Spain in Line for EU Recovery Fund Windfall to Underpin Revival
Spain in Line for EU Recovery Fund Windfall to Underpin Recovery
(Bloomberg) --
Spain’s slice of the European Union’s 800 billion-euro ($907 billion) pandemic recovery fund is set to increase by around 10%, providing an extra boost to growth thanks to funding adjustments based on economic performance.
In a welcome surprise for Prime Minister Pedro Sanchez’s government, Madrid could receive around 7 billion euros on top of the 70 billion euros in grants already allocated, according to an EU diplomat, who asked not to be identified because the information is private.
Belgium is among countries whose share of the fund will be cut after their economies rebounded more strongly than expected. According to the latest estimates, Belgium could lose almost 1 billion euros in grants, reducing its share to around 5 billion euros, Thomas Dermine, state secretary for recovery and strategic investments, told Bloomberg.
When they established the recovery fund in July 2020, EU leaders agreed that 30% of each national allocation would be reviewed by mid-2022 once more information was available about the impact of the pandemic. Spain failed to meet high expectations last year, while Belgium outperformed.
The European Commission will begin assessing the economic performance of member states in the spring once official data for 2021 are published. The assessment will take into account national output in 2020 and 2021 in order to redistribute 30% of the pandemic funds by the end of June, a spokesperson said by email.
Countries obtaining additional funds will have to submit an updated recovery plan -- including new investment and reform proposals -- for EU approval. Governments receiving smaller amounts will have to cover the losses with national contributions, loans or alternative EU funds.
The Netherlands is the only EU member yet to submit its recovery plan due to the recent change in government. The country also risks losing millions of euros under the funding adjustments as its economy has performed better than expected.
The Dutch government, which has set up a 35 billion-euro climate transition fund to be used over the next 10 years, has said it’s planning to submit the final version of the recovery plan to parliament around June.
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