PRESIDENT Pedro Sánchez was met with resounding applause upon his return to the Moncloa Palace today (Tuesday) from Brussels after a hard-fought agreement with the European Union to provide emergency Covid-19 recovery funds to Spain.
The country will receive around €140 billion, of which €72.2bn will be in direct fund transfers and the rest in loans.
Whilst the right-wing opposition PP has abandoned its habitual criticising of the socialist-Podemos leftist coalition and congratulated its rivals' leader on his achievement, far-right Vox claims the funds are 'a bail-out in all but name'.
Unlike the bank bail-out of €100bn (reduced to €41.3bn after rebates) received by the then PP government in 2012 – which came with stifling conditions including income tax rising by over a third and value-added tax (IVA) to 21% - the funds are nothing to do with a national financial crisis at institutional level, and varying amounts are set to be received by several EU member States to help pin their economy back together after the pandemic forced nationwide shutdowns.
Some apprehension has been voiced as to whether Brussels would demand tough conditions in exchange, such as in 2012 when even the lowest-paid workers faced higher tax bills and numerous bank branches closed down at the EU's orders, putting finance employees out of a job.
But Sánchez's government remains determined to abolish at least part of the 2012 labour reform, which made it easier and cheaper for companies to fire workers and, whilst this eased conditions for smaller firms suffering losses who had to make redundancies to avoid total closure, it also paved the way for less-scrupulous bosses to shed staff with fewer protections and guarantees.
Sánchez has not yet revealed the full details of the EU deal, but says he will do so in a press conference before the month is out.
It has been widely reported that some of the more financially-conservative northern European countries, as well as incorrect stereotypes about southern Europe's supposed 'work-shy' and 'time-wasting' culture and 'overpaid' civil servants – despite Spain's having much longer standard working hours than Germany, the UK and the Scandinavian countries, and statistically the best health service on the continent – were posing challenging hurdles for Sánchez and which led to negotiations stretching out for several days.
Spain has been given around €5bn less than Sánchez initially wanted, but the president says he is '95% satisfied' with the outcome reached.
He has already announced that companies seeking a slice of the EU funds must be able to show that their economic downturn, cessation of activity, or staff reduction or lay-offs were caused by the pandemic, the lockdown, or both.
Also, all affected companies must present a 'viability plan', guarantees of being able to refund the cash 'medium- and long-term', that no dividends will be paid to shareholders, and its board of directors will not receive any bonuses.
Grants given will not exceed any firm's net assets as at the last day of 2019.
Firms receiving cash must have been solvent until at least the end of last year, and must be domiciled and have their main branches or offices in Spain.
These companies are also required to be up to date with their tax and Social Security duties – particularly on behalf of their employees – must not ever have been found guilty of any financial crimes such as tax evasion, money-laundering, bribery or misuse of public funds, and are banned from using the EU money for 'aggressive expansion' of their empires.
More information, including how small and medium-sized businesses can claim, is expected to follow in the next few days.
Photograph by the Moncloa Palace, the official presidential residence
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