The European Commission approved this Wednesday the recovery plan for Spain, which will involve the arrival of up to 69,500 million European funds to our country between 2021 and 2026. The Community Executive estimates that the investments proposed by the Government satisfactorily address challenges such as climate change (which will take 40% of the funds), the digital transition (28%) and social cohesion.

The president of the European Commission, Ursula Von der Leyen, and President Pedro Sánchez, staged the approval of the plan with a joint appearance. Before the media, at the headquarters of Red Eléctrica de España, the leader of the Community Executive said that this roadmap it will allow Spain “to come out stronger than ever.” He also praised the “excellent cooperation” of the Spanish authorities. Sánchez, for his part, described the day as “historic”, said that the plan will allow building “a better future” and announced that in July he will convene a Conference of Autonomous Presidents to address the details of the plan.

In exchange for these funds, Spain will have to implement a series of structural reforms in the labor market, pensions and taxes, among other subjects. This same year, key elements of the PP labor reform will have to be repealed, next year the pension reform will be implemented and the bulk of the fiscal reform remains for 2023.

If Spain defaults, payments will be blocked until the reforms are approved, although partial deliveries could also be negotiated. This year they will arrive 19,000 million – less than the 27,000 expected, due to the delay in processing the plans in all countries – in two tranches: one in July and the other at the end of the year. Thereafter, there will be two annual deliveries if these reforms are met.

The labor reform

As promised by the third vice president and Minister of Labor, Yolanda Díaz, the dismantling of the PP labor reform will begin this year. Government, employers and unions have been negotiating for weeks the two points that the Executive considers fundamental –The reform of subcontracting and that of collective bargaining–, and the calendar agreed with the EU establishes that the reform “to improve the rights of people who work in subcontracted companies” and also that which addresses the improvement of “the legal rules governing collective bargaining” will be “in force” in the fourth trimester.

The Government also commits, for this year, to reduce hiring modalities to reduce the rate of temporary employment and to put in place a permanent mechanism in the style of the ERTEs – which are highly valued in Brussels – that provides “internal flexibility for companies and stability for workers” to avoid layoffs in future crises “cyclical and structural ».

Pension reform

The pension reform will take a little longer as the government does not expect to have many of its fundamentals in place until the end of next year. This is the case, for example, of the controversial extension of the calculation period for calculating the pension beyond the current 25 years, to which Sánchez has finally committed to Brussels for the fourth quarter of 2022.

For that same date it is proposed that it enter into force increasing the maximum contribution base “gradually”, so that the highest salaries contribute for a greater part of the salary than until now. On the contrary, the incentives announced by Minister José Luis Escrivá to delay the retirement age will be launched sooner: before the end of this year.

The tax reform, in 2023

The bulk of tax reforms will not be launched until 2023, as promised by Sánchez to the EU. It will be then when the long-promised minimum percentage that large companies will have to pay for corporation tax is put into operation, as well as the harmonization of the wealth tax to avoid fiscal competition between communities, or the establishment of a taxation for companies. “Emerging economic activities”.

Before, in the first quarter of 2022, the Government commits to an “analysis” of the registration tax, the circulation or the possibility of implementing tolls on the highways.

An impact of more than two points on GDP

The large investments to be made from European funds will boost the Spanish economy in the coming years. Brussels calculates that GDP will already grow this year by 1-1.5 extra points as a result of the plan, while from 2022 to 2024 the effect will be between 2 and 2.5 points. To this figure must be added the effect of structural reforms, which will contribute to raising potential growth.

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