MADRID – Spain will receive €7.8 billion more from the European Recovery Fund than foreseen. Initially, the amount to be received was €69.5 billion. However, that has now increased to €77.3 billion.
Why, is now the question. The Spanish economy appears to have emerged the least strong from the Covid-19 crisis. This precisely is a decisive criterion when the EU determines the final distribution of the total amount in the fund of €338 billion million in direct aid. However, exactly what that distribution will look like will be announced next week. Nevertheless, the newspaper El País managed to gain access to the additional amount earmarked for Spain.
Spain main beneficiary
The total amount that Spain will receive makes it the main beneficiary of the Recovery Fund, ahead of Italy.
Deploying the Recovery Fund with a total amount of €725 billion is perhaps the most ambitious decision the European Union has ever taken. The fund consists of almost equal parts of subsidies and credits that will be provided in the period 2021-2027.
27 member states
The distribution of the subsidies among the 27 Member States is done in two parts. The first part takes up 70% of it and is based on the number of inhabitants in each country, how hard the crisis has hit, and the level of unemployment. For Spain, that calculation resulted in 46.6 billion euros. The remaining 30% was determined by the Commission based on the number of inhabitants and above all on the evolution of the economy in 2020-2021.
Crisis and recovery
The corona crisis hit the hardest in Spain. Economic growth declined by 10.8% in 2020. The Italian economy shrank by 9.9%, the Eurozone as a whole by 6.3%, and the EU by 5.9%.
Last year was a year of recovery, but the growth of the Spanish economy, at 5.1%, lagged the average growth in the monetary union (5.4%) and 6.6% growth in Italy.
This means that Spain will be the last country where GDP levels return to pre-pandemic levels, the European Commission predicts. That in itself is bad news, but it may be partly made up for by the fact that the final amount that Spain receives will be higher. That will certainly be on June 30th.
