Spain hopes to create 800,000 jobs with EU recovery funds

The coronavirus health crisis and the strict lockdown that ensued battered Spain's already weakened economy. EPA-EFE/Ballesteros / POOL

€72 billion of Spain’s share of the EU Recovery Fund be invested over the next three years to create 800,000 jobs, Spanish Prime Minister Pedro Sánchez announced on Wednesday (7 October). EURACTIV’s partner EFE reports.

Over half of the EU money allocated to Spain will be invested to accelerate the transformation of the Spanish economy and grow its GDP by 2.5%, Sánchez said.

“The pandemic requires the acceleration of change that was already needed,” said the Socialist Party (PSOE) leader in his hour-long presentation of the government’s economic recovery plan.

The EU earmarked €140 billion for Spain as part a coronavirus recovery fund agreed in July.

While two-thirds of the EU Recovery Fund will be destined to the green and digital transformation over the next three years, €27 billion will be used for the government’s 2021 budget to kick-start a six-year “modernisation” of the economy, Sánchez said.

Minority coalition needs opposition support

The prime minister called for the collaboration of his political opponents and for an end to “partisan shouting matches” which have hampered the country’s coronavirus response.

One of the first issues for Sánchez, who leads a minority coalition with junior left-wing partner Unidas Podemos, will be rallying enough parliamentary support to pass next year’s budget.

His reliance on a motley crew of Basque nationalist and Catalan separatist parties to pass legislation in parliament has fuelled criticism in the opposition benches, which are occupied by the conservative Popular Party, the far-right Vox and the centre-right Ciudadanos.

In 2019, pro-independence groups helped shoot down Sánchez’s budget proposal. It was the starting pistol for a rocky period of Spanish politics that included two general elections in the space of seven months.

“Politics can go down the path of collaboration or of squabbling. The government chooses collaboration,” Sánchez said in his speech Wednesday.

GDP drop and rise in unemployment

In its latest assessment, Spain’s central bank downgraded its outlook on the country’s economic recovery and predicted that its GDP could fall as much as 12.6% in 2020. In a worst-case scenario, unemployment could rise to 22.1% next year, the Bank of Spain added.

The coronavirus health crisis and the strict lockdown that was imposed to contain the outbreak have battered Spain’s already weakened economy. Spain’s reliance on the tourism sector, which accounted for more than 12% of GDP in recent years, has made the country’s economic outlook even gloomier.

Sánchez’s coalition government reopened the country to European tourism at the end of June but the plan soon ran into stumbling blocks as countries like the UK ended their travel corridor agreements due to resurgences of coronavirus in Spain.

More restrictions, particularly in Madrid

Once again Spain finds itself in the eye of the pandemic in Europe and restrictions have been revived in the capital Madrid due to soaring infection rates.

Spain recorded 11,998 new COVID-19 cases within 24 houses on Tuesday (6 October), of which 43% were identified in Madrid.

One of the worst-hit countries in Europe, Spain has recorded over 825,000 coronavirus cases and 32,486 related deaths since the pandemic.

[Edited by Daniel Eck and Frédéric Simon]

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