Site icon The Business Year

Spreading the Wealth

Spain’s economy was hit truly hard by the pandemic. The death toll in Spain was higher than many fellow European nations, which seriously undermined the nation’s morale. The country’s world-famous tourism industry suffered greatly from border closures, while other industries such as automotive, manufacturing, and the services sector were among those affected by nationwide shutdowns.

Despite the difficulties Spain has been through, the country can take some comfort in the knowledge that the EU has thought of a rescue package to alleviate the pains of Spain. Prime Minister Sánchez is confident that an EUR140 billion sum of funds offered by the EU is enough to bring about the nation’s largest economic leap since the 1980s. What is more, some EUR72.7 billion of these funds—just over half of the rescue funds—will be in the form of grants.

The EU rescue funds will be spent very carefully based on a strict spending plan to cancel out the harms inflicted on the Spanish economy during the COVID-19 pandemic, meaning that those sectors which increased the Spanish economy’s resilience in the face of unprecedented challenges caused by COVID-19 will receive a larger share of the EU funds.

In April 2021, Prime Minister Sánchez revealed some of the guidelines. After all, this is the largest help that Spain has received since joining the EU in 1986, and it must be spent wisely. Prime Minister Sánchez’s Socialist Party would hate to be seen as the ruling party that wasted an EUR140 billion rescue package. Not surprisingly, Spain is more interested in in the EUR72.7 billion of the funds that come as a grant than the EUR70 billion that will be paid as loans and translating into debt in the coming years.
Nevertheless, many commentators think if the EU funds—both the grant and the loans—are invested wisely and distributed to the sectors that deserve it, there is no reason to worry about the repayments.

There is no wonder that a generous amount of the funds should directly go to the sectors that kept the economy afloat even under the specter of COVID-19. We are, of course, referring to the IT sector and the digital infrastructure that makes it possible.
It is said that up to 29% of the EU funds will be spent on digital transformation. The digital economy helped the Spaniards carry on a, more-or-less, normal lifestyle during the toughest days of the pandemic. If it were not thanks to hundreds of online retailers, online service providers, and digital solution for almost every aspect of life, life in Spain would have practically come to a standstill, with devastating consequences for everyone.

As such, earmarking 29% of the EU funds for further digital transformation is by no means going too far. If another disruption similar to the COVID-19 pandemic is around the corner, our digital infrastructure is our number one hope. And, we must strengthen our digital infrastructure while we still have the chance.

An even larger portion of the EU funds (39%) will be allotted to ecological causes. This, too, is completely defendable given the tragic experience of COVID-19. If a mutated virus was capable of disrupting our entire way of life for weeks and months, just imagine what a destructive blow a full-blown ecological disaster can deal to us.

We humans must wake up from the illusion that we have become the masters of the natural world.
Even a mutated virus can destroy many of our dreams, make us housebound for months, and take away many of our loved ones. As such, dedicating 39% of the EU funds to ecological causes is not unreasonable at all. We have already seen the wrath of the ecological world in 2019 and 2020—which was, after all, a comparatively minor incident next to what has befallen entire species over the history of this planet we call home. We should dedicate enough resources to the study of ecological transitions, if we are willing to remain on this planet for a long time.

Also of note are a sum of EUR13.2 billion set aside for sustainable practices, EUR6.8 billion for residential developments to house those whose livelihood has been affected by the pandemic, and some EUR4 billion apiece to support small-and-medium-sized companies heralding the digital transformation and companies working on the vast implementation of the 5G technology.
Given the culture of teleworking, which was born in the wake of the lockdowns, giving some support to 5G companies, which are turning teleworking into an everyday reality, would not go amiss.

All things considered, Spain has come up with a sensible plan to spend the funds provided by the EU: while trying to kickstart the economy, Spanish authorities are doing their best to support those sectors of the economy which proved helpful during the pandemic such as Industry 4.0. We can rest assured that if another misfortune strikes, we have at least done our best to reinforce the sectors that almost saved us once, while also spending on the prevention of an even more devastating ecological disaster.

Exit mobile version