According to calculations by Funcas and Analistas Financieros Internacionales (AFI), Spain has only spent €39 billion of the €71.366 billion received, representing an execution rate of barely 45% for a program that launched in 2021. Furthermore, nearly the same amount remains to be requested, as the government expects to receive up to €103 billion after waiving €60 billion in loans to which it was entitled. The entirety of the funds must be absorbed by August 2026.
According to the study “The Impact of Next Generation Funds on the Spanish Economy” released yesterday by Funcas and AFI: “The transformative effect of the funds on the economy has not yet materialized; for that to happen, it would be necessary to improve the management and design of the instruments.”
After five years of receiving the so-called Next Generation funds, the effect on productivity has been “modest”—barely 0.4%—and null in private investment compared to the pre-pandemic period. “Productivity reflects a dynamism that is still limited. The Spanish economy has been the only one of the four major European economies where real productivity per hour has accelerated compared to its previous trend, with additional growth of 0.4 points, contrasted with the declines in Germany, France, and Italy. This progress is, however, modest in absolute terms and contrasts with the magnitude of the stimulus received,” the report states.
Regarding private investment, it has not even recovered to pre-pandemic levels despite the funds, according to an analysis of the 2021-2025 period. “The funds have contributed to sustaining public investment, while the boost to business investment has been lower than anticipated when the program was designed.” Public investment is currently at levels 50% higher than before the pandemic, whereas “at the end of 2025, business investment was still 3.3 points below its pre-pandemic level in real terms, although a sharp rebound is perceptible in the most recent period.”
“European funds account for between 10% and 14% of the average annual GDP growth between 2021 and 2025.” In other words, they represent between 1.4% and 2.1% according to their calculations, when they should have carried a weight of 3.4%.
For Funcas and Afi, this disappointment is not unique to Spain. “The gap between the committed funds (3.4% of GDP) and their impact on GDP growth (notably lower, between 1.4 and 2.1 percentage points) occurs in all countries and is explained by the substitution effect between public and private financing: some investments funded by the program would have taken place even without that aid—that is, using the companies’ own resources.”
