NextGenerationEU: the figures for Spain
The shape of the European Recovery Fund is becoming clearer. This is a summary of a report looking at the figures for Spain. It will be the first in a series of articles in which we will help Dutch companies to identify their opportunities in Spain.
On 10 November 2020, the European Parliament and EU members States in the Council, with the support of the European Commission, reached an agreement on the largest package ever financed through the EU budget, of €1.8 trillion. Following the coronavirus crisis and its consequences, the package will help rebuild a greener, more digital and more resilient Europe.
The Spanish think tank Real Instituto Elcano has published an analysis on the European Recovery Fund in which it breaks down the figures for Spain. Their sheer scale aside, anyone who has looked at the figures of the European response to the pandemic will have realized how difficult it is to understand their distribution, both in terms of countries and in terms of programs or administrative levels.
The Elcano’s analysis attempts to understand these figures and clear up some misconceptions.
Breakdown of EU funds
European funds refer to the combination of the Multiannual Financial Framework (MFF) and the Next Generation EU (NGEU) fund.
The overall ceiling of the MFF 2021-2027 is set at €1.074.3 billion (in 2018 prices). From 2021 to 2023, the MFF will be supplemented by €750 billion from NGEU to arrive at a total of €1.853.3 billion (Fig. 1).
Spain is set to receive around €200 billion of that total amount. These funds will facilitate otherwise difficult investment and prevent Spanish public debt from escalating further.
NextGenerationEU
At the heart of the EU’s response to the coronavirus crisis lies its most innovate element: Next Generation NGEU program, better known as the Recovery Fund. More after six months after the fund was established, we are starting to build up a clearer picture of its workings and governance, as well the dates and conditions for the disbursements of funds.
The final distribution of the €750 billion for NGEU is shown in the following Fig. 2.
In current prices, the total firepower of NGEU is €807 billion, including €724 billion for the Recovery and Resilience Mechanism (RRF), the main component of NGEU.
The figures for Spain
According to the Elcano’s analysis, Spain has access to three types of EU funds over the coming years expressed in current prices:
- First, new funds to finance physical ad human capital, including €154,996 million from NGEU and €43,813 million from the MFF 2021-2027 (excluding the European Agricultural Guarantee Fund EAGF, since these funds will be used to support incomes and prices).
- Secondly, the reprogramming of existing funds, both to finance physical and human capital and to alleviate the short-term crisis. This comprises €36,839 million of unspent allocation from the MFF 2014-2020.
- Finally, the new funds for supporting incomes and prices, which include €39,193 million from the EAGF, as part of the MFF 2021-2027, and €21,300 million to support labour income (SURE scheme).
Taken together, NGEU and the funds from the MFF 2021-2027 make up €198,809 million of new financing for physical and human capital (Fig. 3).
Furthermore, as mentioned above, Spain has also been able to reprogramme existing funding.
Taken together, these funds should allow Spain to meet its most urgent needs and undertake an ambitious investment programme to reduce the impact of the recession and increase the potencial for growth.
Plan España Puede
Not all these funds will be automatically disbursed. Instead, they will be conditional on Spain –like other EU Member States- submitting a National Recovery and Resilience Plan by 30 April 2021 for approval by the European Commission. The Government of Spain publicly unveiled its España Puede plan on 7 October 2020, outlining its future Recovery and Resilience Plan.
The governing principles of this plan are closely aligned with the general objectives of NGEU (digitalization, sustainability and inclusion), in addition to a further objective on gender equality.
In our next article, we will discuss the main lines of the España Puede plan, after its latest updates.
We will also include a small section dedicated to EU funds within the Spanish National Budget for 2021. We will have a look at the NGEU fund investments that are part of the 2021 National budget, of which the Ministry of Agriculture, Fisheries and Food has been allocated €406.5 million.