The great European fiscal experiment born of the pandemic is approaching its last execution date. Spain should have already completed the milestones and objectives committed to in the Recovery, Transformation and Resilience Plan, although there is still one last bill to claim: 21,462 million euros in transfers and another 4,400 million in loans. The Government has until September 30 to present the request for the seventh and final disbursement to Brussels.
The closing of the execution does not therefore equate to the immediate end of the money. Spain has so far received some 78 billion euros in six payments, 76.5% of the 102 billion euros allocated within the Recovery and Resilience Mechanism. The last application would have to prove the fulfillment of 148 milestones and objectives. If Brussels gave its approval, the 100 billion received from the mechanism would be exceeded before the end of 2026.
The sixth disbursement, paid this August, reached 6,234 million euros. Of that amount, 5,226 million corresponded to transfers – including 265 million that had been pending for the fifth payment – and 1,008 million to loans. With this delivery, Spain reached 338 milestones and objectives met.
The challenge now changes its nature. For five years, the Spanish economy has had an extraordinary injection of European resources to finance investments and reforms. From now on, the question will be how much of that momentum remains when that exceptional source of financing disappears and what capacity it has to convert spending into greater productivity.
The Recovery Plan was the European response to a crisis very different from previous ones. After the collapse caused by covid-19, with a drop in Spanish GDP of more than 10% in 2020, the European Union opted for an unprecedented strategy: going into joint debt to finance the recovery of the partners and linking part of that money to reforms.
The Next Generation EU mechanism was born in 2020 with an initial allocation of 750 billion euros for the entire Union. Spain received one of the largest allocations and designed a program that combined public investment with regulatory changes in areas such as the labor market, pensions, digitalization, energy, training and business creation. The Government estimates that two out of every three euros have been directed to the green and digital transition, and estimates the number of beneficiaries at 1.5 million, with SMEs and microenterprises as the main recipients. The Digital Kit, for example, has reached 921,962 SMEs and the self-employed.
400,000 new Vocational Training places have also been created, more than 25% of them linked to digital fields, according to the Executive’s balance sheet. The Create and Grow Law and the Startup Law complete the chapter of business reforms that the Government links to the program.
Execution data offers another measure of the volume mobilized. As of June 30, more than 95 billion had been called, nearly 80 billion had been assigned and more than 70 billion had been resolved, according to the public platform Elisa.
However, the demand for loans has fallen far short of initial forecasts. Spain started with an allocation that included some 80,000 million in transfers and the same amount in credits. However, the Government has ended up requesting around 21.5 billion in loans, a quarter of what was allocated.