Recommendation for a COUNCIL RECOMMENDATION on the 2018 National Reform Programme of Spain and delivering a Council opinion on the 2018 Stability Programme of Spain
Date: 2018-05-23
Institutions: European Commission, Secretariat-General
Subjects: Spain, budget deficit, economic policy, economic reform, education, employment policy, research and development, school-working life relations, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 23.5.2018 COM(2018) 408 final  Recommendation for a COUNCIL RECOMMENDATION on the 2018 National Reform Programme of Spain  and delivering a Council opinion on the 2018 Stability Programme of Spain  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2018 National Reform Programme of Spain 

and delivering a Council opinion on the 2018 Stability Programme of Spain 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof 
Having regard to the recommendation of the European Commission3, 
Having regard to the resolutions of the European Parliament4, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

On  22  November  2017,  the  Commission  adopted  the  Annual  Growth  Survey, 
marking the start of the 2018 European Semester of economic policy coordination. It 
took  due  account  of  the  European  Pillar  of  Social  Rights,  proclaimed  by  the 
European Parliament, the Council and the Commission on 17 November 2017. The 
priorities of the Annual Growth Survey were endorsed by the European Council on 
22  March  2018.  On  22  November  2017,  on  the  basis  of  Regulation  (EU)  No 
1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism  Report,  in  which  it 
identified Spain as one of the Member States for which an in-depth review would be 
carried out. On the same day, the Commission also adopted a recommendation for a 
Council  recommendation  on  the  economic  policy  of  the  euro  area,  which  was 
endorsed by the European Council on 22 March 2018. On 14 May 2018, the Council 
adopted 
the  euro  area 
the  recommendation  on 
(‘recommendation for the euro area’). 

the  economic  policy  of 

1 
2 
3 
4 

OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
COM(2018) 408 final. 
P8_TA(2018)0077 and P8_TA(2018)0078. 

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(3) 

(4) 

(5) 

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As a Member State whose currency is the euro and in view of the close interlinkages 
between the economies in the economic and monetary union, Spain should ensure the 
full  and  timely  implementation  of  the  recommendation  on  the  economic  policy  for 
the euro area, as reflected in recommendations (1) to (3) below.  
The  2018  country  report  for  Spain5  was  published  on  7 March  2018.  It  assessed 
Spain’s progress in addressing the country-specific recommendations adopted by the 
Council  on  11 July  2017,  the  follow-up  given  to  the  recommendations  adopted  in 
previous years and Spain's progress towards its national Europe 2020 targets. It also 
included  an  in-depth  review  under  Article  5 of  Regulation  (EU)  No 1176/2011,  the 
results of which were also published on 7 March 20186. The Commission’s analysis 
leads  it  to  conclude  that  Spain  is  experiencing  macroeconomic  imbalances.  In 
particular,  large  stocks  of  external  and  internal  debt,  both  public  and  private,  in  a 
context  of  high  unemployment,  continue  to  constitute  vulnerabilities  with  cross-
border  relevance.  The  external  rebalancing  is  advancing,  thanks  to  the  current 
account  surpluses  recorded  since  2013,  which  are  underpinned  by  structural 
improvements  in  trade  performance.  However,  net  external  liabilities  remain  high. 
Private  sector  debt  reduction  is  also  progressing,  supported  by  favourable  growth 
conditions,  but  deleveraging  needs  persist.  A  healthier  financial  sector  supports 
economic  activity.  Despite  the  strong  nominal  GDP  growth,  government  debt  as  a 
share  of  GDP  is  only  slowly  decreasing.  The  unemployment  rate  has  continued  its 
rapid  decline,  but  remains  very  high  and  the  high  degree  of  labour  market 
segmentation impedes faster labour productivity growth. Following the strong reform 
implementation  of 
momentum  between  2012  and  2015,  progress  on 
recommendations has become more limited. The present economic situation provides 
a window of opportunity to address pending reform needs with a view to making the 
Spanish economy more resilient and raising productivity growth. 

the 

Spain is currently in the corrective arm of the Stability and Growth Pact. In its 2018 
Stability  Programme,  Spain  plans  to  correct  the  excessive  deficit  by  2018,  in  line 
with the Council Decision of 8 August 2016 giving notice to Spain to take measures 
for  the  deficit  reduction  judged  necessary  in  order  to  remedy  the  situation  of 
excessive  deficit.7    The  general  government  balance  is  planned  to  continue 
improving  and  to  reach  a  0.1  %  of  GDP  surplus  in  2021.  The  2018  Stability 
Programme incorporates all the measures included in the draft budget law submitted 
to parliament on 3 April as well as additional measures announced by late April. The 
medium-term  budgetary  objective  of  a  balanced  budgetary  position  in  structural 
terms  is  not  planned  to  be  reached  within  the  time  horizon  of  the  2018  Stability 
Programme.  The  2018  Stability  Programme  projects  the  government  debt-to-GDP 
ratio  to  decline  to  97.0  %  in  2018,  95.2  %  in  2019,  and  89.1  %  in  2021.  The 
Programme’s  macroeconomic  assumptions  are  plausible.  Overall,  the  planned 
achievement of the headline deficit targets continues to rely on the strong economic 
outlook and on government expenditure growing by less than nominal GDP. Risks to 
the achievement of the fiscal targets relate to both stronger revenue growth and more 
contained expenditure increases than in the Commission forecast, and to the possible 
materialisation of further contingent liabilities.  

On 8 August 2016, the Council requested Spain to put an end to the excessive deficit 
situation  by  2018  and,  in  particular,  to  reduce  the  general  government  deficit  to 

SWD(2018) 207 final. 
COM(2018) 120 final. 
OJ L 148, 10.6.2017, p. 38–41. 

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4.6 %  of  GDP  in  2016,  3.1  %  of  GDP  in  2017  and  2.2  %  of  GDP  in  2018.  This 
improvement  in  the  general  government  balance  was  deemed  consistent  with  a 
deterioration of the structural balance by 0.4 % of GDP in 2016, and a 0.5 % of GDP 
improvement in both 2017 and 2018, based on the updated Commission 2016 spring 
forecast. Spain reached a headline deficit of 3.1 % of GDP in 2017, as required in the 
Council Decision of 8 August 2016. The Commission 2018 spring forecast projects 
the  headline  deficit  to  decline  to  2.6  %  of  GDP  in  2018,  0.4  %  of  GDP  above  the 
headline deficit target in the 2018 Stability Programme and that set by the Council. 
Compared to the 2018 Stability Programme, the Commission forecast projects lower 
growth  in  government  revenues  and  somewhat  higher  expenditure.  In  the 
Commission 2018 spring forecast, the structural balance is forecast to deteriorate by 
0.3 % of GDP in 2018, against the backdrop of deficit-increasing measures included 
in the draft budget law for 2018 that reached parliament on 3 April, and to improve 
only  slightly  in  2019.  Hence,  the  fiscal  effort  in  2018  as  well  as  cumulated  over 
2016-2018  is  not  expected  to  be  ensured.  While  the  economic  expansion  is 
supporting  the  deficit  reduction,  it  is  not  being  used  to  structurally  strengthen  the 
public finances. Accordingly, in its Opinion on the updated Draft Budgetary Plan of 
Spain,  the  Commission  concludes  that  the  plan  is  broadly  compliant  with  the 
provisions  of  the  Stability  and  Growth  pact,  as  the  Commission  2018  forecast 
projects  that  the  excessive  deficit  will  be  corrected  in  a  timely  manner,  but  is 
expansionary.  

For 2019, should a timely and durable correction of the excessive deficit be achieved, 
Spain would be subject to the preventive arm of the Stability and Growth Pact and to 
the  transitional  debt  rule.  In  view  of  Spain's  general  government  debt  ratio  above 
60 %  of  GDP  and  projected  positive  output  gap  of  2.3 %  of  GDP,  nominal  net 
primary government expenditure8 should fall by at least 0.3 % in 2019, in line with 
the structural adjustment of 1.0 % of GDP stemming from the matrix of requirements 
under  the  Stability  and  Growth  Pact.  At  the  same  time,  there  are  signs  that  idle 
capacity in the economy is underestimated. In 2019, Spain is still expected to record 
one  of  the  highest  unemployment  rates  in  the  EU,  which  is  set  to  contain  wage 
pressures, especially in the private sector, and in turn inflation is expected to remain 
well  below  2  %.  This  points  to  remaining  slack  in  the  labour  market.  In  addition, 
even  if  the  Commission's  assessment  of  the  plausibility  of  the  output  gap  does  not 
flag  the  output  gap  estimates  based  on  the  commonly  agreed  methodology  as 
implausible  it  indicates  a  rather  wide  range  of  plausible  output  gap  estimates  for 
Spain.  On  this  basis,  an  annual  structural  adjustment  of  0.65  %  of  GDP, 
corresponding to a maximum growth rate of net primary government expenditure of 
0.6  %,  appears  appropriate.  According  to  the  Commission  spring  forecast,  under 
unchanged policies, there is a risk of a significant deviation from the required fiscal 
adjustment  in  2019.  In  addition,  Spain  is  not  projected  to  comply  with  the 
requirements  of  the  transitional  debt  rule  in  2019.  Overall,  the  Council  is  of  the 
opinion  that  Spain  needs  to  stand  ready  to  take  further  measures  to  ensure 
compliance in  2018 and that the necessary measures should be taken as of 2019 to 
comply with the provisions of the Stability and Growth Pact. The use of any windfall 
gains to further reduce the general government debt ratio would be prudent. 

8  Net primary government expenditure comprises total government expenditure excluding interest expenditure, 
expenditure on Union programmes fully matched by Union funds revenue and non-discretionary changes in 
unemployment benefit expenditure. Nationally financed gross fixed capital formation is smoothed over a 4-
year period. Discretionary revenue measures or revenue increases mandated by law are factored in. One-off 
measures on both the revenue and expenditure sides are netted out. 

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(8) 

(9) 

(10) 

In  addition,  in  August  2016,  the  Council  also  requested  Spain  to  take  measures  to 
improve  its  fiscal  framework,  with  a  view  to  increasing  the  automaticity  of 
mechanisms  to  prevent  and  correct  deviations  from  the  fiscal  targets  and  to 
strengthening  the  contribution  of  the  Stability  Law's  spending  rule  to  fiscal 
consolidation.  However,  the  2018  Stability  Programme  does  not  report  plans  to 
reinforce the domestic spending rule. Neither does it report measures to increase in 
the law the automaticity of the corrective and preventive mechanisms. The Council 
also  requested  Spain  to  take  measures  to  improve  its  public  procurement  policy 
framework. Spain has made progress with the adoption of a new law on public sector 
contracts  in  November  2017.  However,  the  new  legislation  can  only  improve  the 
efficiency  and  transparency  of  public  procurement  if  it  is  swiftly  and  ambitiously 
implemented  by  setting  up  the  new  governance  structure  and  enhancing  control 
mechanisms of procurement procedures at all levels of government. In particular, the 
forthcoming  National  Public  Procurement  Strategy  should  specify  the  ex-ante  and 
ex-post  controls  to  be  carried  out  by  the  new  structures.  In  June  2017,  the 
government  commissioned  the  independent  fiscal  authority  to  carry  out  a  spending 
review  on  selected  public  sector  subsidies.  The  Commission  monitors  the 
implementation of the review, which is expected to be completed by early 2019. 

On  27  April  2018,  Spain  submitted  its  2018  National  Reform  Programme  and  its 
2018  Stability  Programme.  To  take  account  of  their  interlinkages,  the  two 
programmes have been assessed at the same time. 

recommendations  have  been  addressed 

Relevant  country-specific 
the 
programming  of  the  European  Structural  and  Investment  Funds  for  the  2014-2020 
period. As foreseen in Article 23 of Regulation (EU) No 1303/2013 of the European 
Parliament and of the Council9, where it is necessary to support the implementation 
of relevant Council recommendations, the Commission may request a Member State 
to  review  and  propose  amendments  to  its  Partnership  Agreement  and  relevant 
programmes.  The  Commission  has  provided  further  details  on  how  it  would  make 
use  of  that  provision  in  guidelines  on  the  application  of  the  measures  linking  the 
effectiveness  of  the  European  Structural  and  Investment  Funds  to  sound  economic 
governance10.  

in 

Employment  has  continued  to  grow  at  a  robust  pace  in  Spain,  supported  by  the 
effects of past labour market reforms and wage moderation. The unemployment rate 
continues to fall, but it remains well above the country’s pre-crisis levels and ranks 
among  the  highest  in  the  EU.  This  entails  considerable  untapped  skills  potential, 
notably  for  young  unemployed  people.  The  proportion  of  unemployed  people  who 
have  been  without  a  job  for  more  than  a  year  is  decreasing,  but  still  accounts  for 
nearly  half  of  all  unemployed  people.  Spain  adopted  a  set  of  policy  initiatives  to 
extend the individual support to the long-term unemployed and to help young people 
enter  the  labour  market  and  improve  their  employability,  notably  by  increasing  the 
number of Youth Guarantee beneficiaries. The effectiveness of these measures also 
depends on the capacity of regional public employment and social services to deliver 

9 

10 

Regulation (EU)  No 1303/2013 of the European Parliament and of the Council of 17 December 2013 
laying  down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social 
Fund, the  Cohesion Fund, the European Agricultural Fund for Rural Development and the European 
Maritime  and  Fisheries  Fund  and  laying  down  general  provisions  on  the  European  Regional 
Development  Fund,  the  European  Social  Fund,  the  Cohesion  Fund  and  the  European  Maritime  and 
Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p.  320). 
COM(2014) 494 final. 

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personalised  support  to  jobseekers,  which  is  only  slowly  improving.  There  is  also 
scope for greater cooperation with employers, notably by increasing the percentage 
of  vacancies  handled  by  the  employment  services  and  by  better  profiling  and 
matching of jobseekers with employers’ needs. At the same time, efforts to improve 
the  coordination  between  employment  and  social  services,  which  has  seen  some 
progress in 2017, should be maintained.  

The proportion of employees on temporary contracts is among the highest in the EU, 
and mostly comprises young and low-skilled workers. Temporary contracts are often 
short-term  and  rarely  serve  as  a  stepping  stone  to  a  permanent  contract.  Their 
widespread use, including in sectors less prone to seasonal or cyclical activity, may 
impede faster productivity growth and is often associated with lower entitlements to 
social  benefits  and  higher  risks  of  poverty.  While  open-ended  contracts  have 
increased  as  a  percentage  of  net  employment  growth  in  the  last  two  years,  further 
action is needed to incentivise transitions from temporary contracts into open-ended 
ones.  The  system  of  recruitment  incentives  remains  fragmented  and  does  not 
effectively aim to promote open-ended employment. Spain adopted a plan to reduce 
the reliance on fixed-term employment in the public sector, but its implementation is 
just  beginning  and  needs  to  speed  up  to  meet  the  8 %  target  set  for  2019.  Labour 
inspectorates’  greater  capacity  and  effectiveness  in  fighting the  abuse  of  temporary 
contracts  has  resulted  in  an  increased  number  of  them  being  converted  into 
permanent contracts, but does not seem to discourage employers from continuing to 
use  them  extensively.  The  tripartite  round  table  set  up  at  the  beginning  of  2017  to 
discuss quality of employment has not yet made specific proposals. The involvement 
of  social  partners in  policy  design  has  increased  recently  but  there  is  still room  for 
further improvement. 

Economic growth and job creation are helping to reduce the share of people at risk of 
poverty and social exclusion, which nevertheless remains above the EU average, as 
well  as  income  inequality.  In-work  poverty  is  a  concern  especially  amongst 
households with members employed on temporary or part-time contracts. The child 
poverty  rate,  although  declining,  remains  very  high.  The  impact  of  social  transfers 
other  than  pensions  on  reducing  poverty  is  below  the  EU  average  and  decreasing. 
Income  guarantee  schemes  are  marked  by  large  disparities  in  access  conditions 
across  regions,  and  by  the  fragmentation  of  multiple  national  schemes  that  target 
different  groups  of  jobseekers  and  are  managed  by  different  administrations.  As  a 
result, a number of people in need do not receive support. There is still no action plan 
further  to  the  recent  study  assessing  the  effectiveness  of  the  national  and  regional 
income  guarantee  schemes.  The  launch  of  a  Social  Card  system  should  make  the 
social  benefits  granted  more  transparent  and  facilitate  participation  in  associated 
activation  measures,  although  it  will  not  directly  address  the  weaknesses  of  the 
existing  schemes.  The  effectiveness  of  family  benefits  is  also  low  and  coverage  is 
uneven.  The  Spanish  pension  system  plays  an  important  role  in  maintaining  the 
quality  of  life  of  older  people,  who  as  a  result  face  a  significantly  lower  risk  of 
poverty than younger generations. Relative to wages, current pensions are among the 
highest in the EU. Projections in the forthcoming 2018 Ageing Report and Pension 
Adequacy  Report11  indicate  that  the  2011  and  2013  reforms  helped  ensuring 

11 

European  Commission  (2018),  The  2018  Pension  Adequacy  Report:  current  and  future  income 
adequacy in old age in the EU, Volume I and Volume II Joint Report prepared by the Social Protection 
Committee  (SPC)  and  the  European  Commission  (DG  EMPL),  Publications  Office  of  the  European 
Union, Luxembourg, 2018.  

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(14) 

(15) 

sustainability  and  relative  adequacy  of  pensions  in  the  long  term.  However,  the 
increases  in  pensions  and  the  postponement  of  the  sustainability  factor  proposed 
during  the  adoption  process  of  the  draft  2018  budget  call  into  question  the 
commitment  to  these  reforms.  At  the  same  time,  they  do  not  address  the  main 
challenge  to  income  adequacy  of  future  retirees,  which  is  rather  related  to  high 
unemployment and segmentation in the labour market. 

Addressing  weaknesses  in  Spanish  firms’  innovation  capacity  could  improve  their 
productivity.  Innovation  performance  and  productivity  growth  is  hampered  by 
persistently subdued levels of investment in research and development, which make 
reaching the national Europe 2020 research and development intensity target of 2 % 
very  unlikely.  This  trend  is  reinforced  by  the  low  and  falling  execution  rate  of  the 
public budget for research and development. While governance of national research 
and innovation policy is being streamlined, partly through the new State Agency for 
implementation  and 
Research,  national-regional  coordination 
evaluation  of  policy  remains  weak.  Developing  an  evaluation  culture 
to 
systematically  assess  the  effectiveness  of  support  programmes  and  policies  would 
allow policy learning and create synergies across levels of government. 

the  design, 

in 

The  limited  innovation  capacity  of  Spanish  firms  is  also  explained  by  skills 
mismatches, which negatively affect the long-term potential for productivity growth. 
Under-qualification and over-qualification at work are widespread in Spain. Despite 
having improved markedly over the last  decade, early school leaving rates are well 
above the EU average. Together with educational outcomes, they vary greatly across 
regions  and  may  affect  equality  of  opportunities.  Targeted  programmes  to  address 
these  disparities  have  so  far  only  had  limited  effects.  The  National  Social  and 
Political Pact on Education, aimed at an in-depth reform of the education system, is 
still  in  the  negotiation  phase.  In  the  meantime,  the  professional  development  of 
teachers  is  to  be  supported  by  reducing  temporary  employment  contracts  and 
increased  resources  for  their  training.  At  the  same  time,  tertiary  graduates  in 
particular  face  difficulties  in  finding  adequate,  stable  jobs  in  the  labour  market. 
Greater  cooperation  between  education  and  business  could  boost  labour  market 
access of young graduates, while providing firms with the skills required to enhance 
their  innovation  capacity.  In  this  context,  the  proposal  for  a  new  national  digital 
strategy acknowledges the need to improve digital skills. Challenges relate to the low 
number of specialists in information and communication technologies, as well as to 
promoting  the  role  of  the  education  system  in  advancing  digital  skills.  Retraining 
workers in digital skills would also allow Spanish companies to remain competitive 
in an increasingly digitised economy. 

Regulatory  disparities  in  the  business  environment  also  play  a  role  in  keeping 
productivity  growth  restrained.  In  the  current  context,  regulatory  disparities  and 
restrictions  in  the  business  environment  contribute  to  keeping  mark-ups  high, 
reducing  the  geographical  mobility  of  companies  and  workers,  and  restraining 
productivity growth. The Law on Market Unity, which aimed to meet this challenge, 
has been implemented only in part. The monitoring of the implementation of the Law 
at  regional  and  local  level  must  be  improved  and  the  role  of  the  inter-sectoral 
conferences  strengthened.  The  Law  introduced  the  principle  that  compliance  with 
certain requirements in one part of the territory would allow businesses to operate in 
the whole territory. In several judgments published in 2017, the Constitutional Court 
held  that  this  principle  is  void  in  the  absence  of  common  or  equivalent  minimum 
standards  for  access  to  or  exercise  of  an  economic  activity.  In  light  of  these 

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judgments,  establishing  consistent  common  or  equivalent  standards  throughout  the 
territory could help fulfil the objectives of the Law. In addition, cooperation between 
the  different  levels  of  government  should  be  improved  at  all  stages  of  the 
implementation  to  more  effectively  tackle  the  adverse  effects  of  fragmentation  on 
businesses. The work of the Committee for Better  Regulation, which was set up to 
ensure the legislation was aligned with the EU acquis on services, should be stepped 
up  and  completed.  Restrictions  affecting  certain  regulated  professions  such  as  civil 
engineers  and  architects  were  also  highlighted  in  the  Services  Package  adopted  in 
January 2017, and no specific measures to address them have been taken so far12. 

(16)  More  generally, improvements  in  the quality  of institutions could boost trust in the 
Spanish  economy  and  amplify  the  gains  from  measures  adopted  to  increase 
productivity growth. Progress has been made in the transparency of party financing, 
and disclosure of assets and conflicts of interest. The business environment has also 
benefited  from  progress  in  the  fight  against  corruption,  although  concerns  still 
remain in this area. Perceptions of the independence of the justice system have also 
to  further  improve  the 
improved  amongst  citizens  and  businesses.  Efforts 
effectiveness of the justice system are under way and should be continued. Though 
some  progress  has  been  made  in  this  broad  area,  the  challenge  of  fostering  trust  in 
institutions across all levels of government remains. 

(17) 

(18) 

(19) 

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Further  enhancing  the  transport,  energy  and  water  infrastructure  would  foster 
territorial  cohesion,  better  integration  in  the  common  market  and  productivity 
growth.  Cross-border 
transport  and  energy  connections,  as  well  as  water 
infrastructure,  face  investment  gaps.  Better  use  could  be  made  of  passenger  and 
freight  rail  infrastructures.  The  different  gauges  coexisting  in  Spain,  Portugal  and 
France  are  a  critical  barrier  to  better  rail  connectivity,  although  new  sections  using 
the  internationally  prevalent  standard  gauge  have  been  completed  recently. 
Shortcomings  are  also  found  in  freight  railway  connections  between  the  main 
harbours  on  the  Atlantic  and  Mediterranean  coasts  and  in-land  industrial  areas. 
Insufficient connectivity also impedes closer integration in the EU electricity and gas 
markets. Further infrastructure investment is needed to improve water management, 
e.g. to treat wastewater, reduce of leaks in the networks and improve water supply. 
This would bring environmental, economic and social benefits to Spain. 

In  the  context  of  the  2018  European  Semester,  the  Commission  has  carried  out  a 
comprehensive  analysis  of  Spain’s  economic  policy  and  published  it  in  the  2018 
country  report.  It  has  also  assessed  the  2018  Stability  Programme  and  the  2018 
National  Reform  Programme  and  the  follow-up  given  to  the  recommendations 
addressed  to  Spain  in  previous  years.  It  has  taken  into  account  not  only  their 
relevance  for  sustainable  fiscal  and  socioeconomic  policy  in  Spain  but  also  their 
compliance with Union rules and guidance, given the need to strengthen the Union’s 
overall  economic  governance  by  providing  Union-level  input  into  future  national 
decisions.  

In  the  light  of  this  assessment,  the  Council  has  examined  the  2018  Stability 
Programme and its opinion13 is reflected in particular in recommendation 1 below. 

In  the  light  of  the  Commission’s  in-depth  review  and  this  assessment,  the  Council 
has  examined  the  National  Reform  Programme  and  the  Stability  Programme.  Its 

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COM(2016) 820 final. 
Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in 
recommendations 1 to 3 to Spain below. 

HEREBY RECOMMENDS that Spain take action in 2018 and 2019 to: 

1. 

2. 

3. 

Ensure compliance with the Council Decision of 8 August 2016 giving notice under 
the excessive deficit procedure, including through measures to enforce the fiscal and 
public  procurement frameworks  at all levels of government.  Thereafter, ensure that 
the  nominal  growth  rate  of  net  primary  government  expenditure  does  not  exceed 
0.6% in 2019, corresponding to an annual structural adjustment of 0.65 % of GDP. 
Use windfall gains to accelerate the reduction of the general government debt ratio. 

Ensure  that  employment  and  social  services  have  the  capacity  to  provide  effective 
support for jobseekers, including through better cooperation with employers. Foster 
transitions  towards  open-ended  contracts.  Improve  family  support  and  address 
coverage  gaps  in  income  guarantee schemes,  by  simplifying  the  system  of  national 
schemes and reducing disparities in access conditions to regional ones. Reduce early 
school  leaving  and  regional  disparities  in  educational  outcomes,  in  particular  by 
better supporting students and teachers. 

Increase  public  investment  in  research  and  innovation  and  systematically  carry  out 
evaluations  of  support  policies  in  this  area  to  ensure  their  effectiveness.  Increase 
cooperation  between  education  and  businesses  with  a  view  to  mitigating  existing 
skills  mismatches.  Further  the  implementation  of  the  Law  on  Market  Unity  by 
ensuring that, at all levels of government, rules governing access to and exercise of 
economic activities, notably for services, are in line with principles of that law and 
by improving cooperation between administrations. 

Done at Brussels, 

For the Council 
The President 

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