The Spanish Economy Was Already Showing Signs Of Structural Exhaustion Before Covid-19

Does the 2019 Budget benefit the Spanish economy?Spain's lack of convergence with the EU average is manifested in indicators such as the percentage of the population employed

The Spanish economy has been showing clear signs of structural exhaustion prior to Covid-19. The indicator that summarises this weakness is the stagnation of GDP per capita in relation to the EU average, which has stood at 90% since 2016. This is significantly lower than the 98% reached in 2003, according to a report published by Funcas. The crisis generated by the pandemic hits an economy that was no longer converging with the EU27. So the implementation of the Next Generation EU (NGEU) programme is a great opportunity to reverse these structural limitations and, ultimately, to relaunch the convergence processes in the EU.

The article by Funcas reviews the trajectory of the Spanish economy over the last 20 years in relation to structural challenges. It details that Spain’s lack of convergence with the EU average is manifested in indicators such as the percentage of the population employed, the intensity of investment in R&D, both public and particularly private, and the ratio of public debt to GDP. In other cases, the weakness is seen in slower progress, such as the reduction in the school abandonment rate and the percentage of the population at risk of poverty and social exclusion.

Whatsmore, it devotes special attention to the administration of European funds, reaching political and social consensus and improving management capacity with the necessary administrative reforms. In any event, the very nature of the funds and their orientation in terms of medium- and long-term reforms could, together with the delay in processing, rub up against the short-term stimuli required by the Spanish economy from early 2021.

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