Miguel Navascués | In a paper entitled Recent Developments in the Spanish Economy, Policy & Funding, the Spanish government explains how the €140 Bn from the European Recovery Fund will be allocated to obtain the best result: a solid rebound of the economy with permanent fundamentals. According to the government, it is expected these €140 Bn to have a multiplier effect of about €500 Bn, i.e. a not inconsiderable multiplier of 3.6 euros for each spent. Is it reasonable to expect such an amount?
spain european funds
The European Recovery Fund monopolized, along with the coronavirus pandemic, the 11th edition of Spain Investors Day, which closed last Thursday with the aim of positioning the country as an investment destination. At the same time, the EU was planning to increase direct aid to Spain by €11 billion, given the crisis’ impact on debt, as can be seen in one of the annexes to the regulations on the Facility for Recovery and Resilience, which is awaiting final ratification.
According to the annual review of the Spanish economy, known as ‘Article IV’, the IMF believes the impact of the European funds will increase the GDP growth forecast for 2021 to 7.2%. This compares with the previous estimate of 6.3% made in June. The final forecasts will be made known in October, when the institution will publish its biannual ‘World Economic Outlook’.