After a year of pandemic and its very harsh economic consequences, our country has reason to look to the future with optimism. Just this week, the European Commission has approved the Recovery, Transformation and Resilience Plan presented by Spain, for the sum of 69.5 billion euros in direct transfers charged to the Recovery and Resilience Facility (RRF). This approval from the Commission paves the way to receiving more than 140 billion euros in loans, should this be necessary, from now until 2026.
The approval of the Spanish Plan took place on Wednesday, with the delivery of the proposed approval document by the President of the European Commission, Ursula von der Leyen, to the President of the Government, Pedro Sánchez, at the headquarters of Red Eléctrica. This symbolic event shows that the focus is on the ecological transition and the commitment to sustainable growth since, as Ursula von der Leyen underlined, “this Plan will profoundly transform the Spanish economy, making it greener, more digital and more resilient”. “We have backed this Plan because it is ambitious, has a vision for the future and will contribute to a better future for the Spanish people. The sound national responsibility through this Plan is a good sign for the success of its implementation”, pointed out the President of the Commission.
Together with Portugal – which Ursula von der Leyen visited before travelling to Madrid – Spain has been the first country to see its Recovery Plan approved so as to receive the Next Generation EU funds and start to implement its transformation measures. The Plan, which will see the greatest investor and reformist effort in our country since it joined the former European Economic Community 35 years ago, seeks to turn Spain into a “leading country in the major transformations”, with “significant progress in the modernisation of the economic and social structure of Spain”, according to Pedro Sánchez. In short, this is a Plan and a very significant investment to ensure that Spain comes out of the pandemic stronger, as part of the 672.5 billion euros allocated to investments and reforms throughout the EU.
Maximum score in 10 out of the 11 criteria evaluated
Spain has presented 30 components, 211 measures and 416 targets to develop by the year 2026 through the almost 70 billion euros allocated, which seek to boost Spanish GDP by some 2.5 percentage points per annum. And this Plan was approved with an outstanding overall score: the European Commission gave it the maximum Brussels score of ‘A’ in 10 of the 11 criteria evaluated: a Balanced Response, Corporate Social Responsibility, Growth and Jobs, Do No Significant Harm, Green Target, Digital Target, Lasting Impact, Technology, Control Systems and Coherence. The section related to Costing was the only one in which its score was ‘B’.
According to the analysis published by the European Commission, “Spain’s Recovery and Resilience Plan will significantly contribute to supporting the country’s economic recovery and contribute to an ecological, digital and inclusive future”. It points out that it is structured around four cross-cutting goals – the green transition, the digital transition, social and territorial cohesion and gender equality – and responds in a balanced manner to the six political pillars of the Recovery Facility: the ecological and digital transition, smart and sustainable growth, social and territorial cohesion, health, economic, social and institutional resilience, and policies for the next generation.
Green and digital transition, a better job market and social cohesion
The European Commission underlines the “significant allocation” to the green and digital transitions. Specifically, almost 40%, or 27.6 billion euros, is allocated to boost the decarbonisation of the economy and support biodiversity (at least 37% was required) and reserves almost 29% to making progress on the digital transformation -19.6 billion euros- (at least 20% was required). As regards the ecological transition, it highlights the projects to enhance sustainable mobility, increase the energy efficiency of buildings, decarbonise industry and reduce energy dependence, as well as the rollout of new technologies for green hydrogen and renewable energies.
The European Commission believes that the Plan will lead to “the digitalisation of the public administration and of the National Health Service, and will simplify public interaction with companies and citizens”, underlines the efforts to develop the “basic digital training of the population in general, of the unemployed and those workers with lower levels of knowledge”, and values the investments in digital connectivity and in the digitalisation of industry and SMEs, which “will allow Spanish companies to better harness the opportunities offered by an increasingly more digital economy”.
As regards the reform of the job market and the pension system, Brussels highlights that the Plan includes “measures to reduce the high proportion of temporary employment contracts and strengthen active job market policies that it is hoped will improve the functioning of the job market. The Plan is expected to help address the existing fragmentation of unemployment protection and the provision of important skills and qualifications for the job market which must go hand-in-hand with the green and digital transition of the country”. The Plan thus includes reforms of the job market and of the pension system, which are fundamental to receive 12-billion euros allocated in mid-2022, which includes the modernisation of the collective bargaining system. Brussels trusts that the general raft of reforms of the job market “will achieve the right balance between flexibility and security”.
The European Commission also considers that “the Plan pursues the goal of promoting the economic, social and territorial cohesion of the EU and responds in a balanced manner to the six pillars” of the Recovery Facility. In fact, it highlights “the significant allocation to the green and digital transition and the improvements in the rollout of public services and infrastructures throughout the country”.
As regards improvements to the public sector, according to the European Commission, Spain’s Plan “significantly bolsters health, economic, social and institutional resilience, particularly through measures that seek to improve the functioning of the public administration, the National Health System and to preserve and improve the country’s natural capital”. The European Commission highlights the components “designed to support next generation policies through investments in education, skills, the labour market, social inclusion and social housing”.
Control and next steps
As well as evaluating the specific measures, the Commission feels that “once implemented, Spain’s Plan has the potential to have a lasting impact by boosting structural changes in the public administration, institutions and legislation”. This includes “improving Spain’s productivity and competitiveness over time through the swift adaptation of its industry, energy and transport system to the green and digital transitions”.
To achieve this, the text drafted by the Commission stresses that “Spain has established a suitable structure to implement its Plan, as well as to supervise and report on the progress made”, and adds that “the objectives proposed are clear and seem realistic and the indicators proposed are relevant, acceptable and sound”.
Now that it has been approved by the Commission, it is the turn of the European Council – made up of the Heads of State and Government of the Member States – that has the final word within a period of four weeks. This approval will allow the advance pay-out of 9 billion euros, to be disbursed in the coming months – 13% of the total allocation to Spain.
Depending on satisfactory compliance with the milestones and targets set, the Commission will authorise new disbursements. Of the 140 billion euros that Spain could receive, half are direct transfers and the other half are loans.