To receive funds from the Recovery and Resilience Facility (RRF), EU member states committed to implementing specific reforms and investments. However, according to a new report by the European Court of Auditors (ECA), these efforts have so far only partially addressed the obstacles present in the business environment. While some reforms have already brought improvements, the implementation of most is delayed — and only a small share of completed reforms has delivered tangible, meaningful results.
In 2021, to mitigate the economic impact of the COVID-19 pandemic and support a sustainable recovery, the EU launched the RRF with a budget of €650 billion. In order to access this funding, EU countries had to commit to carrying out planned investments and reforms across key sectors. These actions were expected to resolve — fully or largely — the structural problems identified in the EU’s 2019 and 2020 country-specific recommendations. These included, among others, recommendations relating to the business environment.
“The EU is using recovery funding as an incentive for member states to implement major business-environment reforms — but so far, in most cases, the intended objectives have not been achieved,”
said Ivana Maletić, the ECA Member responsible for the audit.
“The RRF could make it easier to do business in the EU, but its full potential is not being realised.”
In the two years preceding the pandemic, the EU issued 82 recommendations to member states aimed at improving the business environment. These included encouraging private investment, improving access to finance, simplifying tax systems and reducing regulatory burdens. To address these recommendations, member states included 157 reforms and 254 related investments in their national recovery plans — with an estimated €109 billion in RRF funding, primarily for investment measures.
So far, member states have largely implemented only about one-quarter of the relevant recommendations — and not a single one has been fully implemented. Around half of the recommendations have seen only minimal progress or none at all, leaving some structural problems unresolved. In fact, no action has been taken at all in response to 7% of the recommendations. A recent ECA audit also found that about one-third of labour market-related recommendations covered by the RRF were not reflected in any reform. Taken together, these findings show that a core objective of the RRF — to address all, or a significant share of, country-specific problems — remains unachieved.
Delays and limited impact
Implementation of most reforms was delayed in the four member states visited during the audit — and over one-quarter of these reforms were still incomplete by April 2025, when the audit ended. Since all RRF actions must be completed by August 2026, further delays risk leaving certain objectives unmet.
Where reforms have been completed, most have successfully delivered expected “outputs” — such as the formal adoption of new legal frameworks. However, the real economic impact may only become visible several years later. In practice, only one-third of completed reforms have so far produced significant measurable results — and even in those cases, the impact may be limited due to tight timelines, weak policy alignment or the possibility of reforms being rolled back.
Moreover, it is difficult to conclusively assess whether business-environment reforms under the RRF are directly responsible for national progress on the associated country-specific recommendations — as they contributed meaningfully to progress in only about half of the evaluated cases. Auditors conclude that progress is slow, although somewhat stronger than in the area of labour market reform.
Background
COVID-19 restrictions and lockdown measures led to severe disruption to economic activity and trade across the EU. While the impact was most acute in 2020, economic recovery followed in 2021. The RRF is still being implemented, and most business-environment reforms are not yet complete.
Within the EU’s annual European Semester framework, the Council issues country-specific recommendations — identifying national economic and structural challenges. Under the RRF Regulation, national recovery plans are required to address all or a significant part of these challenges.
The auditors examined whether RRF business-environment reforms effectively addressed the issues set out in these recommendations — and whether, in Bulgaria, Spain, Cyprus and Austria, these reforms have delivered the intended results.
