'Tsunami of money': Spain's financial capacity will 'treble' thanks to EU recovery funds

CASH pouring into Spain over the next year will 'treble its financial capacity', according to European Commissioner for Cohesion and Reforms, Elisa Ferreira.

Spain is likely to be one of the first to receive a payout from the European Recovery Fund, set up to help member States rebuild and improve on their economies after these took a battering from the Covid-19 pandemic.

Of the total pot of €750 billion, Spain is eligible for up to €140bn – of which half will be direct, non-refundable grants, and the other half can be requested in no-strings loans.

Although there will be no imposed austerity measures such as tax hikes or high-street restructures like those required when Spain applied for a €100 million bank bailout from the EU in 2012 – particularly as all 27 countries are, this time, automatically entitled to a cut – each nation is required to send in a detailed plan of what it will do with the cash, and which must be signed off before it is paid out.

Portugal, currently the president country of the EU, is aiming for the funds to be released as early as this summer.

Sra Ferreira says: “It's a tsunami of money, and it's a tsunami of responsibility.

“Spain has all the right characteristics to be able to get the best possible out of this historic opportunity.”

This is likely to be because of the nation's heavy dependence upon tourism and the catering industry for its income – both together, in a normal year, these would make up around 30 cents in every euro of Spain's GDP – and the fact that a third of its workforce are self-employed and around 75% of companies are small and medium-sized, mainly family-run, businesses.

To qualify for the funds, member States are requested to detail their home resources and confirm their applications by April at the latest – although so far, only six countries have done so.

“There's a real need to speed up this process – there are different institutional mechanisms which need to be complied with, and yet just six countries have done it,” Sra Ferreira warns.

“Completing this procedure is in the general interest.

“Meanwhile, the Commission is discussing with countries their plans for where and how they want to invest the money.

“I don't like to use the word 'spend'; I prefer 'invest',” she admits.

“It's about investing in restructuring, and consolidating our exit from this crisis with greater attention to and greater capacity for complying with environmental or climate objectives, investing in a more modern economic recovery – more digital, greater use of new technologies, but also consistent with social and regional needs.”

Spain's president Pedro Sánchez and his government sent in the country's draft spending, or investment, plan in October, and it is being analysed by the Recovery and Resilience Working Group set up by European Commission Secretary-General, France's Céline Gauer.

According to Commission sources, the examining process of Spain's application is 'heading in the right direction'.

These same sources say the procedure, for Spain, is among those of five countries which are 'the furthest ahead so far', and looks set to be one of the first applications to be approved for the funds to be transferred 'as soon as they become available'.

Spain intends to send the Commission the definitive version of its recovery plan before the end of March.