Spain's PM announces 'a major sovereign wealth fund', starting with 10.5 billion euros, to offset imminent end of EU aid

Prime Minister Pedro Sánchez made another economic announcement, his third this week, following those concerning housing and generational renewal in agriculture.

On Thursday, Sánchez unveiled the creation of "a major sovereign wealth fund" called 'Spain Grows', whose main objective will be to extend the reformist momentum of Spain's economic recovery plan beyond 2026, which is when the EU's Next Generation funding pot expires.

This monetary vehicle, devised by central government but also involving co-investing with the private sector through loans, guarantees or equity instruments, will launch with an initial 10.5 billion euros from European funds. However, the goal is to mobilise approximately 120 billion euros through private debt and national and international investors.

Although project details remain unknown until Monday, when Sánchez will officially present it together with Minister of Economy, Carlos Cuerpo, it has been revealed that Spain's Official Credit Institute (ICO, a publicly-owned bank attached to Cuerpo's Ministry) will be in charge of managing the fund, together with the aforementioned private collaboration.

At a time when Spain is operating without a budget, the fund's resources will be allocated to key sectors to improve productivity in the Spanish economy, with a firm commitment to investment in housing (in the midst of the sector's ongoing crisis), energy, artificial intelligence and digitisation, as well as reindustrialisation, the circular economy, infrastructure, water and security.

"We want to go beyond 2026 and ensure that the reformist momentum can last", said Sánchez during his closing speech at the 16th round of Spain Investors Day in Madrid. "If the NextGen funds were an exercise in European sovereignty, Spain Grows will be an exercise in national sovereignty", he stated.

This fund, announced before the large group of investors and business leaders present at the event, is central government's firm commitment to the country's immediate future without the support of EU Next Generation funds, whose term expires in August of this year.

It's worth noting that the term "sovereign wealth fund" is used by some states to refer to the large investment vehicles with which they manage a portion of their wealth, traditionally linked to profits derived from oil production and exports. These include Norway's sovereign wealth fund and many others such as those of Qatar, Saudi Arabia and Singapore.

In this sense, Sánchez made a clear commitment not to oil, but to renewable energies, to reach those billions that he intends to mobilise together with the private sector, at a time when Spain has relied on European funds to bolster the reformist agenda despite not having a budget.

The Prime Minister used his speech to boast about the positive performance of the Spanish economy and his government's policies. "We are getting used to consistently being among the best economies in the world," he stated. "I don't want to be complacent, but it is true that we are one of the fastest-growing European economies, creating half a million jobs annually and the Ibex 35 is breaking [stock market] records every session", said Sánchez.

In any case, Sánchez advocated working to meet challenges such as continuing to reduce poverty and inequality, resolving the housing problem and increasing the real disposable income for households. He asked the investors present at the event to help the government "in any way they can". All of this comes in a context where, despite the "difficult" international environment, Spain grew by 2.9% in 2025 and is expected to grow by at least 2.2% in 2026, according to government forecasts.

"In an increasingly turbulent world, Spain is a safe haven. Here you will not find trade tensions, geopolitical risks or legal uncertainty", but rather "social peace, territorial cohesion and a stable framework that fosters talent, wherever it comes from, and a government committed to the companies that drive this country forward", he asserted.

After a lengthy speech promoting Spain as an investment destination - also heavily focused on energy opportunities - the PM highlighted the first meeting of the government's 'strategic investment committee', another tool set up to attract production capabilities to leading sectors, both in Spain and across Europe.