digital or climate label, or in the number of contracts awarded under that heading, without identifying the final impact of the investment.
Out of more than 500 M&T in the PRTR, only 79 are strictly economic. Yet, when examining the rest, many indicators that are not expressed in euros in fact boil down to recording the publication of public contracts, approval of agreements, award of subsidies, or abstract execution percentages, all of which ultimately refer to the volume of expenditure executed—thus being economic M&T in disguise. Likewise, many M&T consist in adopting new laws, amending existing regulations, or approving strategic plans, while fewer than half actually incorporate an outcome indicator. This is highly significant, as it shifts the motivation of implementers: instead of prioritising the quality of projects, initiatives of limited transformative scope are adapted to meet economic objectives and deadlines.
To a large extent, this undermines the transformative potential of the PRTR, as it removes the incentive to design new projects aligned with the EU’s current strategy, and instead promotes the execution of projects already in the pipeline which, thanks to NextGenerationEU, found the opportunity for funding. Ultimately, the NextGenerationEU model has ended up halfway between reimbursement-based models and performance-based models. In the former case, the advantage is that the amount reimbursed corresponds exactly to actual expenditure, but it requires the beneficiary to advance the costs and the quality of the investment is not always the goal. In the latter, the advantage of receiving the amount as an advance enables a wider pool of potential beneficiaries, regardless of prior financial capacity, and places emphasis on outcomes, with the amount calculated as a lump sum on the understanding that, if the outcome is delivered, the money will have been correctly spent. By contrast, the NextGenerationEU model offers an advance to achieve certain (often economic) results, while requiring beneficiaries to account for and justify every cent of expenditure, without sufficient mechanisms of budgetary flexibility and without considering factors such as inflation when complying with the initial commitments.
This basic design flaw has been compounded by a poorly conceived fund management system that has imposed an excessive administrative burden on beneficiaries, largely due to regulatory drafting issues. Regulation (EU) 2021/241, which defines the Recovery and Resilience Facility, set out beneficiaries’ obligations only in vague terms. These obligations were specified in Spain through the Orders HFP/1030/2021 and HFP/1031/2021, establishing the PRTR management system. Both Orders were published in September 2021, at a time when the tools they referred to did not yet exist.
This led to a situation in which the regulatory development of the PRTR and the explanation of its principles took place while the Plan’s implementation was already underway. As a result, errors and misapplications arose due to lack of clarity on the procedures to be followed. The clearest example is that of the CoFFEE and MINERVA applications, developed by the Ministry of Finance, intended respectively for project management and conflict-of-interest control. Although the September 2021 regulations referred to the CoFFEE application and made its use mandatory for a range of project reporting tasks, the tool was not made available to beneficiaries until January 2023. At that point, a gradual roll-out took place, allowing public beneficiaries to gain access step by step, but with many of the functionalities required by the Orders still missing—such as the processing of periodic reports, tools to input project progress, and methods for justifying compliance with milestones and targets. Consequently, fund management and oversight between responsible authorities and beneficiaries were carried out in a hybrid fashion—between CoFFEE and numerous non-standardised Excel sheets—for much of the PRTR’s implementation period.
The case of the MINERVA platform is even more problematic. Its functioning depends on CoFFEE being fully operational and used by beneficiaries, in order to perform large-scale data cross-checks to detect conflict-of-interest risks. The regulation announcing the MINERVA application dates from 24 January 2023 and entered into force two days later, when most beneficiaries still had no access to CoFFEE, let alone an integrated project structure within the application. This meant that many conflict-of-interest checks were carried out after the award of contracts or subsidies, rather than as preventive measures. In such cases, regulatory non-compliance should fall on beneficiaries, yet the Spanish State provided no clear response on the consequences of this situation.
The organisational chaos is not limited to these applications. Other PRTR obligations, such as the principle of “do no significant harm” (DNSH), the use of climate and environmental markers, or communication requirements, were also left without clear and consistent guidelines from the outset. Each ministry or competent authority decided how to apply them, generating great disparity of criteria.
In short, the decision to create a management system from scratch introduced additional difficulties which have fallen largely on beneficiaries and on intermediate administrations such as the Government of Catalonia. The lack of planning, combined with management tools ill-adapted to a still only partially digitalised administration, has meant that the Spanish State has assumed a centralising role without delivering the promised transformative results.
The new National and Regional Partnership Plans
The NextGenerationEU funds have served as a precedent for shaping the proposal for the Multiannual Financial Framework 2028–2034, which allocates almost 50% of funds to National and Regional Partnership Plans. The European Commission, however, has not taken into account the problems raised by the pandemic fund and has replicated many elements that have already generated direct opposition from more than 140 EU regions, the European Parliament and the European Court of Auditors.
The model foreseen for the NRPPs could have significant consequences for Catalonia, particularly with regard to respect for its competences, its real decision-making capacity and the effectiveness of investments. Although the proposal includes the participation of various stakeholders, there is a lack of procedural safeguards to ensure genuine structured dialogue among the parties involved.
In this regard, Annex V of the Regulation stipulates that the NRPPs must include a summary of partner participation, but it does not define any clear mechanism for decision-making or effective negotiation. The proposed governance model places regions with exclusive competences on the same level as other actors from civil society or the economic sector, thereby diluting the political and institutional position of regional administrations such as the Government of Catalonia. Furthermore, although regions may potentially act as managing authorities, coordination will always rest with the State. This centralisation runs counter to the European Union’s principle of subsidiarity and fails to guarantee Catalonia’s participation in decision-making in areas where it has exclusive competences, thus constituting a direct infringement of the Statute of Autonomy of Catalonia.
Another problematic factor is that the disbursement of funds is conditional upon meeting milestones agreed between the Commission and the State. This dynamic may pose risks for Catalonia, as its capacity to receive funding could be affected if other Autonomous Communities fail to meet the deadlines or targets set.
As regards monitoring and evaluation, the NRPPs envisage a model based on outcome indicators. However, the proposed methodology reproduces the limitations of NextGenerationEU, where milestones and targets that were theoretically outcome-oriented were in fact directly linked to financial execution. Thus, the proposal for monitoring quantitative targets is based on ambiguous execution percentages, with no clear standardisation of criteria. This may lead to milestones that appear outcome-oriented but in reality, only reflect the level of expenditure executed, thereby reducing the transformative potential of the funded actions.
At the same time, the lack of common standards for assessing indicators could generate disparities in the evaluation of progress and perpetuate the same problems already observed with the PRTR: a system that favours formal compliance and speed of execution over the quality and impact of investments.
Conclusion
The experience of the Recovery and Resilience Facility with the NextGenerationEU funds and its subsequent translation into the new Multiannual Financial Framework 2028–2034 highlight a problematic trend regarding the future of European economic governance and institutional respect for the Union’s diversity of competences. What was initially justified as an exceptional response to an unprecedented health crisis has ultimately become a structural mechanism, replicated in the proposal for the next MFF. The temporary and extraordinary nature of the pandemic should not have been a sufficient justification for bypassing the limits of the Treaties, and even less for consolidating practices that, in the end, have shifted competences and altered the Union’s institutional balance.
In this sense, the use of extraordinary powers required the establishment of robust oversight and accountability mechanisms. Yet, NextGenerationEU has increased opacity in decision-making and consolidated a bilateral relationship model between the Commission and Member States, strengthening executives to the detriment of parliaments, both at European and national level. This reconfiguration of budgetary power carries constitutional consequences for the horizontal division of powers within the EU and sets a negative precedent in terms of transparency, accountability and democratic legitimacy.
For Catalonia, the mechanism has become a precedent that erodes its self-government, as it dilutes its decision-making capacity in areas of exclusive competence and reinforces a centralisation at State level that is contrary to the principle of subsidiarity and the legally established distribution of competences. Moreover, the nature of the funds has not generated institutional learning nor acted as a real driver of transformation at lower levels of governance. For many municipalities, the resources have simply been perceived as an ordinary budget increase, accompanied by excessive additional bureaucracy and without any critical reflection on their origin or purpose. This uncritical assimilation of the funds shows that their transformative potential has not reached the territory in terms of structural change or innovation in public policies.
The NextGenerationEU funds have not only failed to meet expectations of transformation and modernisation but have also left a problematic legacy. They have consolidated an institutional practice that concentrates power in the executive bodies of the Union and in the governments of Member States, weakened the role of both the European and national parliaments, and altered the distribution of competences between States and regions with their own powers. Beyond the immediate effectiveness of the resources mobilised, the real challenge lies in the regulatory and political impact this mechanism has generated: a more centralised Europe, less transparent, and with a governance model that risks normalising exceptional measures by turning them into structural ones. This scenario calls for critical reflection on the need to redefine institutional and competential balances within the Union, so as to ensure that responses to crises do not become channels for the permanent erosion of the founding principles of the European project.
References
[1] Ministry of Economy, Trade and Business (2025) Territorial sheets generated by the ELISA platform that follow the execution of the Recuperation, Transformation and Resilience Plan available at: https://planderecuperacion.gob.es/ejecucion/seguimiento-del-plan-de-recuperacion-por-comunidad-autonoma
[2] Leino-Sandberg, P. i Ruffert, M. (2022) “Next Generation EU and its constitutional ramifications: a critical assessment”, Common Market Law Review, 59(2), 422-472.[3] Schimmelfenning, F. (2024) “Crisis and polity formation in the European Union” Journal of European Public Policy, 31(10), 3396-3420.
[4] Gimeno Feliu, J. M. (2021) “Los fondos Next Generation: su aplicación en España desde la perspectiva del sistema de distribución territorial”, Informe comunidades autònomas, 59-90.
The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the CGI or its contributors. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the CGI concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers.
