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The Spanish Government’s Plan to Allocate EU Aid Funds: What Effect to Expect?

20 mins.
09 OCTOBER, 2020
fondos eu
Leopoldo Torralba Torralba
Ignacio de la Torre de la Torre
Macro Spain Spain AER España AER Global
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A few days ago, the Spanish Government announced its plan to allocate the EU’s pandemic funds for the coming years. This fiscal stimulus is crucial to achieve a more solid and rapid recovery of the Spanish economy. However, will the government be able to meet its growth targets? In this brief note, we evaluate the scope of the government’s plan and point out its impact on our economic projections. In early May, Arcano Economic Research was among the first to sharply downgrade economic forecasts, since we discounted new virus outbreaks after the lockdown lifting, contradicting the mainstream consensus. Subsequently, we updated our forecasts at the end of July, after analysing the latest economic and health figures, and making a first estimate of the potential effect of European funds. Now, we are analysing the government's recent announcement regarding its plans to allocate the European funds and assessing how it may impact our 2020 and 2021 GDP estimates.
What will the EU funds be earmarked for and in what share?
What are the exact amounts, timing and specific measures of the government's plan?
What are the pros and cons of this plan?
What are our expectations on the GDP evolution?

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