October 19, 2020

The Government has a plan to execute European funds if there are no Budgets in 2021




The Government has already activated the machinery to try to absorb the 72,000 million euros that Spain will receive in direct transfers from the European Union through the Reconstruction Plan or Next Generation EU. Government sources indicate that to do this, having updated General State Budgets in 2021 greatly facilitates the planning task but that, although this is the safest scenario, the Executive also works on an alternative to execute the funds of the EU in a hypothetical extension of the accounts that the former Minister of Finance, Cristóbal Montoro, approved in 2018.

All the scenarios are active, although the Government assumes that there will be budgets. Before January 1, 2021, yes, the Executive will have already approved the decree law With which it intends to eliminate bureaucratic obstacles and thus modify the Law of Public Contracts or that of Administrative Procedure, among others, for which it will approve it at the end of the year, predictably in December.

72,000 million in transfers until 2023

The Government’s plan consists, in any case, in accumulating the collection of 72,000 million euros in direct transfers for the first three years of the plan’s duration – from 2021 to 2023 – and until mid-2023 do not request the corresponding credits to the EU, if necessary, to carry them out for the next three years. These sources detail that to ensure the provision of resources, it will be the State that advances the 27,436 million euros of funds that it has planned for 2021 and has included in the spending ceiling for Budgets. Once the EU funds start arriving in mid-2021, it will justify the destination of the expenditure to cover the advance.

The last visit of the President of the Government, Pedro Sánchez, to Brussels despite the cancellation of the European Council, tied many of these details with the president of the European Commission, Ursula von der Leyen, and with the economic commissioner, Paolo Gentiloni. However the effort that the Administration will have to deploy to make good use of this cataract of resources will be immense.

Among the reforms that the plan contains and that the Government will have to detail in Brussels as of October 15, there is a section for the modernization of the tax system in which the Executive already gives clues about the next draft of accounts, with product increases with super-reduced VAT rates and more environmental taxes to bring the green tax burden closer to that of Europe.

“Spain has an income / GDP ratio lower than the European average, a high burden of tax on labor and insufficient development of environmental taxation. Low VAT collection due to the high use of super-reduced rates and the need to address the persistent deficit of the pension system this legislature has also been pointed out, ”the government plan states. The Executive will appoint a group of experts for the tax reform of the future as one of the initiatives it has proposed to Brussels.

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