Spanish PM predicts creation of 800,000 jobs over next three years thanks to European recovery fund

The Socialist Party’s Pedro Sánchez today laid out details of how some of the €140 billion that is due to be disbursed to Spain by the EU will be invested and managed

Pedro Sánchez during today's presentation.
Pedro Sánchez during today's presentation.Jose Maria Cuadrado Jimenez (EFE)

Spain’s prime minister, Pedro Sánchez, on Wednesday presented a financial plan for the remainder of his term in office that goes beyond drafting a new budget. The Socialist Party (PSOE) set out a Recovery, Transformation and Resilience Plan for the Spanish Economy that will be sent to Brussels in two weeks.

The blueprint is a guide for the productive spending of the €140 billion that the European Union’s coronavirus recovery fund is due to disburse to Spain. Sánchez, who heads a coalition government with junior partner Unidas Podemos, explained that investment will be focused in 2020, 2021 and 2022, which is precisely how long the government has in power before the next general election must be held, assuming polls aren’t called ahead of time.

The government has calculated that the enormous public investment that will be made, and the knock-on effect in the private sector, will create 800,000 jobs between now and 2022, and will also achieve a major modernization of the Spanish economy that will reduce the inequality gap with other European countries by two-thirds. Given the difficulties in negotiations with Brussels that could delay the arrival of the funds, Sánchez has announced that this year’s budget will include €27 billion of the €72 billion that is due to be spent from the fund between now and 2022. “That will allow us to bring forward the plans,” he said on Wednesday.

Before an audience of ambassadors, business figures and union representatives, but without members of the political opposition, Sánchez announced that the execution of the plan would be handled by the seat of power, La Moncloa, and will not – as the main opposition Popular Party (PP) had demanded – be managed by an independent office. But, he added, it will have co-governance mechanisms so that regional governments and local councils can participate, and execute a large number of the projects.

The prime minister took advantage of his appearance on Wednesday to convey a message of confidence in the country, and called on citizens to not get mired in the bitter political infighting that has characterized the handling of the coronavirus health crisis, but to instead embrace good politics.

Call for unity

Sánchez made a number of calls for political unity, but for now the plan has been put together in great secrecy within La Moncloa without it being conveyed to any opposition parties, regional governments or local councils.

“This is the biggest challenge of our generation since the restoration of democracy,” Sánchez said. “We must tackle it with ambition and enthusiasm. We cannot afford any desertions,” he added.

The major problem facing Spain right now is how to spend the funds quickly and efficiently so that the chosen projects can serve as productive investments to reactivate an economy that is in freefall due to the effects of the Covid-19 health crisis. The second wave of the pandemic is so far affecting Spain much worse than its European counterparts. In order to achieve this challenge, the prime minister announced that all of the necessary changes to the law will be made in order to streamline processes and avoid them being stalled by bureaucracy.

Based on four axes – environmental transition, social and territorial unity, digitalization and gender equality – the plan sets out a profound modernization of the country. The prime minister included some details of what it will involve, such as the rollout of 250,000 new electric vehicles over a year in order to reach five million by 2030. What’s more, 500,000 homes will be refurbished over a decade in order to make them more efficient. The 5G cellphone network will be developed so that it covers 75% of the population, while digital training will be offered to 2.5 million small and medium businesses (SMEs). And, the prime minister promised, 65,000 free daycare places will be created for children up to three years old in order to reduce the gender gap in the workplace.

“There will be a commission that I will preside over myself and a working group in La Moncloa,” Sánchez explained regarding the management of the plan. “In the area of co-governance, the European Fund Conference will be reactivated and also the conference of [regional premiers]. There will be constant dialogue with companies. We need to drive private investment. And also there will be permanent dialogue with social agents, which has been so fruitful up to now. We will create high-level forums on science, digitalization, energy, water, mobility, industry, tourism, demographic challenges, culture and sports. And in terms of accountability, the Mixed Congressional and Senate Commission for the European Union will be used,” he added.

The plan will be the greatest deployment of public funds in recent history, managed from La Moncloa but with the participation of the regions, local councils and the private sector. It’s a huge task, one that has caused concerns in the government given the risk of not being able to disburse the funds in a timely and efficient manner. But it will constitute the major political program of the executive over the coming years, and as such, failure is not an option.

English version by Simon Hunter.


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