Next Generation EU Funds: The great challenge of transforming the Spanish economy

#NexGenerationEU Funds were planned as a temporary instrument (2021-2026) budgeted with more than 800 billion euros. Its aim is to boost the economic and social recovery of the eurozone in the wake of the coronavirus crisis. This crisis has hit Europe and the world so hard.

There is no doubt that this European Plan has been maked with a clear purpose. Providing a coordinated and unprecedented answer in one situation never experienced before. Likewise, to lead the definitive transition towards digitalisation and sustainability, priority axes for present and future development.

After much expectation, Spain received the first regular transfer of funds of 10 billion at the end of 2021. This is in addition to the 9 billion already provided by the European Commission last August to pre-finance the Spanish government's Recovery Plan.

With the deployment of funds underway, the focus is on how to manage this recovery plan. And it must also fulfil the purpose for which it was conceived, to energise and transform Spain's productive fabric.

José Mañas, CEO of Wireless DNA and president of the technology association GsBIT, analyses the current situation of the Next Generation Funds. Mañas focuses on relevant aspects to get the most out of this historic incentive package.

One of the main difficulties in this initial phase (2021-2023) is related to the destination of funds. Likewise, to the slowness of public institutions to mobilise and attract private investment in the strategic areas of the future envisaged by this Plan. In effect, the public administration is earmarking funds to cover its needs. Similarly, it is failing to tender for key public-private partnership projects. The importance of these projects lies in their capacity for sectoral transformation and their long-term impact.

A part of the Next Generation Funds is foreseen to address structural reforms recommended by the European Commission. These reforms have been pending for decades. It is also worth highlighting the importance and need for the private sector and public administration to work hand in hand. It is necessary to involve all links in the industrial value chain in a cooperative manner, especially small and medium-sized enterprises. Regarding this, the public tendering of these projects cannot be delayed any longer.

Another problem is the deadlines for proposals. In Mañas' opinion, the fact that they are too tight requires maximum agility and efficiency from organisations. The reason is that it is necessary to identify the strategic lines or initiatives that best fit into the spirit of proposals. And, these proposals must satisfy some eligibility requirements. There are also situations where public organisms are exceeding their own deadlines for awarding tenders.

Therefore, it does not seem that the difficulties faced by companies in accessing the Funds are only attributable to a lack of preparation. A recent report by KPGM’s consultancy firm reveals that only 9% of companies have access the Fund’s aids. Of these, 80% are always the same. This shocking statistic suggests that the acces is becoming more difficult because of other factors. It should therefore be taken into consideration.

It is not enough to have done your homework in advance and to be on time. In many cases, companies face additional, almost unbridgeable, handicaps. As for example, the complexity of the procedures for applying for such aid and its subsequent justification. It is therefore foreseeable that there are companies that prefer to remain without aid. Either to run away from excessive bureaucracy or to opt for other more agile ways to move their projects forward.

Finally, José Mañas adds in his analysis that “not all organisations can present and lead large PERTE projects that fit into Next Generation Funds, and not all sectors will benefit in the same way”. Consequently, it seems appropriate to relativise the widespread euphoria without underestimating the value and role of this European aid, as it is quite likely that the benefits of these funds not be extended to the entire business community and will not solve major problems that equire a "country" vision, determination and leadership.