European Funds Get Bogged Down in Bureaucracy

Just Sanchez

According to El Periódico, “the excessive expectations that had been created about a rapid arrival of European money to the Spanish economy are colliding with bureaucracy and the lack of communication between administrations and companies”.

The Ministry of Finance claims that 60.9% of the funds planned for this year have already been authorised – through the Council of Ministers and the different sectoral conferences – and that 25.5% of the total amount has been allocated. However, the CEOE warns that the money allocated to projects and distributed to the autonomous communities (that 25%) is one thing, but the actual execution of the funds is quite another. According to the employers’ association, currently only 8% of the funds earmarked for 2021 have been effectively executed with two and a half months left until end-year.

“The most recently available information suggests that the absorption of PRTR funds has been relatively modest to date,” warned the Bank of Spain in its latest Economic Bulletin. The Bank of Spain almost halved the expected impact of the European funds’ spending on GDP this year (predicting that it will boost the economy by 0.6 percentage points compared to the 1% estimated in June). It also shifted this boost to 2022 and 2023 precisely because of the delay in the execution of the funds this year. The Bank of Spain’s estimates suggest that 11.602 billion euros of European funds will be absorbed this year (adding the investments of the Recovery Plan and those of the parallel React EU programme). And this is a far cry from the maximum forecast by the government. The execution of the funds, according to the supervisor, will rise to 31.185 billion next year and to 24.458 billion in 2023.

El Periódico has picked up the attestation from Pedro Robles, founder of Fandit, a technology startup that locates and classifies these subsidies for its clients (companies and organisations interested in aspiring to these resources).  His algorithm is capable of detecting how many calls for proposals have been launched in Spain under the umbrella of the Next Generation EU programme: there are 42 lines, for a total of 3.393 billion euros. And how much of these resources have already reached companies and institutions? “Probably zero,” he says.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.