Less is more

The latest data shows that Spain's government had access to around five billion euros of EU grants as at the end of August, but had only deployed 104 million

MARK NAYLER

Pedro Sánchez has said that his post-Covid recovery plan, aided by payouts from Brussels, will be the "most ambitious in the recent history of Spain". But when's it going to start and will his ambitions be realised? At the end of the third quarter, Spain was behind other European countries in returning its GDP to end-of-2019 levels - here, the gap still stands at 6.6%, compared to Germany's 1.1% and France's 0.1%. Even Italy, whose economy is more comparable to Spain's than those two are, has managed to reduce the margin to 1.4%.

Despite tremendous fanfare surrounding the EU handouts, there are two problems with their deployment in Spain, which partly account for the country's slower-than-expected recovery. The first is that most of them are going to be wasted on projects that have nothing to do with post-Covid recuperation, such as green cars and digitalisation (to use one of the government's favourite, and most infrequently explained, words); the second is that even these are being hampered by the Sánchez administration's apparent unwillingness to spend. That reluctance is puzzling, because the Socialist leader has claimed that Brussels' cash will transform Spain in a way not seen since it joined the EU in 1986. Still, probably better to hoard the money rather than squander it, if those are the only two options.

The latest data shows that Spain's government had access to around five billion euros of EU grants as at the end of August, but had only deployed 104 million. With less than two months to go until the end of the year, it's now looking unlikely that any dramatic effects will be seen from their use before we're all celebrating the arrival of 2022 (hopefully out on the streets and squares again). Their effective expenditure also depends on the agendas and competence of future governments, as Spain's next general election is due at the end of 2023 - four years before the last of the funds are set to be released. Who will have the chance to play with them once Sánchez steps down, and will he or she do a better job?

Of course, other factors also account for Spain's slow return to pre-Covid GDP levels, perhaps more so than what the government's (not) doing. Economists also cite cautious household spending, itself closely tied to rising energy prices, persistent instability in the labour market and a delayed recovery of tourism. In fact, as was demonstrated by the political sleepwalk of 2015-2016, during which Spain went for 313 days without a government, the country's GDP is able to grow when NO ONE is running it.

Perhaps less, not more, governmental interference will bolster Spain's position in the post-pandemic recovery marathon.