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As details of countries’ recovery plan are being released, here are some thoughts about the Spanish Recovery Plan in comparative perspective. Here is a thread
1/ After months of negotiations between governments and the European Commission, Spain along with other countries is presenting its final plans. They are available at https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en#documents
2/ Natinoal Plans will be compared, reviewed and approved by the European Commission, during the months of May and June. Subsequently, ECOFIN will give its approval. From then on, around 6% of the funds will be advanced to each country
3/ Thereafter, disbursements will be made every six months provided that established “milestones” are reached.
4/ A milestone can be many things, ranging from passing a law (such as a climate change law), the draft of a proposal for tax reform being presented by an appointed groups of experts…
5/ … a plan to reinforce active employment policies (which could be a component of labour reform), the tendering or implementation of investment projects in hydrogen, mobility, or the establishment of a battery plant for electric cars.
6/The EU’s Own-Resources Decision, which will allow the recovery plan to be financed by European debt, is pending ratification in several national parliaments. There will be bumps and scares on the way, but in the end, problems will be resolved
7/ All national recovery plans are similar. And the reason is simple. The Commission has set up very clear guidelines; investments and reforms must first and foremost promote sustainability and digitalisation.
8/ Sustainability refers to “green” investments, as well as all kinds of reforms, digitalisation is not only about digital hardware, but also about investing in digital skills at all levels, from SMEs to schools
9/ Furthermore, reforms and investments must aim to solve problems identified by the European Commission with an unified "European" vision in mind.
10/ If this method of reform and investment in exchange for funds works well and becomes permanent, we could be looking at a majour progress in fiscal European integration.
11/ Some reflections regarding the Spanish Plan- details (content, components, main axes, expected impact on growth, etc.) can be found here https://www.lamoncloa.gob.es/presidente/actividades/Paginas/2020/espana-puede.aspx
12/ The Spanish Recovery Plan is one of the most thorough, detailed, and ambitious. It sets out a transformative vision, difficult to disagree with, as practically nothing is missing; in other words, everyone’s concerns are reflected.
13/ The plan does not include everything Spain is doing. Many investments will be made from the national budget (e.g., most of those in education). Additional funds will also come from the European budgets 2021-2027. Italy has added all together
14/ As the plan sets out a roadmap for the coming years, some of the reforms are yet to be approved (some of the "milestones" must be met). However, the same is true for other countries. No one has approved all reforms set out in their National Plans.
15/ Regarding labour, pension and tax reforms, for example, there is a clear commitment to pass them, thus it will be done. Arguably, they should’ve already been approved, however it is more important to approve them through social dialogue and support, to make them long lasting.
16/ Moreover, the Commission is not requireing to approve them when delivering the plan. Deadlines and dates have been negotiated for each milestone, including the different elements of these reforms.
17/ Although governance and accountability is not very detailed, expenditure control mechanisms seem concrete. Where more needs to be done, is in evaluation
18/ The biggest challenge will be implementation. We are talking about funds amounting to 5.8% of Spanish GDP in 2019, which need to be distributed in a decentralised way and in a short period of time.
19/ Therefore, it is critical to provide the administration with more resources, and make some of the procedures considered to be acting as hurdles more flexible, beyond the Royal Decree-Law already approved in December.
20/ It is also necessary to set up a web portal to provide specific information for companies, especially SMEs, on how to participate in projects, what kind of documents they will have to prepare for the tenders, what the specifications will be like, etc.
21/ In sum, the Spanish Plan will pass with flying colours in Brussels. And it is possible that other countries will be asked to do some things similarly. But Spain needs to ensure that the ‘Proyecto País’ (Country Project) outlined in the plan can be implemented. END
