In olive groves and vineyards across Spain, sensors and drones – purchased with funds from the largest European recovery programme since the post-war Marshall Plan – are collecting soil data that feeds artificial intelligence models to help farmers manage their crops more efficiently. This project – the decarbonisation and digitisation of a critical economic sector – embodies exactly the purpose for which the EU’s $955 billion EU Recovery Fund was created, agreed six years ago, and now, final disbursement deadlines are nearing expiry.

However, skills shortages, heavy bureaucracy, and uncertainty over long-term funding mean the historic support package – presented as an “opportunity to make Europe stronger” – is struggling to overcome familiar hurdles that have repeatedly put the brakes on the continent’s economic transformation efforts, Reuters notes.

“The funds have left us with data infrastructure, shared governance and teams capable of operating AI on a large scale,” said Juan Francisco Delgado, coordinator of the rural project. “What they didn’t leave us is a business model,” he added, noting that his team is working on a financial plan to develop the data platform, upgrade equipment and attract talent when European funds run out.

Ambitious goals, mixed results

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EU leaders, faced in 2020 with an unprecedented collapse in GDP due to the pandemic, launched the Recovery Fund with an ambitious goal: to rescue the Union’s economy through reforms and investments that would simultaneously boost digitisation and sustainability.

The need to make good use of resources has taken on new importance as threats of economic coercion from China and increasingly hostile relations with the United States intensify the sense that Europe needs to strengthen its defences.

More than €700 billion was made available as grants and loans in 2021, although the amount was capped at €577 billion as some states chose not to use all of the loans offered to them. Five years later, €182 billion of the allocated funds have yet to be disbursed, according to Reuters calculations based on EU data.

The commission argues that the fund has met both its short-term and long-term objectives. However, officials, businesses, and other stakeholders who spoke to Reuters believe the end result is more uneven.

There is widespread agreement that the fund absorbed some of the shock of the pandemic and broke a long-standing taboo of joint European funding – a practice now firmly entrenched in the arsenal of European politicians. Conditions for access to the funds, from labour market reforms in France and Spain to simplified renewable energy permits in Italy, Greece, and Portugal, and cybersecurity enhancements in Slovakia and Romania, are likely to deliver long-term productivity and growth benefits.

However, implementing these reforms and absorbing funds has taken longer than expected, limiting any rapid acceleration in growth, which remains sluggish compared to the US or China.