The coalition government PSOE-United We Can It trusts a large part of the recovery to European funds. Some 140,000 million that will reach our country in the coming years, of which it is expected to have more than half in the triennium that begins in 2021. But the Executive’s forecasts of what that money can contribute to the economy is very inflated, in view of the correction that projects the Bank of Spain.
Moncloa predicts that in 2021 these games will contribute 2.6 points to the GDP. On the other hand, the institution directed by Pablo Hernández de Cos lowers the figure to 1.3 points. “The lower boost in activity compared to the plans included in the PGE is due to the assumptions about a lower degree of absorption of funds and a lower fiscal multiplier”, highlights the macroeconomic projections report, presented today.
The Bank of Spain doubts this economic effect not only for this coming year. “It is estimated that GDP growth could increase by 1.3 pp in 2021 and, additionally, by another 0.2 pp in the average of 2022 and 2023,” he explains, when the Government maintains that 2.6 annually for both years . In the entire three-year period, the total impact would amount to only almost 1.8 points, as highlighted by Óscar Arce, General Director of Economics and Statistics.
The agency doubts that the 74,000 million that it would receive can be executed 100% Spain until 2023. “The uncertainty about the ability of Public Administrations to absorb such a high volume of resources in such a short period is very high,” the document states. Furthermore, it highlights that the Spanish recovery plan, together with the French one, is one of the most ambitious in Europe in relation to the volume of funds absorbed and the anticipation of terms.
The truth is that Pedro Sánchez believes that 100% of what is received from the community fund can be used. The position of the Bank of Spain is somewhat different, estimating a lower percentage: «The projections incorporate around 70% of the investment spending announced for 2021, a percentage that gradually increases as time passes, until reaching the 85% in 2023. All of this implies that, over the projection horizon, spending will be executed for just over 80% of the resources available in transfers from the NGEU (close to 5% of the expected GDP) ».
The institution also pulls a newspaper library to argue that it could be very difficult for this money to be fully translated into economic growth, since the “historical evidence” shows that in similar cases from the past, “After the first two years of these programs, the Spanish Public Administrations have only managed to execute projects for an amount of around 30% of the available funds”. Optimism in vein on the part of the Executive, when concrete projects that will be financed by EU funds are not even known yet.
The Government’s recovery plan, as it is, aims to boost and modernize the Spanish economy in the short and medium term. Opt for new production models and sectors with high added value look to the future. In this sense, a good part of the money will go to digitization and energy transition.