Rethink the Recovery: Leading EU economies set to waste two thirds of pandemic recovery funding plans

New research shows leading European economies set to waste two thirds (64%) of 302 billion pandemic recovery funding plans, leaving Europe vulnerable to climate change and falling living standards

  • New analysis shows Germany, France and Spain set to waste two thirds (64%) of combined €302 billion spending on unsustainable and environmentally damaging sectors.
  • Findings from Finance Watch, the pan-European NGO with a mission to make finance serve society, show just 36% of recovery effort will be spent on strengthening Europe’s ability to cope with climate change and inequality.
  • Finance Watch  spearheads a new coalition, Rethink the Recovery, calling on Finance Ministers to revise spending plans and reforms to prioritise urgently needed green transition to sustainable economy with improved living standards.

BRUSSELS, Monday, 22 February 2021 New analysis of recovery plans drawn up by EU Member States in Germany, France, and Spain shows a large portion of  investments are being wasted on rebuilding an unsustainable economy.

Finance Watch, supported by leading economists, says European governments are already failing to use post-Covid recovery plans to build new sustainable, resilient economies. Current recovery spending plans show that Europe’s largest economies fall short on environmental resilience measures, leaving Europe vulnerable to accelerating climate change. France has allocated just 22% of its €100 billion budget to enhancing environmental resilience, and Germany just 16% of €130 billion, while Spain earmarked a meagre 11% of €72 billion.

By contrast, these countries plan to provide across-the-board support to businesses, including environmentally harmful or unsustainable industries that are not investing to become sustainable. This flies in the face of the urgent need to rapidly reduce carbon emissions in line with Europe’s Paris Agreement climate commitments.

As the ranks of the jobless swell into the millions, the recovery plans also leave Europe exposed to the likelihood of falling living standards. In the current recovery spending plans, France has allocated only 23% of its €100 billion budget to social resilience measures that boost the long-term health and wellbeing of its citizens, while Germany has allocated just 7% of €130 billion, and Spain only 6% of €72 billion.

Benoît Lallemand, Secretary General of Finance Watch, said: “Europe is on course to waste this once-in-a-generation opportunity to retool the economy to build a sustainable and socially inclusive future. EU policymakers must learn the lessons of the pandemic and avoid short-term thinking when drawing up their Covid-19 economic recovery plans. Europe’s Finance Ministers must go back to the drawing board and end support for industries that won’t shift to more sustainable business models.”

Finance Watch Rethink the Recovery: Leading EU economies set to waste two thirds of pandemic recovery funding plansThe criticism of spending plans comes as Finance Watch today launches Rethink The Recovery, a pan-European campaign with a coalition of non-profit organizations, trade unions and think tanks, including the European Trade Union Confederation (ETUC), and the European Environmental Bureau (EEB). The campaign aims to persuade EU Member States to shift the bulk of proposed recovery spending away from old-economy sectors into sustainable investments and reforms before the looming April submission deadline when final National Recovery and Resilience plans must be sent to the European Commission.

The campaign also calls for reform of the EU fiscal rules and broader economic governance to allow this once-in-a-generation opportunity to transform Europe’s economy to focus on the long term. Those reforms will help Commission projections that show investments of €470 billion each year until 2030 are needed if Europe is to meet its environmental aims, including Paris Agreement emissions targets.

Lallemand said: “We need to unlock public finance through fiscal reform: private markets alone cannot tackle climate change due to their too-often risk-averse approach and drive for short-term profit.”

Rethink the Recovery has outlined a five-point plan for Finance Ministers and the European Commission to remedy shortfalls in recovery plans:

End support for unsustainable activities: Recovery financing must not be spent on supporting the fossil fuel industry and other unsustainable activities that have no place in the green economy of the future.

Guarantee living standards for all: Europe must ensure spending plans guarantee a decent standard of living for everyone, through direct support for all who need it during the recovery and beyond.

Invest in the green transition: Ambitious spending to build the sustainable economy of the future, including green energy production, sustainable transport infrastructure, energy efficient buildings, environmentally friendly agriculture, and biodiversity protection.

No return to austerity: Replace fiscal rules limiting borrowing when deficits top 3% and debt-to-GDP ratios reach 60% with a more flexible system.

Reform the fiscal framework: Prioritize long-term environmental and social resilience over short-term fiscal sustainability.

Lallemand concluded: “Plans must ensure a socially just transition that supports workers to retrain for the green jobs of the future, and guarantees a decent standard of living for everyone. And we need proper public investment in infrastructure such as hospitals, which were left vulnerable to Covid-19.”

The launch follows an open letter sent on Monday, 15 February to European Union leaders asking them to review the EU’s Economic Governance. That letter was coordinated by the New Economics Foundation and Finance Watch, and co-signed by George Soros, Chair of the Open Society Foundations; James K. Galbraith, Professor of Government at the University of Texas at Austin; and Olivier De Schutter, Professor of Law at the University of Louvain and UN Special Rapporteur on extreme poverty and human rights; among 180 academics, civil society leaders and trade unionists.


Notes to editors:

About Rethink the Recovery: Rethink the Recovery is a civil society campaign advocating for resilient recovery plans and a reform of the EU fiscal rules. The campaign argues that civil society needs to come together to tackle this crucial issue and aims to build a network of activists and economists to press for urgent reform of EU fiscal rules. Citizens and activists concerned about climate change, social and tax justice, and sustainable economics can join the campaign at the Rethink the Recovery website.

List of signatories:


  • European Trade Union Confederation, General Secretary Luca Visentini
  • European Environmental Bureau, Secretary General Jeremy Wates
  • Fondation Nicolas Hulot, Président Alain Grandjean
  • Bürgerbewegung Finanzwende, Vorstand Gerhard Schick
  • Veblen Institute, Co-director Wojtek Kalinowksi
  • Les éconologistes, Founding member André Peters
  • Greentervention, Co-founder Michael Vincent
  • REVO PROSPERIDAD SOSTENIBLE, Chairwoman Neus Casajuana
  • AK EUROPA, Head of Office Petra Völkerer
  • NESI Forum, Director Diego Isabel La Moneda
  • ASUFIN, CEO Patricia Suárez Ramírez


  • Stephany Griffith-Jones, Financial Markets Director, IPD, Columbia University
  • Christian Kellermann, Economist and author at Friedrich-Ebert Stiftung, Stockholm
  • Robert Thys, Retired Director of International Affairs at NYSE Euronext, Paris

Recovery plan analysis: Analysis of recovery plans assess measures in two ways: environmental and social sustainability, and orientation towards recovery versus resilience. Resilience measures were defined to be long-term oriented and expected to have transformative economic effects beyond 2021 (up until 2030-2050).  Once plan measures are agreed by the Commission, Member States can receive partial funding for their measures through the €672.5 billion EU Recovery and Resilience Facility.

About Finance Watch: Finance Watch is an independently funded public interest association dedicated to making finance work for the good of society. Its mission is to strengthen the voice of society in the reform of financial regulation by conducting advocacy and presenting public interest arguments to lawmakers and the public. Finance Watch’s members include consumer groups, housing associations, trade unions, NGOs, financial experts, academics and other civil society groups that collectively represent a large number of European citizens. Finance Watch’s founding principles state that finance is essential for society in bringing capital to productive use in a transparent and sustainable manner, but that the legitimate pursuit of private interests by the financial industry should not be conducted to the detriment of society.

About Benoît Lallemand: Secretary General of Finance Watch since January 2017, Benoît Lallemand served previously as senior policy analyst mainly covering MiFID 2, as well as senior advisor to Better Markets on EU affairs and head of strategic development and operations. He started the Citizens’ Dashboard of Finance, a platform allowing a broad range of stakeholders, including pioneers in sustainable businesses and financial services, academics and civil society organizations, to engage in a global campaign to change finance. Before joining Finance Watch upon its creation in 2011, Benoît Lallemand spent more than 10 years in the financial sector in clearing and settlement, where he held senior positions in asset-servicing departments, focusing on fixed income and structured products primary markets and regulatory reporting. He managed several business steering committees and strategic projects. Benoît Lallemand has roots in the NGO world from his student years.



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