Spain: Recommendations to improve the usage of European funds within the Recovery, Transformation and Resilience Plan

Report by Fedea, prepared through the Joint Working Group in which experts from the business world collaborate, analyzing the design and functioning of the Spanish recovery plan, with special attention to its investment component. Its aim is to contribute to improving the implementation of the Plan in view of the experience acquired so far and to inform the final design of the Addendum to the Plan that will be negotiated with the European Commission in the coming months, which will detail the allocation of close to 10 billion in new non-refundable grants and up to 84 billion in loans.

Main improvements proposed to provide a new impetus to the Recovery Plan:

• Open a dialogue with the European institutions to explore the possibility of extending, beyond 2026 if necessary, the deadlines set for the implementation of the Recovery Plan and extending the margins of state aid for its investments. As a result, a strategic reflection should be undertaken in view of the second phase of the deployment of the Plan, in which it would be necessary to update the objectives and deadlines of the Plan and reallocate part of its resources.
  
  
• Increase the ambition of the reforms committed to and their alignment with the recommendations of the European Semester: for example, to facilitate the sustainability of the pension system, the report proposes, among other measures, facilitating the introduction of the famous Austrian rucksack.
  
  
• Increasing collaboration with private entities for the distribution and management of the funds: It would be key to involve the financial sector more, taking advantage of the knowledge of its broad customer base, the capillarity of its distribution network, its advisory capacity and the possibility of providing complementary financing to contribute to the deployment of the Plan.
  
  
• Strengthen the mechanisms for disclosure of information on access to grants, and ensure transparency on the implementation of funds: to this end, the report recommends exploring the possibility for the public sector to take advantage of the digital solutions implemented by the private sector (business organizations, financial institutions and consultancy firms) to communicate and manage aid, thus facilitating greater absorption of funds. To access up-to-date data on budget and real execution of funds, it is key that the CoFFEE tool, developed by the Ministry of Finance and Public Administration, is fully operational.
  
  
• Extend the use of tax incentives and alternative forms of financing, such as renting, to those investments whose nature allows it, such as housing renovation, investment in small renewable generation facilities, digitalisation or R&D. This would have the advantage of easier processes than subsidies.