Spain announces €11 billion direct aid package for SMEs

"It is a significant amount of resources to continue supporting sectors that are in an extremely complex situation in the hard weeks ahead," Sánchez stressed, pointing at Easter and the summer holidays. [EFE/Emilio Naranjo]

Spain’s socialist Prime Minister Pedro Sánchez announced on Wednesday (24 February) an €11 billion direct aid package to help mitigate the difficult financial situation of Spain’s small and medium-sized companies, and the self-employed badly hit by the coronavirus pandemic. EURACTIV’s partner EFE reports.

The fresh money will be allocated in the coming weeks and months to the sectors most affected by the crisis, such as tourism and services, two pillars of the Spanish economy.

Usually, tourism makes up roughly 12.5% of Spain’s GDP and the Iberian country was the world’s second-most popular destination in 2019, according to official data.

New data published on Wednesday has revealed that overnight stays in Spanish hotels in January (2021) have dropped 85%, according to the Spanish Statistical Bureau (INE). 

Currently no ‘extreme risk’

This was announced in Sanchez’s speech before the parliament in Madrid, where he informed MPs about the situation of the pandemic and the state of alarm, which is due to expire in May.

“It is a significant amount of resources to continue supporting sectors that are in an extremely complex situation in the hard weeks ahead,” Sánchez stressed, pointing at Easter and the summer holidays.

Although Spain is no longer within the “extreme risk” level – recording a cumulative 235 cases per 100,000 inhabitants, below the 250 threshold – the situation in regions like Catalonia remains worrying.

The main purpose of these new financial resources is to reinforce “the solvency of the balance sheets,” facilitate the return to normality, “make the necessary investments” and hire new workers, the Spanish PM explained.

Since the start of the pandemic in March 2020, the Spanish socialist-leftist government has committed 20% of the nation’s GDP to help ease its devastating economic effects, which Sánchez said was “an exercise of protection never seen before” in the country.

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Temporary schemes to save jobs

Among other extraordinary measures, the Spanish government has put in place an ambitious programme to save thousands of jobs, endangered by the consequences of the pandemic, mainly thanks to temporary lay-off schemes (Expedientes de Regulación Temporal de Empleo, or ERTE in Spanish), currently benefiting around 800,000 workers.

Those benefitting from the ERTE scheme are officially considered as employed, meaning they are not counted as “unemployed”. As the unemployment rate reached 16.13% in 2020, analysts called it “the worst year” in terms of employment in Spain since 2012.

“Only the payment of ERTEs’ salaries and benefits amounts to some €40 billion in direct aids”, Sánchez said on Wednesday.

Under the ERTE scheme, the Spanish state gives workers about 70% of their salary and prohibits companies from firing people. In case of fraud or redundancies, companies must return exemptions from contributions to the social security system and risk heavy penalties, said the country’s labour ministry.

Sánchez admits ‘mistakes’ in first de-escalation

The chief of the Spanish executive admitted that the de-escalation phase after the first wave of the pandemic, last summer, was implemented too quickly, adding that this should be seen as a lesson for everyone, including for citizens who he called on to take up the joint challenge of avoiding a fourth wave.

The first de-escalation was too fast, prompted by the urgent need to reactivate the economy and soften the “emotional fatigue” of the population after a harsh lockdown, Sánchez added.

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[Edited by Daniel Eck and Frédéric Simon]

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