Recommendation for a COUNCIL RECOMMENDATION on the 2020 National Reform Programme of Spain and delivering a Council opinion on the 2020 Stability Programme of Spain
Date: 2020-05-20
Institutions: European Commission, Secretariat-General
Subjects: Spain, aid to undertakings, economic policy, economic recovery, economic reform, employment aid, epidemic, infectious disease, investment, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 20.5.2020  COM(2020) 509 final  Recommendation for a COUNCIL RECOMMENDATION on the 2020 National Reform Programme of Spain and delivering a Council opinion on the 2020 Stability Programme of Spain  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2020 National Reform Programme of Spain and delivering a Council opinion on 
the 2020 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 Commission, 

Having regard to the resolutions of the European Parliament, 

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) 

(2) 

1 
2 
3 

On  17  December  2019,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Strategy,  marking  the  start  of  the  2020  European  Semester  for  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. 
On  17  December  2019,  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  date,  the  Commission  also  adopted  a  recommendation  for  a  Council 
recommendation on the economic policy of the euro area. 
The  2020  country  report  for  Spain3  was  published  on  26  February  2020.  It  assessed 
Spain’s  progress  in  addressing the country-specific  recommendations  adopted  by the 

OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
SWD(2020) 508 final. 

EN 

1 

  EN 

 
 
                                                 
(3) 

(4) 

(5) 

Council  on  9  July  20194,  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 26 February 2020. The Commission’s analysis 
led  it  to  conclude  that  Spain  is  experiencing  macroeconomic  imbalances.  High 
external  and  internal  debt,  both  public  and  private,  continued  to  constitute 
vulnerabilities,  in  a  context  of  still  high  unemployment  and  had  cross-border 
relevance.  

On 11 March 2020, the World Health Organization officially declared the COVID-19 
outbreak  a  global  pandemic.  It  is  a  severe  public  health  emergency  for  citizens, 
societies  and  economies.  It  is  putting  national  health  systems  under  severe  strain, 
disrupting  global  supply  chains,  causing  volatility  in  financial  markets,  triggering 
consumer  demand  shocks  and  having  negative  effects  across  various  sectors.  It  is 
threatening  people’s  jobs,  their  incomes  and  companies’  business.  It  has  delivered  a 
major  economic  shock  that  is  already  having  serious  repercussions  in  the  European 
Union. On 13 March 2020, the Commission adopted a Communication5 calling for a 
coordinated economic response to the crisis, involving all actors at national and Union 
level. 

Several Member States have declared a state of emergency or introduced emergency 
measures.  Any  emergency  measures  should  be  strictly  proportionate,  necessary, 
limited in time, and in line with European and international standards. They should be 
subject to democratic oversight and independent judicial review. 

On  20  March  2020,  the  Commission  adopted  a  Communication  on  the  activation  of 
the general escape clause of the Stability and Growth Pact6. The clause, as set out in 
Articles 5(1), 6(3), 9(1) and 10(3) of Regulation (EC) 1466/97 and Articles 3(5) and 
5(2) of Regulation (EC) 1467/97, facilitates the coordination of budgetary policies in 
times  of  severe  economic  downturn.  In  its  Communication,  the  Commission  shared 
with the Council its view that, given the expected severe economic downturn resulting 
from the COVID-19 outbreak, the current  conditions  permit activation of the clause. 
On  23  March  2020,  the  Ministers  of  Finance  of  the  Member  States  agreed  with  the 
assessment of the Commission. The activation of the general escape clause allows for 
a temporary departure from the adjustment path towards the medium-term budgetary 
objective,  provided  that  this  does  not  endanger  fiscal  sustainability  in  the  medium 
term. For the corrective arm, the Council may also decide, on a recommendation from 
the  Commission,  to  adopt  a  revised  fiscal trajectory.  The  general escape  clause  does 
not suspend the procedures of the Stability and Growth Pact. It allows Member States 
to depart from the budgetary requirements that would normally apply while enabling 
the  Commission  and  the  Council  to  undertake  the  necessary  policy  coordination 
measures within the framework of the Pact. 

(6) 

Continued  action  is  required  to  limit  and  control  the  spread  of  the  pandemic, 
strengthen  the  resilience  of  the  national  health  systems,  mitigate  the  socio-economic 
consequences through supportive measures for business and households and to ensure 
adequate  health  and  safety  conditions  at  the  workplace  with  a  view  to  resuming 
economic  activity.  The  Union  should  fully  use  the  various  tools  at  its  disposal  to 
support  Member  States’  efforts  in  those  areas.  In  parallel,  Member  States  and  the 

4 
5 
6 

OJ C 301, 5.9.2019, p. 117. 
COM(2020) 112 final. 
COM(2020) 123 final. 

EN 

2 

  EN 

                                                 
(7) 

(8) 

(9) 

Union should work together to prepare the measures necessary to get back to a normal 
functioning of our societies and economies and to sustainable growth, integrating inter 
alia the  green  transition and  the  digital  transformation,  and  drawing  all  lessons  from 
the crisis. 

The  COVID-19  crisis  has  highlighted  the  flexibility  that  the  single  market  offers  to 
adapt  to  extraordinary  situations.  However,  in  order  to  ensure  a  swift  and  smooth 
transition to the recovery phase and the free movement of goods, services and workers, 
exceptional measures  that  prevent  the  single  market  from  functioning  normally  must 
be removed as soon as they are no longer indispensable. The current crisis has shown 
the need for crisis preparedness plans in the health sector, which include in particular 
improved  purchasing  strategies,  diversified  supply  chains  and  strategic  reserves  of 
essential  supplies.  They  are  key  elements  for  developing  broader  crisis  preparedness 
plans. 
The  Union  legislator  has  already  amended  the  relevant  legislative  frameworks7  to 
allow  Member  States  to  mobilise  all  unused  resources  from  the  European  Structural 
and  Investment  Funds  so  they  can  address  the  exceptional  effects  of  the  COVID-19 
pandemic. Those amendments will provide additional flexibility, as well as simplified 
and streamlined procedures. To alleviate cash flow pressures, Member States can also 
benefit  from  a  100%  co-financing  rate  from  the  Union  budget  in  the  2020-2021 
accounting year. Spain is encouraged to make full use of those possibilities to help the 
individuals and sectors most affected by the challenges. 

The  socio-economic  consequences  of  the  pandemic  are  likely  to  be  unevenly 
distributed across Spanish regions due to different specialisation patterns. This is the 
case, for example, for the regions that rely the most on tourism, such as those in the 
Mediterranean coast, Andalusia, or the Balearic Islands and the Canary Islands, where 
more than one fourth of jobs are linked to that sector. This entails a substantial risk of 
widening  regional  disparities  within  Spain.  Combined  with  the  risk  of  a  temporary 
unravelling of the convergence process between Member States, the current situation 
calls for targeted policy responses. 

(10)  On 1 May 2020, Spain submitted its 2020 National Reform Programme and its 2020 
Stability  Programme.  In  order  to  take  account  of  their  interlinkages,  the  two 
programmes have been assessed at the same time. 

(11)  Spain is currently in the preventive arm of the Stability and Growth Pact and subject to 

the transitional debt rule.  

(12)  On 13 July 2018, the Council recommended Spain to ensure that the nominal growth 
rate  of  net  primary  government  expenditure  (3)  does  not  exceed  0,6%  in  2019, 
to  an  annual  structural  adjustment  of  0,65%  of  GDP.  The 
corresponding 
the 
Commission’s  overall  assessment  confirms  a  significant  deviation  from 

7 
Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending 
Regulations  (EU)  No  1301/2013,  (EU)  No  1303/2013  and  (EU)  No  508/2014  as  regards  specific  measures  to 
mobilise  investments  in  the  healthcare  systems  of  Member  States  and  in  other  sectors  of  their  economies  in 
response to the COVID-19 outbreak (Coronavirus Response Investment Initiative) (OJ L 99, 31.3.2020, p. 5) and 
Regulation  (EU)  2020/558  of  the  European  Parliament  and  of  the  Council  of  23  April  2020  amending 
Regulations  (EU)  No  1301/2013  and  (EU)  No  1303/2013  as  regards  specific  measures  to  provide  exceptional 
flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak 
(OJ L 130, 24.4.2020, p. 1). 

EN 

3 

  EN 

                                                 
 
(13) 

(14) 

recommended adjustment path towards the medium-term budgetary objective in 2019. 
This is a relevant factor in the Commission report prepared in accordance with Article 
126(3) of the Treaty assessing Spain’s compliance with the debt criterion in 2019.  

In  its  2020  Stability  Programme,  the  government  plans  the  headline  balance  to 
deteriorate  from  a  deficit  of  2,8%  of  GDP  in  2019  to  a  deficit  of  10,3%  of  GDP  in 
2020.  After  decreasing  to  95,5%  of  GDP  in  2019,  the  general  government  debt-to-
GDP ratio is expected to increase to 115,5% in 2020 according to the 2020 Stability 
Programme.  The  macroeconomic  and  fiscal  outlook  is  affected  by  high  uncertainty 
due to the COVID-19 pandemic. 

In response to the COVID-19 pandemic, and as part of a coordinated Union approach, 
Spain  has  adopted  budgetary  measures  to  increase  the  capacity  of  its  health  system, 
contain  the  pandemic,  and  provide  relief  to  those  individuals  and  sectors  that  have 
been  particularly  affected.  According  to  the  2020  Stability  Programme,  those 
budgetary  measures  amounted  to  3,2%  of  GDP.  The  quantification  of  the  deficit-
increasing  measures  broadly  coincides  with  the  Commission’s  estimates,  once  the 
different  treatment  of  the  cost  of  automatic  stabilisers  is  taken  into  account.  The 
measures include strengthening health care services and providing income support to 
workers put on short-time work schemes. In addition, Spain has announced measures 
that, while not having a direct budgetary impact, will contribute to support liquidity to 
businesses,  which  the  2020  Stability  Programme  estimates  at  9,2%  of  GDP.  Those 
measures in particular include loan guarantees (8,8% of GDP). Overall, the measures 
taken  by  Spain  are  in  line  with  the  guidelines  set  out  in  the  Commission 
Communication on a coordinated economic response to the COVID-19 outbreak. The 
full  implementation  of  those  measures,  followed  by  a  refocusing  of  fiscal  policies 
towards  achieving  prudent  medium-term  fiscal  positions  when  economic  conditions 
allow, will contribute to preserving fiscal sustainability in the medium term.  

(15)  Based  on  the  Commission  2020  spring  forecast  under  unchanged  policies,  Spain’s 
general government balance is forecast at -10,1% of GDP in 2020 and -6,7% in 2021. 
The general government debt ratio is projected to reach 115,6% of GDP in 2020 and 
113,7% in 2021.  

(16)  On 20 May 2020, the Commission issued a report prepared in accordance with Article 
126(3) of the Treaty due to Spain’s non-compliance with the debt rule in 2019 and the 
planned  breach  of  the  3%  of  GDP  deficit  threshold  in  2020.  Overall,  the  analysis 
suggests  that  the  deficit  and  debt  criteria  as  defined  in  the  Treaty  and  in  Regulation 
(EC) No 1467/1997 are not fulfilled. 

(17)  Measures taken to  stop the spread of the virus are having an important effect on the 
economy  and  could  result  in  a  9,4%  loss  of  GDP  this  year.  The  impact  on 
employment, while difficult to calculate at this stage, will also be sizeable. Around one 
million people have already lost their jobs since the onset of the crisis. The effect on 
employment is currently mitigated by the close to 3,5 million workers who have been 
enrolled in short-time work schemes (ERTEs), which have prevented so far immediate 
losses of employment. The consequences of the pandemic in Spain will be aggravated 
by the high share of employment in small and medium-sized enterprises (SMEs), the 
weight of sectors that are being particularly hit and are likely to experience a slower 
recovery,  among  which  tourism  and  retail,  and  the  high  rate  of  temporary  contracts 
among employees (26,3% in 2019). All these factors could lead to large employment 
losses  and  amplify  the  shock.  According  to  the  Commission’s  forecast,  the 

EN 

4 

  EN 

unemployment rate (which was 13,6% in February 2020), is expected to rise to 18,9% 
in 2020 and recover to 17% in 2021. 

(18)  The Spanish authorities have sought to mitigate the impact of the pandemic and of the 
containment period through various packages of measures that in total amount to EUR 
145  billion.  In  their  efforts  to  tackle  the  disease,  the  authorities  have  increased  their 
expenditure on health and social services. They have also facilitated the use of ERTEs 
with  a  view  to  keep  people  in  employment  and  support  household’s  income. 
Employees  affected  by  an  ERTE  receive  a  benefit  amounting  to  70%  of  their  social 
security contribution base, with a minimum and maximum limit (EUR 502 and EUR 
1,402, respectively). The employment relationship remains intact during the duration 
of  the  ERTEs,  which  have  been  recently  extended  until  30  June  2020.  Firms 
implementing ERTEs are exempted from having to pay a very large part of the social 
security contributions for workers covered by the scheme, provided they maintain their 
jobs for at least six months after the resumption of activities. These measures go hand 
in  hand  with  specific  aid  for  SMEs  and  self-employed  workers,  who  constitute  the 
backbone  of  the  Spanish  economy  (deferral  of  tax  payments,  reductions  of  social 
security  contributions  and  state  guarantees),  and  are  an  attempt  to  help  them  avoid 
bankruptcy  and  quickly  resume  activity  once  the  crisis  is  over.  Measures  have  also 
been  adopted  to  guarantee  income  support  temporarily  to  non-standard  workers  who 
have no access to social security protection.  

(19)  The  Spanish  health  system  has  been  delivering  good  health  outcomes  despite  the 
comparatively  low  level  of  investments.  The  outbreak  of  the  COVID-19  pandemic 
has, however, put an unprecedented strain on the system and revealed its vulnerability 
to shocks. Immediate action is focusing on strengthening capacities in terms of health 
workers, critical medical products and infrastructure in order to save lives and restore 
health during the pandemic. Persons with disabilities and the elderly in residential care 
have  been  particularly  exposed  during  the  crisis.  Their  continued  access  to  medical 
and social care, including emergency and intensive care services, needs to be ensured. 
Later on, efforts should concentrate on improving the resilience of the health system 
so  that  it  can  resume  its  optimal  performance  as  quickly  as  possible  and  better  cope 
with  new  shocks.  The  pandemic  has  revealed  existing  structural  problems,  some  of 
which  derive  from  certain  shortfalls  in  investment  in  physical  infrastructures  and 
shortcomings in the recruitment and working conditions of health workers. There are 
regional  disparities  in  terms  of  spending,  physical  resources  and  staff,  and  the 
coordination  between  different  levels  of  government  is  not  always  effective.  In  the 
medium-term,  healthcare  delivery  could  better  respond  to  the  challenges  of  ageing, 
growing  chronical  conditions and  disability.  Primary  care  and  the  development  of  e-
health  have  a  central  role  to  play  in  this  regard.  In  the  medium-term,  it  will  be 
important to ensure that the likely decrease in resources due to the economic downturn 
does not affect people’s healthcare coverage and result in inequalities in access. 

(20)  Despite  years  of  strong  job  creation,  the  Spanish  labour  market  still  recorded  high 
levels  of  unemployment  and  labour  market  segmentation  before  the  COVID-19 
outbreak.  Preliminary  data  point  to  a  very  significant  increase  in  the  level  of 
unemployment  in  Spain  as  a  result  of  the  crisis,  which  will  weigh  on  the  already 
limited  capacity  of  employment  services  to  support  workers  and  employers  and  on 
social services. In the medium term, the way to recovery should be paved by measures 
to  support  employment  taken  in  consultation  with  social  partners,  such  as  gradually 
phasing-out  short-time  work  schemes,  reviewing  the  system  of  hiring  incentives  to 
better promote sustainable forms of employment, notably for young workers, as well 

EN 

5 

  EN 

as  through flexibility in working  conditions.  Raising the share of students in  science 
and digital technologies, making vocational education and training more attractive and 
ensuring flexible upskilling and reskilling opportunities could help meet the growing 
demand  for  the  technical  skills  needed  for  the  green  and  digital  transitions  that  will 
accompany the recovery. More generally, improving educational and career guidance 
and  providing  adequate  support  to  students  with  disadvantages  and  regions  lagging 
behind could contribute to better educational outcomes. The success of measures that 
may  be  adopted  with  a  view  to  achieving  these  objectives  will  strongly  depend  on 
taking  the  necessary  time  to  build  a  broad  and  long-lasting  social  and  political 
consensus around the reforms. 

(21)  The  effects  of  the  pandemic  on  the  labour  market  have  prompted  a  pressing  need  to 
support the income of households hit by the crisis. The facilitation of the use of short-
time work schemes has been key in that endeavour. However, temporary workers with 
very  short  contracts,  who  constitute  the  bulk  of  the  close  to  one  million  new 
unemployed and amongst which there are many young workers, are often not eligible 
for  standard  unemployment  protection.  Ensuring  early  on  that  all  workers,  including 
temporary  workers  and  the  self-employed,  have  access  to  adequate  social  protection 
and  active  labour  market  policies,  is  needed  to  support  a  sustainable  recovery  and 
social cohesion.  

(22)  The crisis will likely increase the high levels of poverty or social exclusion in Spain, 
especially  among  families  with  children.  In  2019,  Spain  was  the  Member  State  with 
the lowest average of family benefits per child. Families with low-to-medium income 
are not entitled to the country’s strict child benefits, and tax deductions are of limited 
advantage  to  them.  Social  protection  expenditure  remains  highly  oriented  towards 
older people, and the level of expenditure on pensions is set to increase significantly in 
the  medium  to  long  term,  should  the  announced  departures  from  the  2013  pension 
reform  be  made  permanent  and  no  adequate  compensatory  measures  taken.  The 
difficult  economic  and  social  context  resulting  from  the  pandemic  instead  calls  for 
intergenerational  solidarity  in  favour  of  the  younger  generations.  Unemployment 
assistance for the long-term unemployed and workers not qualifying for contributory 
schemes  is  currently  scattered  across  multiple  schemes,  resulting  in  low  coverage. 
Existing  regional  minimum  income  schemes  only  reach  20%  of  their  potential 
beneficiaries  in  the  country,  amid  large  regional  disparities  in  terms  of  coverage, 
duration, access conditions and adequacy. In the current pressing context, a permanent 
national  income  guarantee  scheme,  with  an  estimated  coverage  of  three  million 
beneficiaries, is planned to be introduced swiftly to complement the existing regional 
minimum income schemes. Its impact on poverty-reduction and its sustainability in the 
short and medium-term cannot be assessed at this stage.  

(23)  Another aggravating factor for the pandemic crisis in Spain is that the high number of 
SMEs  account  for  a  large  share  of  employment.  In  order  to  prevent  avoidable 
bankruptcies, some measures to provide liquidity support to businesses through loans 
and guarantees have been adopted as a matter of urgency, with a focus on SMEs and 
on  sectors  that  will  be  hit  harder  and  longer  by  the  crisis,  such  as  tourism  (which 
accounts for 12% of GDP in Spain in 2019). These measures should be efficiently and 
swiftly  implemented  by  financial  intermediaries  if  they  are  to  deploy  their  effects. 
Allowing  deferred  payments  of  taxes  and  social  contributions  and  speeding  up 
contractual  payments  by  public  authorities  will  also  help  improve  the  cash  flow  of 
SMEs. In the process of designing and implementing these measures, the resilience of 
the  banking  sector  needs  to  be  taken  into  account.  With  a  view  to  ensuring  the 

EN 

6 

  EN 

effectiveness  of  these  measures,  it  is  important  that  efforts  to  reduce  administrative 
burden and to offer efficient digital public services are maintained. Support to firms in 
the sectors most damaged by the crisis and safeguarding the competitiveness of export 
companies is crucial for the successful recovery. 

(24)  To  foster  the  economic  recovery,  it  will  be  important  to  front-load  mature  public 
investment  projects  and  promote  private  investment,  including  through  relevant 
reforms.  Spain’s  recovery  prospects  will  depend  on  its  capacity  to  increase 
productivity and foster innovation, including through the digital and green transition. 
Spain’s  innovation  performance  is  below  the  EU  average  in  all  regions.  Spain 
underperforms  on  the  ability  of  firms  to  innovate,  invest  in  tangible  and  intangible 
assets  and  make  best  use  of  their  population’s  skills,  which  could  hamper  their 
competitiveness  in  a  knowledge-based  economy.  The  crisis  has  highlighted  the 
importance of digitalisation to maintain access to governmental services and education 
and training, as well as to preserve jobs and economic activity. Before the confinement 
period,  only  half  of  the  schools  in  Spain  had  adequate  digital  learning  platforms  in 
place,  with  significant  regional  disparities.  The  sudden  shift  to  digital  learning  was 
also a particular challenge for vulnerable students who did not have access to digital 
solutions at home. Spain should ensure that all students benefit from access to digital 
learning,  including  those  in  rural  areas  and  from  vulnerable  households.  Supporting 
the  digitalisation  of  businesses  would  also  promote  the  competitiveness  of  Spanish 
firms in global value chains and increase their capacity to export, notably SMEs and 
microenterprises.  The  digital  uptake,  including  of  advanced  digital  technologies,  and 
the reduction of the digital divide between urban and rural areas, would improve the 
Spanish  economy’s  capacity  to  innovate.  In  addition,  reinforcing  research  and 
innovation  governance  at  all  levels,  increasing  the  quality  of  research  through 
systematic evaluations  and incentivising  research organisations to  cooperate with the 
private  sector  could  make  research  and  innovation  policies  more  effective  and 
accelerate the diffusion of innovation in order to help the recovery.  

(25)  Spain’s transformation to a climate neutral economy will require sizeable investment 
over a sustained period in renewable energy, energy infrastructure, energy efficiency 
and sustainable transport, among others. Investments should be frontloaded to help the 
green transition during the recovery, in line with Spain’s National Energy and Climate 
Plan. Promoting an integrated energy system should facilitate renewables penetration. 
Reducing  energy  consumption  in  private  and  public  buildings  through  large-scale 
renovations, and developing smart grids and renewable electricity storage would help 
better manage demand for energy, while supporting job creation during the recovery. 
Further investments in energy infrastructures, including in electricity interconnections 
with  the rest  of the Union, would help to  improve the integration of the internal  EU 
energy market, while introducing more competition and facilitating the deployment of 
renewable  energy.  Additional  efforts  should  also  promote  sustainable  transport, 
including  the  rollout  of  alternative  fuels  infrastructure,  in  particular  for  electric 
vehicles.  Investments  will  also  be  needed  to  make  a  greater  use  of  rail  for  freight 
transport  possible,  including  cross-border  connections  with  France  and  Portugal  and 
connections to  ports and logistic  hubs. In  addition, certain areas of Spain are among 
those most exposed to climate change in Europe. Water resources are under pressure, 
and  infrastructure  for  water  and  waste  management  is  uneven  across  the  country. 
Green investments can help to cope with the adverse effects of climate change, such as 
floods  and  forest  fires,  improve  air  quality,  as  well  as  water  and  waste  management 
and  develop  the  potential  of  the  circular  economy.  The  programming  of  the  Just 
Transition  Fund  for  the  period  2021-2027  could  help  Spain  to  address  some  of  the 

EN 

7 

  EN 

challenges  posed  by  the  transition  to  a  climate  neutral  economy,  in  particular  in  the 
territories covered by Annex D to the country report8. This would allow Spain to make 
the best use of that fund. 

(26)  Regulatory  fragmentation  and  barriers  in  Spain  prevent  firms  from  benefiting  from 
economies  of  scale  and  negatively  affect  productivity.  The  Law  on  Market  Unity, 
which is already being enforced by courts and competition authorities, should be more 
actively used to promote better regulation and competition during the recovery. In this 
context,  stringent  ownership  and  market  restrictions  that  have  sought  to  ensure  the 
supply of strategic goods and services during the pandemic crisis should be removed 
as  soon  as  the  emergency  ceases.  More  generally,  a  stronger  and  sustained 
coordination  between  the  different  levels  of  government  could  make  policies  to 
facilitate the recovery more effective. It is also essential to ensure that the governance 
structure  that  has  already  been  created  by  the  laws  implementing  the  2014  Public 
Procurement  Directives  can  work  at  full  speed  as  soon  as  possible  to  warrant  an 
efficient  use  of  the  public  investment  that  may  support  the  recovery.  Work  on  the 
comprehensive  national  public  procurement  strategy  should  be  stepped  up  in  close 
cooperation  with  the  representatives  of  all  government  levels  (central,  regional  and 
local) through the Cooperation Committee.  

to  address  medium- 

(27)  While the present recommendations focus on tackling the socio-economic impacts of 
the  pandemic  and  facilitating  the  economic  recovery,  the  2019  country-specific 
recommendations adopted by the Council on 9 July 2019 also covered reforms that are 
essential 
structural  challenges.  Those 
recommendations remain pertinent and will continue to be monitored throughout next 
year’s  European  Semester  annual  cycle.  That  also  applies  to  recommendations 
regarding investment-related economic policies. The latter recommendations should be 
taken  into  account  for  the  strategic  programming  of  cohesion  policy  funding  post-
2020, including for mitigating measures and exit strategies with regard to the current 
crisis. 

long-term 

to 

(28)  The timely resolution of insolvency proceedings will also play a key role in ensuring 
the  liquidity  of  companies  and  an  effective  reallocation  of  resources,  as  well  as  in 
promoting  entrepreneurship  and  the  stability  of  the  financial  sector.  It  is  essential  to 
safeguard  the  justice  system’s  capacity  to  handle  insolvency  proceedings  efficiently. 
This  is  particularly  important,  as  the  current  suspension  of  the  activity  of  the  courts 
and  the  expected  increase  in  litigation  due  to  the  recession  caused  by  the  pandemic 
may  further  exacerbate  already  existing  challenges  with  increasingly  lengthy 
proceedings and growing backlogs of cases. 

(29)  The  European  Semester  provides  the  framework  for  continuous  economic  and 
employment  policy  coordination  in  the  Union,  which  can  contribute  to  a  sustainable 
economy.  Member  States  have  taken  stock  of  progress  regarding  United  Nations’ 
Sustainable  Development  Goals  (SDGs)  implementation  in  their  2020  National 
Reform  Programmes.  By  ensuring  the  full  implementation  of  the  recommendations 
below,  Spain  will  contribute  to  the  progress  towards  the  SDGs  and  to  the  common 
effort of ensuring competitive sustainability in the Union.  

(30)  Close coordination between economies in the economic and monetary union is key to 
achieve a swift recovery from the economic impact of the COVID-19. Spain should, 
as  a  Member  State  whose  currency  is  the  euro  –  and  taking  into  account  political 

8 

SWD(2020) 508 final. 

EN 

8 

  EN 

                                                 
(31) 

(32) 

(33) 

guidance by the Eurogroup – ensure its policies remain consistent with the euro area 
recommendations and coordinated with those of the other euro area Member States. 

In  the  context  of  the  2020  European  Semester,  the  Commission  has  carried  out  a 
comprehensive  analysis  of  Spain’s  economic  policy  and  published  it  in  the  2020 
country  report.  It  has  also  assessed  the  2020  Stability  Programme  and  the  2020 
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  that  assessment,  the  Council  has  examined  the  2020  Stability 
Programme and its opinion9 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  2020  National  Reform  Programme  and  the  2020  Stability  Programme. 
The present recommendations take into account the need to tackle the pandemic and 
facilitate the recovery as a first necessary step to permit an adjustment of imbalances. 
Recommendations  directly  addressing  the  macroeconomic  imbalances  identified  by 
the  Commission  under  Article  6  of  Regulation  (EU)  No  1176/2011  are  reflected  in 
recommendations (1), (2) and (4), 

HEREBY RECOMMENDS that Spain take action in 2020 and 2021 to: 

1. 

2. 

3. 

In  line  with  the  general  escape  clause,  take  all  necessary  measures  to  effectively 
address the pandemic, sustain the economy and support the ensuing recovery. When 
economic  conditions  allow,  pursue  fiscal  policies  aimed  at  achieving  prudent 
medium-term  fiscal  positions  and  ensuring  debt  sustainability,  while  enhancing 
investment. Strengthen the health system’s resilience and capacity, as regards health 
workers, critical medical products and infrastructure.  

Support  employment  through  arrangements  to  preserve  jobs,  effective  hiring 
incentives  and  skills  development.  Reinforce  unemployment  protection,  notably  for 
atypical workers. Improve coverage and adequacy of minimum income schemes and 
family support, as well as access to digital learning. 

Ensure  the  effective  implementation  of  measures  to  provide  liquidity  to  small  and 
medium-sized  enterprises  and  the  self-employed,  including  by  avoiding  late 
payments.  Front-load  mature  public  investment  projects  and  promote  private 
investment  to  foster  the  economic  recovery.  Focus  investment  on  the  green  and 
digital  transition,  in  particular  on  fostering  research  and  innovation,  clean  and 
efficient  production  and  use  of  energy,  energy  infrastructure,  water  and  waste 
management and sustainable transport. 

9 

Under Article 5(2) of Council Regulation (EC) No 1466/97. 

EN 

9 

  EN 

 
                                                 
4. 

Improve  coordination  between  different  levels  of  government  and  strengthen  the 
public procurement framework to support recovery in an efficient manner. 

Done at Brussels, 

For the Council 
The President 

EN 

10 

  EN