Misc 15/01/2021

Spain will receive €10.5bn more in direct aid from the European anti-pandemic fund

The figure increases after the allocation has been updated with new data

Júlia Manresa Nogueras / Núria Rius Montaner
2 min
La presidenta de la Comisión Europea, Ursula von der Leyen

Brussels / MadridSpain will receive €10.5bn more than expected in direct aid from the EU anti-pandemic fund. The final amount increases, as advanced this Thursday by El Mundo and confirmed to ARA by sources from the Ministry of Economy, because the European Commission has updated its calculations with the economic data of the autumn. Spain was to receive €72.7bn in direct aid, that is, funds that do not have to be reimbursed. This figure will rise to €83.2bn.

At the beginning of November, the European Commission considerably worsened the forecasts for the slump in the Spanish economy. It predicted a shock twice as strong as that which the German economy would suffer: a 12.4% decline in GDP for 2020 and a strong impact on the labour market, with Spain expected to top the EU's unemployment figures. The Commission's services have updated the calculation in favour of Spain, while the legal texts on the anti-pandemic funds are going through their final stages in the European Parliament. However, there will be another revision in 2022 that could lead to further changes.

This emergency recovery plan is designed to help the countries most affected by the pandemic and Spain's exposure is particularly high due to its dependence on the service and tourism sectors, two of the most affected by containment measures.

To recapitulate, the heads of state and government of the European Union approved last July an unprecedented economic recovery plan in the face of the impact of the first wave of the coronavirus pandemic in Europe. In total €750bn will be granted in the form of loans, of which €390bn will be in direct aid. Of the total fund, Spain has access to €140bn. The Spanish government has already promised to "mobilise 72bn", the amount foreseen in non-refundable aid which now increases by 10.5 billion euros. In fact, next year's budget already counts on €27bn of that fund.

However, the processing of all the texts is not yet complete. The recovery plan was the subject of turbulent negotiations between MEPs and governments at the end of last year over thorny issues such as the mechanism linking the disbursement of the money to compliance with the rule of law (democratic principles and separation of powers). Hungary and Poland used the right of veto to block the procedures and finally managed to water down the mechanism

But it is not over yet. The European Parliament has to give the final go-ahead to the legal texts, a procedure that should be fairly straightforward. However, the text will then be sent to Member State parliaments for approval. This is expected to be more complicated, as it depends much more on domestic politics. in the week that both the Italian and Dutch governments collapsed, there is fear that this instability may affect the outcome.

Finally, for the money to start arriving in Spain, the government needs to present the so-called "reform plans". These are documents in which the government explains what it intends to do with the money. There are certain conditions, for example that 30% of the money is earmarked for the green transition and also for the digital transition. But the spirit of this plan is also for governments to reform and modernise their economies to correct "structural" problems that are being aggravated by the pandemic. And this is one of the great controversies in Spain because two of the systematic requests from Brussels to the Spanish governments are reform of the pension system and the labour market.