Manifesto “Next Generation EU: For a true national plan”

On 27 May 2020, the European Commission presented the temporary recovery instrument Next Generation EU (NGEU), worth 750 billion euros, with the aim of boosting the recovery and transformation of the European economy after the pandemic. In doing so, it sent a clear message of determination in the face of an unprecedented challenge. After Italy, Spain will be the country receiving the most resources from NGEU, a total of 140 billion euros, under the Recovery and Resilience Facility (RRF), the core element of NGEU, endowed with 672.5 billion euros in grants and loans to support the reforms and investments proposed by the different EU countries.

To implement these funds, the government has drawn up the Recovery, Transformation and Resilience Plan (PRTR, also known as “España Puede”). The PRTR is an unprecedented planning exercise in Spain because of the scale of the investments mobilised and the reforms planned, setting out the objectives for applying the RRF on the basis of the country-specific recommendations of the European Council under the 2019 and 2020 European Semester. The PRTR includes a total of 102 reforms and 110 priority investments. Among the former, in compliance with these recommendations, Spain should strengthen the sustainability of the pension system; approve labour reforms to promote permanent hiring; simplify the system of hiring incentives; correct the fragmentation and inefficiencies of national unemployment support; tackle early school leaving; increase efficiency in the use of public resources; and apply the Market Unity Guarantee Law, among others. As for investments, in line with EU guidelines, priority is given to the energy transition and digital transformation.

The Plan represents an extraordinary opportunity for Spain to strengthen the recovery, but above all to drive a profound change in its productive model. Because of its size and duration, the plan should serve, in the words of the economist Jean Pisani-Ferry, to “lay the foundations for a new development model”. But at the same time, the Plan poses a huge political, strategic, management and implementation challenge. To make the most of the funds, progress will be needed on four fronts:

1. Consensus in setting objectives: given the amounts involved, the scope of its reforms and investments and the long implementation period of the plan, it is essential to achieve the broadest possible political, territorial and social consensus when putting it into practice. This is instrumental in ensuring that the Plan is perceived as a national objective and in guaranteeing its effectiveness and continuity over time. This will require better coordination with regional and local administrations, which have extensive experience in implementing European funds and may be responsible for part of the Plan’s implementation, as well as greater efforts by political parties to reach cross-party agreements to implement reforms.
2. Transparency in planning and project selection: at EU level, the Spanish plan has been very well received. However, this should not lead us into complacency. Greater efforts can be made to improve transparency in the selection of investment projects to ensure that funding reaches the most innovative projects with the highest social and economic return.
3. Building the capacity of the public administration to meet the challenge: to improve the plan’s chances of success and ensure maximum technical soundness in its implementation, the public administration must be given the necessary technical and human resources. This includes strengthening professional, specialised teams with previous experience in public procurement, but also making further progress in speeding up processes, reducing red tape and simplifying procedures for managing and controlling European funds. And all this must be done at each of the three levels of Spanish administration.
4. A genuine commitment to structural reforms: despite the extraordinary economic development achieved by Spain in recent decades, the productivity gap with our northern European partners has widened rather than narrowed. The España Puede plan sets out a long list of important investments and reforms for the next three years. However, the commitments on the main structural reforms for productivity growth are still vague. This is particularly true in the areas of the labour market, taxation, pensions, the internal market and the promotion of human capital, in education, universities and active labour market policies. The huge availability of funding concentrated in the coming years is a unique opportunity for reforms, as the funds can greatly mitigate their social costs.

Success in managing these funds and in the policies designed is a task in which we are all called to collaborate: government, parliamentary groups, regional and local administrations, social partners, companies and, of course, civil society. And it is here, at this point, that we feel called upon and concerned.

It is in response to this call to responsibility that EsadeEcPol and EY Insights have decided to launch the “Next Generation EU Funds Observatory” to try to contribute to what must be a collective effort. From this purpose comes the idea of creating a forum for generating and disseminating knowledge around this great objective: ensuring that NGEU funds become a true lever for transforming Spain’s growth model.

Madrid, 25 June 2021.