This panel explores the early implementation of Next GenerationEU (NGEU) in order to identify challenges and risks for governance and accountability. To cope with the pandemic, the annual budget multiplied by five in the 2021-2027 Multiannual Financial Framework. Such move required amending long-standing boundaries in the Own Resources Decision, whose national ratification process - usually complex- was completed in a timeframe four times shorter than ever (Becker, 2020; Sánchez-Barrueco, 2021). The EU was allowed borrowing in the capital markets and Member States may be held liable if others default in their reimbursements. New resources have been created for the EU to secure safe payment back of the loans (Benedetto, 2017). The flagship programme to distribute NGEU is the Recovery and Resilience Facility (RRF), governed under cohesion rules.

This panel examines the challenges and pitfalls of NGEU in both its revenue and expenditure dimensions. It seeks to engage in a multidisciplinary dialogue due to its unique combination of scholars from Political Science, Law and Economics/Accountancy. All three presenting authors have an extensive knowledge of the governance of the EU budget.

Through an intergovernmental lens, this paper analyses the negotiations that concluded the EU’s multiannual financial framework (MFF) for the years 2021 to 2027, agreement on the EU Recovery Instrument (more widely known as Next Generation EU) worth €750 billion, and the EU rule of law mechanism. Drawing on elite interviews with staff members in each of 27 permanent representations, the paper identifies the divisions that were present amid the first wave of Covid in 2020, and the resolutions that led to a new package deal that summer. The paper identifies four coalitions of different groups of Member States: the already well-known net payers (or Frugal Four) whose position-taking was less credible than in the past, the emergence of a southern group distinct from the friends of cohesion, who had been defending traditional redistribution, and a heterogeneous group of countries and actors that secured side-payments as the price of agreement.

This paper reviews the early implementation stages of Next Generation EU (NGEU) in order to identify the main challenges and risks for accountability in the framework of the Recovery and Resilience Facility (RRF), after more than two years of implementation. The paper first situates NGEU in the framework of governance literature through the 'experimentalist governance' lens (Zeitlin, 2015), due to its features of multilevel governance combined with elements of pooled sovereignty and intergovernmental checks and balances. The RRF indirectly contributes to further 'hardening' the legal effects attached to country-specific recommendations in the framework of the European Semester (Bekker, 2021).

Then, the focus shifts to the accountability of the programme. If EU funds -contributed for the most part by European taxpayers- have never been a 'manna from heaven', this is even truer in the face of multimillion loans taken by the EU under NGEU, to be repayed by several generations. Are the regulatory safeguards apt to maximise an optimal yield from investment opportunities created under the umbrella of the RRF? How efficient are the accountability arrangements to monitor that the national recovery plans truly address the Member States development needs in an inclusive way? Do these mechanisms effectively curb the exposure of EU transfers to political corruption risks or to authoritarianism? Particular attention is attached to the application of the budget conditionality mechanism (rule of law mechanism) and the uneven involvement of Member States in the European Public Prosecutor's Office.

NextGenerationEU (NGEU) is the 800 million EUR master recovery plan designed by the EU institutions in the wake of the COVID-19 pandemic seeking build a greener European Union, better equipped digitally, with more equality and more resilient for the future. This instrument brings challenges not only in terms of implementation but also from the point of view of its oversight and accountability. Some of the key actors in this respect will be audit institutions around the EU – national and regional member state audit institutions -, and especially the European Court of Auditors.

This paper seeks to bring evidence on the capabilities and preparedness of the European Court of Auditors to give assurance on the correctness, reliability and impact of the NGEU spending. Through the lens of the institutional theory (IT) (Almqvist et al., 2013; Parker et al., 2021), using methods such as surveys/interviews with auditors, relevant ECA and EU actors and archival research of the ECA’s methods – including the digital ones - and results, we look to establish how the EU public auditors address the challenges of scrutinising the new instrument from a financial, compliance and performance perspective. We also analyse the lessons they use for this task from auditing other already well-established instruments such as the Cohesion Funds. We conclude on the auditors capacity to adapt to new methods and acquire new skills or their resistance to change in the context of the digital transformation which means a shift from document-based to data-based audit procedures.

By acquiring a deep knowledge of the oversight of the NGEU at EU level, this paper’s objective is to offer audit practitioners useful insights into the strengths and weaknesses of their audit approach regarding the instrument. It also aims to contribute to literature by using the IT framework to explain how the different external actors and interests influence the development of the audit task and its effectiveness. One of main research’s limitation is that we do not have generalising purposes, focusing on only one audit institution. However, this research is relevant in terms of scrutinising the scrutiniser, with lessons to be learned for other audit institutions and with new research avenues opened – analysing national and regional audit institutions’ role on the NGEU oversight through the same lens.