Taking the pulse of NextGenerationEU

Spain’s Recovery, Transformation and Resilience Plan (PRTR) is under way and this is a good time to take the pulse of its rollout:

→ The Kingdom of Spain has already submitted to the European Commission its request for the first tranche of non-repayable transfers, on account of the reforms and investments carried out from the start of the pandemic until June 2021. In this context, challenges can be seen in the implementation of the reforms corresponding to the second tranche, essentially the labour reform and the first part of the pension reform, given their orientation and ambition and the need for backing through social and parliamentary dialogue. These challenges will be followed by many others until the 102 reforms committed to with Brussels are completed by 2026.

→ The pace of publication of calls for grants and tenders funded by the Recovery and Resilience Facility (RRF) is accelerating in the second half of 2021, after a slow rollout in the first part of the year, which limited implementation in terms of final spending to 104 million euros by August, 0.46% of the total budgeted. Budget execution data, together with Gross Fixed Capital Formation data, show that, to date, the Plan is not yet working to its full potential as an effective policy to stimulate the recovery.

EY Insights’ Pulse NextGenerationEU consists of a comprehensive questionnaire addressed to 100 experts in the field, including renowned economists from the country’s main research departments, public managers involved in the rollout and development of the Plan, and corporate executives called on to submit investment projects funded by the RRF. These are the main general conclusions.

→ Good overall assessment:

— The NextGenerationEU funds and their implementation in Spain in the form of the PRTR are rated very positively by respondents (63% have a “very good” opinion of the PRTR).

— In turn, the new funds have generated a great deal of interest. From 60% of companies stating that they have taken part in the traditional European investment and cohesion funds, the figure rises to more than 80% stating that they have applied or plan to apply for RRF funds. A majority of the companies consulted (46%) have had the opportunity to take part in some dialogue or negotiation with the Administration on defining the priorities or actions eligible for funding.

→ Strengths:

— All the groups consulted identify the Spanish Administration’s long experience
in managing European funds as one of its main strengths for managing these funds.

→ Weaknesses:

— The management system designed in the Recovery, Transformation and Resilience Plan does little
or nothing to make the funds accessible.

— Despite the broad general knowledge of the plan, a high percentage (21%) of the public managers and business executives called on to implement the investments report an insufficient level of knowledge.

— The absence of a body independent of the Executive to speed up processes and provide independence; the lack of specialised staff; the administrative procedures required to publish calls for tenders and grants; and the lack of consensus on the implementation of the Plan are the main weaknesses in the management of these funds.

→ Proposals:

01/ Strengthen political, social and territorial consensus on the definition, implementation and monitoring of the Plan.

02/ Raise the ambition of the Reforms committed to in the Recovery Plan.

03/ Strengthen mechanisms for dialogue and shared responsibility between the different levels of Administration.

04/ Make full use of the flexibility and streamlining options provided for in Royal
Decree-Law 36/2020.

05/ Promote automation and robotisation as mechanisms to streamline administrative processes and procedures.

06/ Speed up the launch of flagship projects under the PERTEs, including the approval of the associated State aid frameworks, and promote the participation of Spanish companies in Important Projects of Common European Interest (IPCEI).

07/ Expressly enable Technical Assistance mechanisms to help companies and institutions receive and manage funds.

08/ Strengthen mechanisms for disseminating information and communicating results.

09/ Work towards a balance between large flagship projects, with transformative impact and led by large companies, and calls for aid specifically aimed at SMEs and
the self-employed.

10/ Bring in the financial sector as a key agent to ensure agile implementation and the widespread reach of the funds, especially to SMEs and the self-employed.

It is in our hands not only to drive the transformation of our country through the effective implementation of the PRTR’s reforms and investments, but also thereby to contribute to the progress of European integration. Our national plan is decisive in shaping the Europe that future generations will live in. Everyone’s involvement is therefore needed. There is a lot at stake, and there is time to correct the weaknesses already identified and to build on the strengths so that NextGenerationEU becomes, as intended, a boost for Europe.