COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Spain and delivering a Council opinion on the 2022 Stability Programme of Spain
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Spain, digital transformation, economic policy, economic recovery, economic reform, energy policy, fiscal policy, stability pact, stability programme, waste management

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 610 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Spain and delivering a Council opinion on the 2022 Stability Programme of Spain {COM(2022) 610 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Spain’s economic recovery is on 
track, but vulnerabilities remain 

The  COVID-19  pandemic  halted  six  years 
of  strong  economic  growth  and  dynamic 
job  creation.  Between  2013  and  2019, 
Spain’s GDP grew by 17% and 2.7 million jobs 
were  created.  This  cycle  came  to  an  abrupt 
end  in  2020,  when  Spain  experienced  the 
largest  GDP  contraction  (-10.8%)  in  the  EU. 
lockdown 
impact  of 
The  economic 
measures  was  amplified by  some  features  of 
the  Spanish  economy,  such  as  its  reliance  on 
tourism and other contact-intensive services, a 
business  fabric  with  a predominance  of  small 
and  medium-sized  enterprises  (SMEs)  and 
structural  labour  market  weaknesses.  As  a 
result,  more  than  1.1 million  workers  (largely 
temporary  employees)  lost  their  jobs  and  the 
employment rate decreased by 4.5 percentage 
points in the first three months of the crisis. 

the 

At  the  same  time,  after  the  initial  shock 
of the pandemic, labour market resilience 
is  underpinning  the  recovery.  After  a 
modest expansion in the first half of 2021, the 
recovery  gained  traction  during  the  second 
half  due  to  a  strong  labour  market  and  the 
recovery of tourism. Real GDP grew by 5.1% in 
2021,  although  it  was  still  3.8%  below  the 
pre-pandemic  levels  in  Q4-2021.  By  contrast, 
headcount  employment  almost  matched  pre-
crisis  levels  in  Q4-2021  (Graph 1.1)  although 
at  a  lower  level  for  hours  worked.  Despite 
decreasing  over  2021,  unemployment  rate 
remains well above the EU average, especially 
among the young. 

Employment resilience suggests a change 
in  pattern  compared  to  previous  crises, 
when job destruction outpaced the fall in 
GDP.  The  effective  deployment  of  short-time 
work  schemes  since  the  initial  stages  of  the 
pandemic,  benefitted  from  the  support  of  the 

EU 
instrument  for  temporary  Support  to 
mitigate Unemployment Risks in an Emergency 
(SURE,  see  Annex  3)  and  was  complemented 
by  other  internal  adjustment  mechanisms. 
These  schemes  have  cushioned  the  impact  of 
the COVID-19 crisis on the labour market and 
paved  the  way  for  a  quick  recovery.  In 
contrast,  during  the  2008-2013  crisis  the  fall 
in  the  number  of  jobs  (-15.8%)  was  almost 
twice as high as the fall in GDP (-8.5%). 

Graph 1.1: GDP and number of jobs 

Source: Eurostat, own calculations. 

had 

pandemic 

Regional  disparities  persist 
in  Spain, 
including  between  urban  and  rural  areas. 
The 
asymmetric 
has 
consequences  among  the  Spanish  regions, 
having  a  greater  impact  in  those  regions 
whose  economy  depends  more  on  tourism. 
Some 
show 
significant 
territorial  disparities,  such  as 
unemployment,  poverty  and  competitiveness 
(see Annex 15). 

socio-economic 

indicators 

Full recovery from the COVID-19 crisis is 
expected  to  be  delayed  due  to  the 
economic  impact  of  the  Russian  military 
aggression  against  Ukraine.  Despite  the 
limited  direct  economic  exposure  of  the 

2 

758085909510010508Q108Q409Q310Q211Q111Q412Q313Q214Q114Q415Q316Q217Q117Q418Q319Q220Q120Q421Q319Q4=100GDPEmployment 
 
      
 
to 

Spanish  economy,  activity  may  be  affected 
through different channels (see details below). 
According 
the  Commission’s  Spring 
Economic  Forecast (see  Annex  19  for details), 
GDP  growth  is  expected  to  slow  down  in  the 
first  half  of  2022,  and  gain  again  traction  in 
the second half of the year, when energy price 
increases and supply bottlenecks are expected 
to  start  easing.  However,  both  are  set  to 
remain  high  over  the  forecast  period.  Hence, 
full recovery of the pre-pandemic level of GDP 
is expected to be delayed until mid-2023. 

Domestic and external demand are set to 
sustain GDP growth over 2022 and 2023. 
Overall, GDP is expected to expand by 4.0% in 
2022  and  by  3.4%  in  2023.  The  revived 
tourism  activity  has  been  the  main  driver  of 
economic  growth  since  the  summer  of  2021 
and  is  expected  to  keep  momentum  in  2022. 
This  will  provide  a  large  contribution  of  net 
exports  to  GDP  growth.  Moreover,  economic 
growth  is  set  to  accelerate  from  2022-Q3 
of 
to 
thanks 
investments  under 
the  RRP  and  some 
reactivation  of  private  consumption,  despite 
the  deterioration  of  households’  purchasing 
power due to high inflation and a reduction in 
real  wages.  The  savings  accumulated  during 
the pandemic and a strong labour market are 
set  to  partially  mitigate  this  effect.  The 
unemployment  rate  is  expected  to  decrease 
from  14.8%  in  2021  to  13.4%  in  2022  and 
13.0% in 2023. 

implementation 

faster 

High  energy  prices  and  their  spread  to 
other  products  will  keep  inflation  high  in 
2022.  Energy  prices  have  been  the  main 
driver  of  the  steep  increase  in  the  HICP 
inflation rate over the last year (7.9% y-o-y in 
Q1-2022),  but  the  transmission  to  the  prices 
of  other  goods  and  services  has  recently 
become more evident.  Inflation is expected  to 
moderate  slowly  during  the  rest  of  the  year, 
helped by recent governmental measures such 
as  fuel  discounts  and  the  cap  on  wholesale 
gas  prices,  although  remaining  high.  Thus 
annual  HICP  inflation  is  expected  to  reach 
6.3%  in  2022,  increasing from  3.0%  in  2021. 
In 2023, further moderation of energy prices is 
projected  to  reduce  annual  inflation  to  1.8%. 
Core  inflation  is  set  to  remain  relatively  high 
over  the  forecast  period,  although  wage 

3 

moderation is expected to help contain second 
round effects. 

The  extraordinary  measures  in  the  face 
of  the  COVID-19  crisis  have  led  to  a 
significant 
public 
deterioration 
in 
finances,  which 
is  gradually  being 
reversed.  Before  the  pandemic,  government 
debt  in  relation  to  GDP  had  decreased  from 
100.7%  in  2014  to  95.5%  in  2019.  Due  to 
favourable  financing  conditions,  borrowing 
costs  also  fell  sharply,  helping  bring  the 
government deficit down to below 3% of GDP 
before  the  COVID-19  crisis.  However,  the 
combination  of  the  fall  in  economic  activity 
and  the  decisive  policy  response  to  support 
businesses and households brought the deficit 
to  10.3%  of  GDP  in  2020.  As  crisis-related 
measures  were  progressively  phased  out  and 
the 
the  economic 
deficit,  which  decreased  to  6.9%  in  2021,  is 
set  to  narrow  further  to  4.9%  in  2022  and 
4.4%  in 2023,  and  public debt  to  decrease to 
115.1% of GDP in 2023 from 113.7% in 2021. 

recovery  consolidates, 

At  the  same  time,  the  impact  of  the 
phasing  out  of  the  remaining  COVID-19 
support  measures  is  uncertain,  although 
no  significant  cliff-edge  effects  have 
emerged  so  far.  Borrower  relief  measures 
and  public  guarantee  schemes  introduced  in 
response  to  the  COVID-19  crisis  have  so  far 
averted  broad-based  liquidity  problems.  In 
recently 
the  authorities  have 
addition, 
extended 
the  public 
the  maturity  of 
guaranteed loans and their grace period for six 
additional  months,  applicable  in  those  sectors 
most affected by the increase in energy costs 
(see  below).  However,  uncertainty  remains  on 
the impact their phasing out could have on the 
financial  situation  of  the  private  sector. 
Moreover, excessive debt may  weigh on firms 
productivity  by  reducing  their  capacity  to 
invest in capital, innovation or skills. 

Sustained  growth  is  expected  to  support 
a  gradual  correction  of  macroeconomic 
imbalances. The long-standing imbalances of 
the Spanish economy were following a steady 
declining trend before the pandemic. However, 
those  imbalances  have  worsened  as  a  result 
of  the  economic  fallout  from  the  COVID-19 
is  still  characterised  by  a 
crisis.  Spain 

 
combination  of  a  large  stock  of  external  and 
internal  debt,  both  public  and  private,  in  a 
context  of  high  unemployment  and  relatively 
low  productivity.  A  gradual  improvement  is 
expected (see Annex 17), due to sustained GDP 
growth  and  supported  by  the  successful 
implementation of the RRP. 

is 
implementation  of  the  RRP 
The 
expected to increase Spain’s resilience. By 
providing  funding  for  strategic  investments, 
the  RRF  can  support  economic  growth  while 
fiscal  consolidation  takes  place.  Targeted  and 
efficient  expenditure  –  focused  on  the  twin 
green  and  digital  transition  –  is  expected  to 
have  a  positive  impact  on  productivity  and 
support the recovery through inclusive growth. 
While  a  law  has  been  passed  to  facilitate 
implementation, 
the  absorption 
increasing 
capacity and securing a timely implementation 
of  mutually  reinforcing  measures  in  the  RRP 
would increase their positive impact. All these 
factors  together  are  expected  to  decisively 
contribute  to  increasing  the  country’s  social, 
economic and environmental resilience. 

the 

The  economy  is  expected  to  regain  cost 
recovery 
competitiveness  during 
despite  high  inflation  pressures.  Real  unit 
labour  costs  increased  substantially  in  2020 
due  to the  fall  in labour  productivity  resulting 
from confinement measures and the extended 
use  of  short-time  work  schemes  during  the 
pandemic.  The  declining  path  started  in  2021 
is  expected  to  be  sustained  over  the  forecast 
period,  under  the  assumption  of  a  slower 
increase  of  wages  than  prices.  The  minimum 
wage  increased  steeply  since  2019  (36%  in 
nominal  terms),  with  the  aim  of  addressing 
wage inequalities in a context of high in-work 
poverty  and  job  precariousness (1).  Further 
increases  are  planned  as  part  of  a  political 
objective  to  reach  60%  of  the  average  wage 
by  2023.  As  on  previous  occasions,  they  are 
to  be  based  on  an  ex-ante 
expected 
into  account  the 
assessment,  and  taking 

(1)  Bank of Spain (2021), “Los efectos del salario minimo 
interprofesional en el empleo: nueva evidencia para 
España”, assessed the 22% rise of minimum wage in 
2019 and concluded that it had a limited impact on 
overall employment but a negative one for young and 
low-skilled workers. 

multiple  effects  on  net  employment,  social 
cohesion, 
internal 
demand, amongst other aspects. 

competitiveness 

and 

Despite limited exposure to Russia  
and Ukraine, high energy prices  
and trade spill-overs have hit the  
economy 

Direct  economic  exposure  to  Russia  and 
Ukraine  is  limited  and  lower  than  for 
other  Member  States.  Trade  dependencies 
and  value  chain  interlinkages  with  Russia  and 
Ukraine  are  small  overall  and  restricted  to  a 
number  of  sectors.  In  particular,  as  compared 
with  other  products,  both  the  traded  values 
and the shares in total Spanish goods imports 
are  significant  for  Russian  oil  and  gas 
(although lower than for the EU average), and 
for  Ukrainian  cereals  and  sunflower  oil.  On 
aggregate,  a  mere  0.3%  of  the  Spanish 
economy’s  value  added  depends  on  Russian 
final  demand  (compared  to  0.6%  for  the 
EU27).  The  share  of  Russian  value  added  is 
also limited in Spanish final demand, although 
it is relevant for fuel products. The number of 
Russian  tourists  had  increased  significantly 
before  the  pandemic,  particularly  in  certain 
parts of the Mediterranean coast, but they still 
represent  a  small  share  overall.  The  stock  of 
foreign  direct 
is 
negligible,  while  the  presence  of  Spanish 
corporates  in  those  countries  is  limited  to  a 
few  exceptions  in  infrastructure  and  retail 
trade  activities.  The  exposure  of  Spanish 
financial  institutions,  which  is  already  low 
compared  to  other  EU  countries,  is  now  very 
limited  due  to  the  declining  trend  since 
sanctions were adopted in 2014 after Russia’s 
annexation  of  Crimea.  This  also  explains  the 
limited  house  purchases  by  Russian  citizens 
since then. 

investment  by  Russia 

Despite  low  reliance  on  Russian  energy 
supply,  further  price 
increases  from 
already  high  levels  exert  considerable 
pressure  on 
consumer  prices  and 
production  costs.  The  share  of  energy 
imports from Russia is relatively low compared 
with other EU countries, especially for gas and 

4 

 
                                                 
for  Spain,  making 

oil.  However,  despite  having  a  highly 
diversified  basket  of  oil  and  gas  suppliers, 
overall dependence on foreign energy supply is 
high 
the  economy 
particularly  sensitive  to  price  developments in 
global markets. The main demand of imported 
oil  products  in  Spain  comes  from  transport 
activities  (mostly  by  road)  and  non-energy 
industrial  use  (mostly  chemicals  and  non-
metallic mineral products), while natural gas is 
either transformed for electricity generation or 
industries, 
used  for  energy  purposes  by 
households. 
commercial 
Developments in the natural gas market have 
had  a  substantial  impact  on  electricity  prices 
since mid-2021, and further since the Russian 
invasion  of  Ukraine.  This  has  dented 
consumers’  purchasing  power 
(low-income 
households  in  particular)  and  stressed  firms’ 
positions, particularly firms in electro-intensive 
activities such as the iron and steel industries. 

activities 

and 

risks. 

round 

second 

Government  measures  prioritise 
the 
containment  of  retail  prices  for  energy 
and the support to vulnerable households, 
but  may  not  be  sufficient  to  contain 
negative 
The 
government has reacted swiftly to contain the 
rise  in  energy  retail  prices  (which  to  a  large 
extent  extend previous  packages  adopted  last 
year)  and  provide  income  support  to  those 
most  affected  by  negative  economic  effects, 
including  low-income  households  and  electro-
intensive  industries.  The  Spanish  economy  is 
particularly  sensitive  to  the  balance  of  risks 
given  its  strong  reliance  on  EU  demand  and 
supply,  the  legacy  of  the  COVID-19  crisis 
(among the  deepest  in the  EU)  and  persistent 
macroeconomic  imbalances.  In  this  context, 
the  negative  effects  on  employment  and  the 
deterioration  of 
financial 
situation could be partly mitigated by the likely 
activation  of  the  new  employment  flexibility 
and  stability  mechanism  –  the  so-called 
Mecanismo RED – in specific sectors. Also by a 
in  the  phasing  out  of  the  public 
delay 
introduced  during  the 
guarantee  schemes 
pandemic  and  which  have  been  recently 
reinforced  by  the  National  Response  Plan  to 
the war in Ukraine (including EUR 10 billion of 
additional guarantees and the extension of the 
maturity  and  the  grace  period  of  existing 
ones). Regarding commitments at EU level, the 

the  business 

Spanish  government  has  already  allocated 
EUR 1.2 billion to provide protection and build 
hosting  centres  for  displaced  people  from 
Ukraine,  while  on  the  expected  increase  of 
military  expenditure,  Spain  is  currently  far 
below  the  NATO  reference  of  2%  of  GDP 
(0.9%  in  2020  compared  with  1.3%  for  the 
EU27 average). 

Addressing the remaining socio- 
economic and environmental  
challenges will underpin sustained  
growth 

Spain  has  made  progress  towards  the 
UN’s  Sustainable  Development  Goals 
(SDGs), but lags behind the EU in several 
areas.  Improvements  have  been  made  in 
recent  years,  particularly  on  poverty,  health 
and  education  within  the  fairness  dimension, 
and  on  clean  energy  and  climate  action 
contributing  to  environmental  sustainability. 
Nevertheless,  several  of 
the  underlying 
indicators  remain  well  below  the  EU  average, 
such  as  those  on  support  for  the  circular 
economy  and  higher  productivity,  while  other 
socio-economic  indicators  have  deteriorated 
due the COVID-19 pandemic (see Annex 1). 

The  green  transition  requires  large-scale 
interventions.  The  transformation  of  the 
economy  under  the  European  Green  Deal  is 
particularly  demanding  in  terms  of  energy 
efficiency  and  decarbonisation,  clean  and 
sustainable mobility, and the circular economy. 
Spain  aims  to  lower  greenhouse  gas  (GHG) 
emissions  by  23%  by  2030  (compared  to 
1990), and achieve climate neutrality by 2050 
(Annexes  5  and  6).  Significant  investment  is 
needed in order to renovate public and private 
buildings,  cut  transport  emissions,  generate 
and distribute renewable energy, for water and 
waste management, and support the reskilling 
and upskilling of the workforce. 

Structural  factors  continue  to  hamper 
productivity  growth.  Innovation  and  digital 
gaps,  skill  shortages  and  mismatches,  labour 
market  inefficiencies,  and  regulatory  barriers 
are among the most significant (Annexes 7 to 

5 

 
11).  The  persistence  of  the  effects  of  the 
pandemic  on  productivity  remains  to  be  seen 
in the Spanish economy, particularly in relation 
to  existing  skills  shortages  and  mismatches, 
and  the  need  for  reorganization  of  business 
activity. 

supporting 

The pandemic exacerbated the challenges 
for  employment,  fairness  and  inclusion. 
The  Social  Scoreboard 
the 
European  Pillar  of  Social  Rights  pointed  to 
moderate  progress  before 
the  COVID-19 
outbreak,  but  the  pandemic  has  had  a  very 
significant  socioeconomic  impact,  aggravating 
existing  challenges  for  vulnerable  groups 
(Annexes 12 to 15). Many indicators still point 
to  critical  situations,  particularly  in  relation  to 
equal 
people, 
structural  deficiencies  in  the  labour  market 
and  the  limited  impact  of  social  transfers  on 
poverty reduction, including child poverty. 

opportunities 

young 

for 

Fiscal  consolidation  and  higher  economic 
to  economic 
growth  will  contribute 
stability in the medium term. The impact of 
the pandemic crisis was cushioned by decisive 
policy  action.  Nevertheless, 
it  halted  the 
correction  of  macroeconomic  imbalances,  and 
the  strength  of  the  economic  recovery  would 
be challenged if productivity, employment and 
macroeconomic  and  financial  conditions  are 
to  20). 
not 
Accelerating population ageing puts additional 
pressure  on  government spending making  the 
correction of the structural fiscal deficit in the 
medium  to  long  term  more  demanding,  while 
growth-enhancing policies appear necessary to 
facilitate  the  reduction  of  high  private  debt 
levels. 

(Annexes  16 

supportive 

6 

 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

Progress on the Recovery and 
Resilience Plan in 2021 

and 

social 

The Spanish Recovery and Resilience Plan 
(RRP)  comprises  30  components  along 
four  main  axes:  green  and  digital 
transitions, 
territorial 
cohesion,  and  gender  equality.  It  includes 
110 investments (for a total estimated cost of 
EUR 69.5 billion)  and  102  reforms,  articulated 
in  416  milestones  and  targets  to  be  met 
during the period 2021-2026 (see Annex 2). It 
provides a balanced response to the six policy 
pillars  of  the  RRF,  with  a  significant  focus  on 
social  and  territorial  cohesion  and  on  the 
green transition (Graph A2.1).  

the 

The 

Commission 

fulfilment  of 

implementation  of  the  RRP 

is 
The 
disbursed 
underway. 
EUR 10bn on 27 December 2021 based on the 
satisfactory 
first  52 
milestones of the RRP. Additional measures of 
the RRP adopted since December 2021 include 
the  establishment  of  the  National  Evaluation 
Office  for  public  procurement,  legal  acts  to 
support building renovation, and the reform of 
the  labour  market  including  the  streamlining 
of 
labour  contracts  and  establishing  a 
permanent  short-time  work  scheme.  On 
investments,  the  central  government  has 
transferred  approximately  EUR 11 billion  to 
regions to implement measures under the RRP. 
Box 1 contains a summary of key deliverables 
in 2022 and 2023. 

Supporting the green transition 

Spain’s 

renewable 

Meeting 
and 
decarbonisation  targets  represents  a 
significant challenge. The RRP aims to make 
a  significant  contribution  to  meeting  this 

challenge  by  promoting  renewable  energy 
generation and complementary investments in 
storage, networks and renewable hydrogen. Its 
target  is  for  42%  of  gross  final  energy 
consumption  to  come  from  renewable  energy 
by 2030 (from 21% in 2020; see also Annex 5, 
Table A5.1).  Considerable  reform  efforts  have 
already been made to achieve the first set of 
milestones, which included the Law on Climate 
Change and Energy Transition, promoting long-
term  contracting  of  renewable  generation, 
reducing administrative barriers while ensuring 
the  protection  of  the  environment,  facilitating 
investment  in  energy  storage,  and  developing 
renewable  fuels  and  gases.  Looking  forward, 
the  RRP  includes  significant  investments  in 
technologies 
infrastructure 
(innovative  renewable  capacity,  and  electricity 
storage and grids), building renovation (energy 
efficiency),  as  well measures  for  reskilling  for 
the green transition. 

clean 

and 

investments 

Greenhouse gas (GHG) emissions continue 
to  grow  most  in  transport.  Measures  to 
encourage a modal shift remain key to achieve 
Spain’s  GHG  emission  reduction  targets.  The 
RRP  allocates  significant 
to 
sustainable  mobility,  including  the  shift  from 
road  to  rail  and  electric mobility,  and  it  seeks 
infrastructure 
to  modernise 
(including 
Transport 
in 
Network  (TEN-T)  corridors).  It  also  promotes 
the  sustainable  and  digital  transformation  of 
transport,  with  aims  that  include  reducing 
private vehicle use in urban areas. In addition, 
a  significant  number  of  measures  for  the 
deployment of the charging infrastructure and 
the promotion of the electric vehicles are also 
envisaged. 

the 
railway 
Trans-European 

Spain  will  have  to  renovate  a  significant 
number  of  buildings  in  order  to  meet  its 
energy consumption targets by 2030. The 
RRP  aims  to  ensure  that  at  least  355 000 
residential  dwellings,  690 000 m2  of  non-
residential  buildings,  and  1 230 000 m2  of 

7 

 
 
 
 
 
public buildings are renovated by 2026. These 
investments will result in an average reduction 
in  primary  energy  demand  of  at  least  30%. 
However,  while  these  will  make  a  significant 
contribution  to  achieve  National  Energy  and 
Climate  Plan  (NECP)  targets,  greater  efforts, 
including to quickly modernise a larger part of 
the  building  stock,  are  needed  (see  next 
section). 

significant 

step 
and 

(landfill  and 

a 
coordination 

The  RRP  also  includes  relevant  measures 
to  promote  the  circular  economy  and 
improve  waste  management.  The  Law  on 
Waste  and  Contaminated  Soils  for  a  Circular 
(Ley  7/2022  of  8  April  2022) 
Economy 
towards 
represents 
reducing 
improving 
fragmentation  of  waste  management. 
It 
introduces  a  harmonised  taxation  scheme  for 
waste  disposal 
incineration) 
across  regions,  and  compulsory  separate 
collection  of  bio-waste  in  national  legislation. 
It also reviews the general  framework for the 
application of extended producer responsibility, 
it  provides  for  authorisations  granted  by 
regions  for  collective  waste  management 
systems  for  producers 
to  have  national 
validity,  and  seeks  to  improve  data  collection. 
However,  waste  management 
remains  a 
significant  challenge  for  Spain  with  52%  of 
waste  still  going  to  landfills,  and  recycling 
rates  for  municipal  waste  below  EU  targets. 
Further  measures  are  needed  to  address  this 
issue (see next section). 

framework 

investments 

Despite  progress,  challenges  for  water 
management  remain.  The  RRP  aims  to 
improve hydrological planning, and reform the 
legal 
in 
and 
infrastructure.  Investments  aim  to  improve 
wastewater  collection  and  treatment  and 
promote 
reuse.  Additional 
resources  will  also  be  awarded  to  improve 
water  supply  and  reduce  water  leakages  in 
small  and  medium-sized  municipalities.  The 
new  strategic  project  for  the  digitalisation  of 
urban  water  cycle  promotes  the  use  of  new 
technologies 
improve  governance  and 
transparency. 

further  water 

to 

Spain is highly vulnerable to the adverse 
effects  of 
change.  Spain’s 
geographical  location and topography make it 

climate 

8 

particularly  prone  to  floods,  droughts,  coastal 
erosion,  water  shortages  and  biodiversity 
losses.  The  RRP 
includes  a  number  of 
measures and policies to protect the coastline 
and  the  marine  environment,  promote  river 
restoration and aquifer recovery, and mitigate 
the risk of floods. There are also measures to 
integrate  climate  risks  in  water  management, 
prevent  forest  fires,  and  protect  and  restore 
marine  and  terrestrial  ecosystems  and  their 
biodiversity.  The  National  Strategy  for  Green 
Infrastructure,  Connectivity  and  Ecological 
Restoration  adopted  in  2021  was  one  of  the 
milestones  fulfilled  under  the  first  payment 
request. 

Reinforcing economic and social  
resilience 

Equal  opportunities  and  access  to  the 
labour  market  are  a  particular  challenge 
leaving, 
for  young  people.  Early  school 
NEETs,  and  unemployment 
remain 
rates 
among  the  EU’s  highest.  The  RRP  aims  to 
address  these  challenges,  contributing  to  the 
implementation  of  the  European  Pillar  of 
Social Rights, with measures to improve digital 
skills,  and  the  vocational  and  education 
training  (VET)  system.  For  instance,  the  2021 
National  Digital  Competences  Plan  supports 
the  digital  transformation  of  education.  New 
curricula  were 
to 
introduced 
modernise  the  VET  system  and  laws  are 
planned to improve the relevance of VET skills 
to  business.  The  new  Organic  Law  on 
education entered into force in 2021 and aims 
to  reduce  early  school  leaving  and  improve 
educational inclusion. A new curriculum model 
for  key  competences,  fundamental  learning 
and  inclusive  academic  planning  seeks  to 
improve  educational  outcomes.  The  Youth 
Guarantee Plus Plan 2021-2027 is expected to 
increase  equal  opportunities  and 
improve 
employability for young people. 

in  2020 

The  labour  market  faces  a  number  of 
structural challenges hampering progress 
on  fair  working  conditions.  The  reforms  of 
labour  markets  included  in  the  RRP  seek  to 
reduce labour market segmentation by limiting 
the  use  of  temporary  contracts,  and  improve 

 
infrastructure.  Long-term  care  is  also  to  be 
strengthened, in view of ageing and longer life 
expectancy.  Investments in  the  RRP  also  have 
to  support  the  deinstitutionalisation  of  long-
term  care.  Moreover,  primary  care  requires 
further funding support. 

to 

promote 

Innovation, 

The  RRP  includes  reforms  and  sizeable 
territorial 
investments 
cohesion 
in  many  components.  Key 
examples  include  the  Urban  Agenda,  the  Just 
Transition  Strategy,  the  Strategy  for  Science, 
the  Digital 
Technology  and 
Strategy,  the  National  Strategy  for  Artificial 
Intelligence,  the  National  Health  Strategy,  the 
review of active labour market policies and the 
reform of the tax system. Reforms also aim to 
strengthen local autonomy and co-governance. 
In  particular,  the  reform  of  local  government 
aims  to  digitalise  local  public  services  to 
guarantee  their  provision,  and  local  entities 
will also manage digitalisation funds. 

Closing the productivity gap and  
supporting the digital transition 

to 

Insufficient  linkages  with  businesses and 
underinvestment  continue  to  weigh  on 
Spain’s  science  and  innovation  system. 
The  RRP  aims  to  strengthen  the  educational, 
science  and  innovation  system  and  crowd-in 
private  investment.  To  this  end,  two  Royal 
Decrees  have  been  adopted  on  the  re-
organisation and quality of university courses, 
and  establishing  a  scheme 
create, 
recognise,  authorise  and  accredit  universities 
and  their  centres.  The  RRP  also  envisages 
the  Science,  Technology  and 
amending 
improve 
Innovation 
law 
coordination  between  different 
levels  of 
government,  establish  longer  contracts  for 
entry  to  a  scientific  career  and  improve 
knowledge  transfer.  Furthermore,  it  allocates 
significant  resources  to  R&D,  public-private 
and 
collaboration, 
interdisciplinary  projects  linked  to  the  green 
and digital transitions. However, further efforts 
are needed (see next section). 

concept, 

proof 

order 

of 

to 

in 

functioning  of  collective  bargaining. 
the 
Reforms  of  active  labour  market  policies  and 
the  public  employment  services  seek  to 
improve their effectiveness and boost workers’ 
reskilling  capacities  and  employability.  The 
reinforcement of short-time work schemes by 
creating a permanent mechanism for flexibility 
and  stability  (Mecanismo  RED)  is  expected  to 
provide  further  income  support  and  training 
opportunities  for  workers  facing  negative 
economic  shocks  and  reduce  unemployment 
volatility  and  its  associated  socioeconomic 
costs. Legislation that contributes to close the 
gender pay gap, protect workers in distribution 
activities  on  behalf  of  third  parties  using 
technological  means,  and  provide  adequate 
protection to those in subcontracted activities, 
aim to support fair working conditions. 

The share of people at risk of poverty or 
social  exclusion  is  high,  with  significant 
regional  disparities,  and 
it  worsened 
during  the  pandemic.  Close  to  one  in  three 
children  was  at  risk  of  poverty  or  social 
exclusion  in  Spain  in  2020  (well  above  the 
24%  EU  average).  The  pandemic  is  likely  to 
have increased the risk of poverty  (see Annex 
12).  In  this  regard,  the  entry  into  force  of  a 
national minimum income scheme (part of the 
RRP’s  first  set  of  milestones)  has  boosted 
support to poor families. The RRP also includes 
a  reform  to  reorganise  and  simplify  non-
contributory benefits in 2022. Tax benefits will 
also  be  reviewed  in  order  to  improve  support 
to low and middle income families. A new law 
the  availability  of 
seeks 
affordable  and  social  housing,  which  remains 
a  significant  challenge,  especially  for  young 
people and low-income households. 

to  encourage 

The  RRP  aims  to  strengthen  the  public 
health  system’s  resilience  and  capacity. 
The  action  plan  for  primary  and  community 
care  was  approved  in  2021.  The  forthcoming 
Public Health  Strategy  and  reforms  related to 
the  health  workforce,  digitalisation  and 
prevention  measures  seek  to  modernise  the 
health  system  and  adapt  it  to  current  and 
future  challenges.  The  law  on  the  equity, 
universality  and  cohesion  of  the  National 
its 
aims 
Health  System 
Investments  aim  to  address 
accessibility. 
hospital 
existing 

shortcomings 

improve 

to 

in 

9 

 
to 

their 

Labour  market  segmentation  resulted  in 
underinvestment  in  human  capital  and 
low  productivity.  Due 
limited 
duration,  short-term  labour  contracts  limit 
incentives  to  invest  in  human  capital  against 
expected long-term returns. The reforms under 
the RRP to improve skills and the effectiveness 
of 
(including  by 
addressing  segmentation)  have  the  potential 
to  bring  long-lasting  increases  in  productivity 
and potential growth. 

labour  market  policies 

Reinforcing  skills,  including  digital  skills, 
is  expected  to 
improve  productivity. 
Several  reforms  and  investments  in  the  RRP 
focus  on  upskilling  people  and  reskilling 
workers. This includes future-proofing skills by 
training  individuals  for  the  green  and  digital 
transitions  (e.g.  through  the  National  Digital 
Competences  Plan  and  new  VET  curricula  on 
digital areas), and efforts to address skill gaps 
in the event of structural shocks (including via 
the RED mechanism and the modernisation of 
active labour market policies).  

to 

the 

value 

boost 

projects 

productivity 

Strategic 
the 
competitiveness  and  productivity  of  key 
sectors  are  being  deployed.  Known  as 
PERTEs (2),  these  aim  to  transform  value 
chains,  support  firms  of  all  sizes  and 
strengthen 
and 
chains,  with 
competitiveness  of 
associated 
investments.  PERTEs  already 
approved  by  the  Spanish  government  include: 
electric and connected vehicles, health, energy 
storage,  renewable  energy  and  hydrogen, 
agro-business,  Spanish  language,  the  circular 
economy,  naval  industry,  aerospace  industry, 
and  the  digitalisation  of  the  water  cycle. 
to 
Further  PERTEs  and  other  measures 
strengthen  innovation  and  SME  performance 
are  being  considered.  SMEs  and  the  self-
employed  will  benefit  in  particular  from  a 
programme to promote scalable, public-private 
collaboration with a view to accelerating their 
digitalisation  (e.g.  through  the  Digital  Toolkit 
instruments 
Programme).  Also, 
helping  SMEs  to  invest  and  favouring  their 
growth  are  reinforced.  The  RRP  also  includes 

financial 

(2)  Proyectos Estratégicos para la Recuperación y la 

Transformación Económica (PERTEs) 

10 

specific measures to support connectivity (e.g. 
fixed very high capacity networks and 5G). 

and 

Regulatory 
low 
fragmentation 
innovation  across  firms  and  regions 
hamper  growth  and  productivity  and 
prevent  firms  from  scaling  up.  Increasing 
both  productivity  growth  and  their  size  is 
particularly  relevant  for  SMEs,  given  their 
larger  share  in  the  economy  compared  to 
other large EU Member States. To this end, the 
RRP  includes  several  legislative  initiatives  to 
facilitate  the  setting  up  and  growth  of  firms 
(laws for Business Creation and Growth, Start-
ups).  Other  relevant  reforms  concern  the 
financing  of  innovative  firms  and  insolvency 
of 
proceedings, 
entrepreneurship. 

fostering 

and 

the 

The  RRP  includes  measures  to  improve 
the  efficient  use  of  resources.  Spain’s 
circular  use  of  materials  is  below  the  EU 
average, while its overall resource productivity 
is  above  it.  Spain  plans  to  increase  the 
improving  separate 
resource  efficiency  by 
waste  collection  and 
the  efficiency  and 
sustainability  of  irrigation,  and  investing  in 
building  renovation.  However,  its  performance 
on  waste  management  remains  a  challenge 
(see next section). 

Reinforcing fiscal sustainability  
and reducing macroeconomic  
imbalances 

The  RRP  aims  to  bring  the  government 
revenue-to-GDP  ratio  closer  to  the  EU 
average. Spain’s structural deficits were large 
prior  to  the  COVID-19  outbreak  and  its  fiscal 
position  has  worsened  further  as  a  result  of 
the  pandemic.  Under  the  RRP,  Spain  has 
already  taken  measures  to  bring  government 
revenues  closer  to  the  EU  average  as  a 
(e.g.  by  modifying 
percentage  of  GDP 
corporate  and  personal 
taxes, 
introducing  financial  transaction  taxes,  etc.). 
Further  measures  envisage  developing  green 
taxation  (e.g.  taxes  on  single-use  plastics  and 
on  landfilling  and  incineration  of  waste  as 
the  Law  on  Waste  and 
introduced  by 

income 

 
                                                 
force, 

by 
reducing 

The RRP can also help reduce high private 
increasing 
debt 
and 
external 
competitiveness 
the 
and 
reliance  on  energy  import.  Measures  to 
the  competitiveness  of  Spain’s 
increase 
business  fabric  include  the  upskilling  of  the 
labour 
labour  market 
reducing 
segmentation,  and  supporting  companies, 
including  SMEs,  for  business  growth  and  to 
innovate,  adopt  new  technologies  and  reach 
new  markets.  Reforms  and 
investments 
favouring 
renewable  energy  and  energy 
efficiency  can  reduce  energy  imports  and 
contribute  to  reduce  external  debt.  The  RRP 
also 
the 
effectiveness of pre-insolvency and insolvency 
instruments,  including  a  special  procedure  for 
microenterprises  and  a  reform  of  second 
chance  for  natural  persons,  with  the  goal  of 
preventing insolvencies and facilitate resource 
reallocation. 

includes 

improve 

reforms 

to 

Contaminated  Soils  for  a  Circular  Economy; 
and  the  reform  of  the  tax  on  fluorinated 
gases) and adopting a broad tax reform. 

it  promotes 

The  RRP  also  seeks  to  improve  the 
effectiveness  of  public  expenditures.  In 
further  spending 
particular, 
reviews  via  a  new  2022-2026  cycle, 
it 
including  the 
reinforces  their  governance, 
interaction  between  the  Ministry  of  Finance 
and  the  Independent  Fiscal  Institution  AIReF, 
and  aims  to  follow-up  effectively  on  their 
previous  and  forthcoming  recommendations 
(in the spirit of ‘comply or explain’). 

linking  pensions 

A reform of the pension system seeks to 
improve  its  adequacy,  while  limiting  the 
fiscal 
impact  of  demographics  on 
sustainability.  By 
to 
consumer  prices,  the  reform  is  expected  to 
support purchasing power. Other measures are 
in  the  process  of  being 
implemented  or 
adopted  as  part  of  a  package  to  support  the 
overall  fiscal  sustainability  of  the  pension 
system.  These  include:  measures  to  increase 
the  effective  retirement  age,  further 
link 
contributions  and  entitlements,  reduce  the 
pension  gender  gap,  change  tax  incentives, 
modify  the  contribution  system  for  self-
employed  workers,  the  extension  of  the 
reference  period  for  calculating  pensions,  and 
an intergenerational equity mechanism. 

and 

ensure 

reforms 

Investments  and 
in  public 
administration  are  needed  in  order  to 
implement  the  RRP  and  reinforce  its 
institutional  capacity  and  resilience.  As 
part  of  the  first  set  of  milestones  already 
fulfilled,  Spain  adopted  a  law  with  measures 
to  reduce  temporary  employment  in  public 
administration 
sufficiently 
effective  provisions  to  prevent  and  penalise 
abuse. Further measures are foreseen to help 
stabilise  public  sector  employment  and  to 
improve  public  administrations’  recruitment 
procedures  and  human  resources.  The  reform 
also  aims  to  complete  the  implementation  of 
the  public  procurement  reform  and  further 
develop 
evaluation. 
Coordination  and  cooperation  between  the 
different levels of government is also foreseen 
to be reinforced. Furthermore, the provision of 
public digital services is to be improved. 

ex-ante 

policy 

11 

 
Box 1: 

Key deliverables expected under the Recovery and Resilience Plan in 2022-23 

 

 

 

 

Tenders for investment support to innovative or value added renewable capacity. 

Regulation establishing guarantees of origin for renewable gases. 

Introduction of taxes on single-use plastics and waste incineration and landfill. 

Entry into force of the Law on 5G cybersecurity. 

  Assignment of the 26GHz band (remaining 5G bands to be assigned). 

 

 

 

Entry into force of the reform of Insolvency Law. 

Support to R&D&I projects in sustainable automotive. 

Reform of public recharging services. 

  Award of TEN-T core network projects. 

 

 

Reform of the reception system for migrants and applicants for international protection. 

Reform of the pension system. 

  Action plan for primary and community care. 

  Civil Service Act to reinforce public administrations’ human resources policies. 

 

 

Law on the single integrated Vocational Training System modernising the system. 

Legislative reforms to establish a scheme to address cyclical and structural shocks. 

Source: CID Annex. 

12 

 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

In 

in  the  RRP. 

Beyond  the  challenges  addressed  by  the 
RRP,  as  outlined  above,  Spain  faces 
additional  challenges  not  sufficiently 
covered 
the  current 
geopolitical  context,  accelerating  the  green 
increasing  cross-border  energy 
transition, 
interconnections  with  the  rest  of  Europe,  and 
containing  energy  consumption  including  by 
In 
enhancing  energy  efficiency  are  key. 
addition, further progress is required on fiscal 
of 
sustainability, 
correction 
macroeconomic 
circular 
the 
improve  productivity. 
economy  and 
Addressing  these  challenges  will  also  help 
make  further  progress 
in  achieving  SDG 
indicators  relating  to  affordable  energy  and 
housing  (7  and  11),  macroeconomic  stability 
(8), circular material use and waste generation 
(12),  and  productivity  (8  and  9).  EU  funds 
could  make  an 
important  contribution  to 
these  challenges.  A  gradual 
addressing 
correction  of  macroeconomic  imbalances  is 
expected  to  take  place  during  the  lifetime  of 
the RRF. 

the 
imbalances, 
to 

Accelerating the green transition 

fuels, 

prices 

Despite  the  low  dependence  on  Russian 
fossil 
have 
energy 
substantially  surged  since  summer  2021, 
underlining  the  need  to  accelerate  the 
green  transition.  Russia 
the  fourth 
supplier  of  natural  gas  to  Spain  (via  liquefied 
natural  gas  (LNG)),  but  Russian  imports  only 
represented 10% of the total imports in 2020 
(well  below  the  EU  average  of  44%).  Spain’s 
dependence  on  Russian  oil  (2%)  is  also  well 
below  the  EU  average  (26%),  and  relatively 
small (3).  Nonetheless,  the  current  energy 

is 

tension 

market 
from  Russia’s 
resulting 
invasion of Ukraine has led to a large increase 
in  the  energy  prices,  faced  by  Spanish 
businesses  and  consumers.  This  has  added  to 
the  energy  price  increases  since  the  summer 
of  2021.  Stepping  up  efforts  to  meet  current 
renewable  energy  targets  laid  down  in  the 
NECP,  and  the  even  more  ambitious  targets 
proposed  under  the  Fit  for  55  package, 
becomes  even  more  important  in  the  current 
energy  market  context.  Renewable  electricity 
sources  reached  68.3  GW  of  capacity  in 
mainland  Spain  by  end  2021  (equivalent  to 
63.5%  of  total  installed  capacity).  Renewable 
electricity 
covered  48.4%  of  mainland 
demand. 

by 

installations 
including 

Renewable  deployment  will  need  to 
increase  considerably  over  the  next 
decade to the meet the targets of the Fit-
for-55  package.  These  require  122GW  of 
renewables  by  2030,  including  67GW  of  wind 
power  and  35GW  of  solar  power.  Building  on 
the  RRP,  additional  measures  to  support 
(with  a  focus  on 
renewable  deployment 
and 
decentralised 
self-
consumption, 
streamlining 
permitting procedures and improving access to 
the  grid)  and  complementary  investments  (in 
storage,  network  infrastructure,  electrification 
of  buildings  and  of  mobility,  and  renewable 
hydrogen)  can  help  further  decarbonise  the 
economy,  including  industry,  transport  and 
housing,  and  reduce  reliance  on  fossil  fuels 
and  exposure  to  international  prices.  Progress 
in  decentralised  renewable  energy  production 
and  deep  renovations  in  both  residential  and 
non-residential  buildings,  particularly  in  mid-
size  cities,  could  be  achieved  by  putting  in 
place appropriate financing schemes, upskilling 
and  training  of  workers  in  the  construction 
sector,  awareness  raising  campaigns  and 

(3)  Eurostat (2020), share of Russian imports over total 
imports of natural gas and crude oil. For the EU27 
average, the total imports are based on extra-EU27 

imports. For Spain, total imports include intra-EU trade. 
Crude oil does not include refined oil products. 

13 

 
 
 
                                                 
 
                                                                        
 
technical  assistance  to  support  the  use  of 
grants 
for 
renovations. 

instruments 

financial 

and 

in 

line  with 

the 
In  addition,  and 
REPowerEU  initiative,  integrating  Spain 
effectively into the single energy market 
would play an important role in terms of 
the  security  of  the  EU’s  energy  supply. 
The effective integration of Spain in the single 
energy  market  requires  increasing  its  energy 
interconnections.  The  NECP  aims  for  15%  of 
electricity  interconnection  capacity  by  2030, 
against  5%  in  2021.  In  particular,  further 
electricity  interconnections  with  neighbouring 
countries  could  support  greater  integration  of 
renewable capacity of the Iberian Peninsula in 
the  single  energy  market.  Spain  could  also 
support 
gas 
interconnections,  to  contribute  to  the  EU’s 
security  of  supply.  New  infrastructure  and 
investments  related  to  gas  are 
network 
recommended 
future-proof  where 
possible,  in  order  to  facilitate  their  long-term 
sustainability  through  future  repurposing  for 
sustainable fuels. 

cross-border 

additional 

to  be 

the private and the public sectors, also through 
forms  of  cooperation 
to  purchase  and 
renovate  a  significantly  larger  social  housing 
stock (currently only a small fraction of the EU 
average),  and  a  regular  re-evaluation  of  both 
social  rents  and  the  existing  legislation,  could 
be  considered.  Such  measures  could  help 
alleviate  housing  affordability  challenges 
(Annex  1)  while  limiting  the  fiscal  impact  of 
public support for investment in enhancing the 
energy efficiency of the housing stock. 

Decoupling economic growth from  
resource use 

is  due 

circular 

EU 
targets  are 
economy 
increasingly  ambitious,  representing  an 
additional challenge for Spain. The Fit-for-
increase 
55  package 
In  this 
ambitions 
regard, 
rate  of 
municipal  waste  and  its  use  rate  of  circular 
materials fall below the EU average, while the 
share of waste being landfilled is well above it.  

to  further 
in  waste  management. 

the  country’s 

recycling 

investing 

incomes,  especially 

in  energy  efficient 
Further 
housing  would  also  make  the  economy 
more  resilient  and  alleviate  affordability 
challenges.  The  rise  in  energy  prices  is 
expected  to  have  a  significant  impact  on 
households’  real 
low-
income households, hamper consumption; and, 
in  turn,  affect  economic  growth.  Deteriorating 
living  conditions  will  hit  especially  vulnerable 
groups, particularly young people and families 
with children at risk of poverty or exclusion. In 
this  context,  building  on  the  RRP,  deploying 
additional 
and 
affordable  housing,  particularly  in  areas  with 
pronounced  shortages  and  stressed  markets, 
could  help  contain  energy  consumption  and 
address  the  green  transition  more  decisively, 
while  at  the  same  time  supporting  vulnerable 
households,  as  they  are  more  exposed  to 
energy poverty (Annex 6). Focus on renovation 
of  the  existing  less  energy-efficient  stock 
would  contribute  to  these  objectives  without 
resulting  in  further  consumption  of  land,  and 
results. 
could 
Furthermore,  well-targeted 
and 
affordable  rental  housing,  provided  by  both 

immediate 

to  more 

efficient 

energy 

social 

social 

lead 

and 

collection 

instruments 

Enhanced  coordination  across  different 
levels  of  government  and  additional 
investments can support Spain in meeting 
recycling 
separate 
obligations (4).  Achieving  recycling  targets 
has been cascaded downwards to lower levels 
of  government.  However, 
to 
enforce them may not be sufficiently effective. 
Additional  reforms  could  therefore  strengthen 
coordination  between  the  different  levels  of 
government, 
including  continuing  with  the 
interpretation  of 
work 
provisions  and  for  the  planning  and  use  of 
infrastructure (5).  Further 
waste 
support from the Technical Support Instrument 
can  help  spread  best  practices  (Annex  3  and 
7).  Additional 
to  strengthen 
investments 
Spain’s  recycling  capacity  may  be  warranted, 
including  to  promote  the  circular  economy  in 
specific  sectors.  Furthermore,  innovation  and 
investment  to  promote  the  circular  economy 

treatment 

common 

for  a 

(4)  2018 EU Waste legislative package 

(5)  See Country Report 2020 and EIR 2019. 

14 

 
                                                 
are key to ensuring greater resource efficiency. 
Spain  also  suffers  from  water  scarcity  and 
there  is  a  need  and  potential  to  further 
develop  water reuse, including from a circular 
economy perspective 

the  quality  of  public  spending. 
improve 
However,  the  allocation  of  public  spending  to 
boost productivity appears to be low (see next 
section).  This  limits  the  ability  to  crowd-in 
positive effects on private investment. 

Ensuring the sustainability of  
public finances 

Establishing a credible consolidation path 
can  help  Spain  reduce  its  structural 
deficit  in  the  medium  term  and  anchor 
expectations 
in  the  long  term.  Fiscal 
sustainability is underpinned in the short term, 
by  favourable  financing  conditions  related  to 
the supportive monetary policy stance and the 
average  maturity  of  government  debt  (above 
8  years).  However,  in  the  medium  and  long-
term  perspective  a  budgetary  strategy  is 
needed  to  establish  a  credible  consolidation 
path and anchor expectations. 

to 

impact 

Fiscal  sustainability  in  the  medium  to 
long-term  will  be  impacted  by  the  high 
level  of  debt  and  an  unfavourable  initial 
budgetary  position.  Costs  due  to  Spain’s 
ageing  population  are 
fiscal 
sustainability. In particular, health care and, to 
a  lesser  extent,  long-term  care  costs  are 
expected  to  increase  sustainability  gaps  over 
the medium and long-term. This will take place 
at a time where it is also necessary to address 
deficits in primary care and regional disparities 
in  access  and  quality  of  healthcare.  For 
pensions,  expenditure  was  projected 
to 
decrease under the previous legislation. In this 
regard,  the  pension  reforms  included  in  the 
RRP  need  to  be  carefully  designed  and 
implemented  as  a  consistent  package  to 
ensure  they  positively  contribute  to  mitigate 
medium-  and  long-term  risks.  With  regard  to 
the tax system, this is set to undergo a broad 
reform. As a result, there appears to be scope 
to  improve  by  emphasising  taxes  considered 
more conducive to economic growth and which 
can  reduce  the  large  share  that  labour  tax 
revenues  represent  in  total  revenues  (see 
annex  18).  Moreover,  Spain  has  been  carrying 
out  spending  reviews  and  intends  to  continue 
to  do  so  in  2022  and  beyond  with  a  view  to 

its 

reducing 

in  2020.  Following 

The  Spanish  economy  has  resumed  the 
trend  of 
long-standing 
macroeconomic  imbalances.  Prior  to  the 
outbreak of the pandemic, Spain was following 
a  steady  trend  of  reducing  its  high  levels  of 
external, public and private debt. This was put 
on  hold  and  partly  reversed  during  the 
pandemic  mainly  due  to  the  sizeable  fall  in 
GDP 
the  easing  of 
restrictions  and  gradual  economic  expansion, 
the level of imbalances has now returned to a 
path  of  moderate  improvement.  Sustained 
GDP  growth  and  high  current  account 
surpluses  over  the  coming  years  will  prove 
fundamental  to  deleveraging  and  reducing 
external  liabilities  (annex  17).  In  this  regard, 
the  RRP  has  the  potential  to  help  bring  down 
imbalances. However, further investments and 
reforms, such as in R&D and innovation, skills 
and improving labour market  outcomes, could 
provide further support. 

Maximising the overall impact of  
EU funds 

Spain needs to maximise the potential of 
the  RRF  funds  and  other  available  EU 
funds.  Spain  has  expressed  its  intention  to 
benefit from the loan allocation under the RRF 
and is soon to receive further support through 
the allocation of the 2021-27 cohesion policy 
funds,  the  2023-2027  Spanish  CAP  Strategic 
Plan  (annex  3)  and  a  higher  grant  allocation 
under the RRF. Maximising the absorption and 
impact of all these funds will require a strong 
administrative capacity, effective mechanisms 
to  coordinate  the  actors  involved  in  planning, 
implementation and control,  and the ability to 
complementarities 
exploit 
across  EU  funding.  Reducing  the  gap  between 
regions,  including  between  urban  and  rural 
areas,  would  stimulate  long-term  sustainable 
and  inclusive  growth  boosting  their  economic 
potential. 

synergies  and 

15 

 
 
(see  Annex 13),  while  a  regular  evaluation  of 
reskilling  measures  supporting 
the  green 
transition  seems  warranted.  Tackling  these 
challenges  is  key  to  Spain  contributing  to  the 
achievement of the 2030 EU  headline targets 
on employment and skills. 

can 

boost 

Enhanced  cooperation  on  the  transition 
towards  sustainable  and  productive 
models 
competitiveness. 
Economic  complexity  and  global  interlinkages 
require a holistic approach, integrating private-
public cooperation on different fronts, such as 
those mentioned above on R&D and skills. For 
instance, 
and 
if 
implemented, 
integrated  strategic  projects 
such  as  PERTEs  can  provide  a  coordinated 
approach 
firms’ 
can 
that 
competitiveness. 

developed 

enhance 

properly 

Boosting productivity-enhancing  
investment 

Further  investment  in  R&D  and  stronger 
links  with  the  scientific  ecosystem  can 
boost  firms’  productivity.  Spain  is  one  of 
the EU countries with the lowest investment in 
R&D (1.4% of GDP in 2020, compared to 2.2% 
in  the  EU).  Insufficient  funding  concerns  both 
the  public  and  private  sector,  hindering 
the  economy’s 
productivity  growth  and 
capacity  for  innovation.  The  RRP  will  provide 
much  needed  financial  support  to  the  sector. 
However, the situation requires the scale-up of 
research  and  support  for  private 
public 
investment to continue. An effort to streamline 
the  efficiency  of  R&D  support,  incentives  and 
governance,  and  to  improve  the  quality  of 
innovation  output  would  be  highly  beneficial 
(see  Annex 9).  Actions  to  further  strengthen 
the  collaboration  between  the  public  and 
private  sector  are  key  to  spur  knowledge 
transfer.  Support  for  innovation  among  SMEs 
including 
would  be  particularly  beneficial, 
collaboration  with 
in 
innovative  projects  and  talent  acquisition 
among new graduates. 

institutes 

research 

from 
In 

unemployment 
context, 

There  is  scope  for  further  investment  in 
reskilling and upskilling the workforce for 
the  twin  transition.  Public  employment 
services,  and  their  coordination  at  regional 
level,  as  well  as  the  modernisation  of  Active 
Labour  Market  Policies, play  a  key  role  in  this 
by providing continuing vocational  training for 
the workforce and facilitating transitions (job-
to-job 
to 
and 
further 
this 
employment). 
strengthening  of  the  capacities  of  public 
employment services as envisaged in the RRP 
–  if  matched  with  the  allocation  of  adequate 
resources  –  is  expected  to  support  a  broader 
and more effective use for those searching for 
a  work.  This  will  also 
require  strong 
cooperation  with  the  educational  system  and 
the  private  sector  to  better  identify  current 
and  future  needs  for  skills  in  the  labour 
market.  Existing  gaps 
include  Science, 
Technological,  Engineering  and  Mathematics 
(STEM)  graduates  and 
Information  and 
Communications  Technology  (ICT)  specialists 

16 

 
 
KEY FINDINGS 
KEY FINDINGS 

Spain’s  Recovery  and  Resilience  Plan 
includes measures to address a series of 
structural challenges through: 

  Effectively integrating Spain into the single 
energy  market  by  expanding  energy 
interconnection capacity. 

  Furthering 

the  decarbonisation  of 

the 
energy  sector  and  promoting  sustainable 
mobility. 

  Helping  to  mitigate  the  adverse  effects  of 

climate change. 

  Supporting  the  digital  transition  in  public 

administration, industry and SMEs. 

  Promoting  deep  renovation,  and  adequate 
availability  of  social,  affordable  and 
energy-efficient  housing,  and  combating 
energy poverty. 

  Increasing the recycling of municipal waste 
and use of circular materials by introducing 
reforms to enhance coordination among all 
levels of government. 

  Investing  in  digital  skills  and  inclusion, 
artificial  intelligence,  cyber  security  and 
the  digitalisation  of 
connectivity,  and 
tourism and culture systems. 

  Investing  to  meet  separate  collection  of 
waste  and  recycling  obligations,  as  well  as 
to  further  develop  the  potential  for  water 
reuse. 

  Reducing  the  structural  budget  deficit  of 
the  general  government  and  anchoring 
fiscal  expectations 
face  of 
in 
demographic challenges. 

the 

  Boosting 

investment 

productivity-
enhancing  areas,  such  as  innovation,  skills 
and strategic competitiveness. 

in 

  Reducing 

regions, 
the  gap  between 
including  between  urban  and  rural  areas, 
building  on  the  effective  use  of  funding 
provided by the RRF and other EU funds. 

  Further 

strengthening 

administrative 
capacity to ensure the effective absorption 
and higher impact of the RRF and other EU 
and national available funds. 

  Adopting  labour  market  reforms  to  reduce 
the  high  share  of  workers  on  temporary 
contracts. 

  Supporting  the  upskilling  and  reskilling  of 

workers. 

  Reinforcing  economic  and  social  resilience 
by  fostering  a  reduction  of  early  school 
leaving, and improving employability. 

Beyond  the  reforms  and  investments  in 
the  Recovery  and  Resilience  Plan,  Spain 
would benefit from: 

focusing 
and 

  Accelerating  the  deployment  of  renewable 
decentralised 
energy, 
installations 
self-consumption, 
including by further streamlining permitting 
procedures  and  improving  access  to  the 
grid. 

on 

  Supporting  complementary  investments  in 
storage, 
infrastructure, 
electrification  of  buildings  and  transport 
and renewable hydrogen. 

network 

17 

 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan — implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial sector developments 

Annex 17: Macroeconomic Imbalance Procedure assessment matrix 

Annex 18: Taxation 

Annex 19: Key economic and financial indicators 

Annex 20: Debt sustainability analysis 

23 

23 

25 

27 

29 

32 

32 

36 

38 

38 

40 

42 

44 

47 

49 

49 

51 

53 

55 

58 

58 

60 

63 

65 

66 

21 

 
 
 
LIST OF TABLES 

Key elements of the Spanish RRP 
Table A2.1: 
Summary table on 2019, 2020 and 2021 CSRs 
Table A4.1: 
Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 
Table A5.1: 
Selected resource efficiency indicators 
Table A7.1: 
Key digital economy and society index indicators 
Table A8.1: 
Key research, development and innovation indicators 
Table A9.1: 
Key Single Market and Industry Indicators 
Table A10.1: 
Public administration indicators 
Table A11.1: 
Social scoreboard 
Table A12.1: 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Table A13.1: 
Key health indicators 
Table A14.1: 
Spain, selected indicators at regional level 
Table A15.1: 
Table A16.1: 
Financial soundness indicators 
Table A17.1: Assessment of Macroeconomic Imbalances matrix 
Table A18.1: 
Table A19.1: 
Table A20.1: 
Table A20.2: 

Indicators on taxation 
Key economic and financial indicators 
Debt sustainability analysis for Spain 
Heat map of fiscal sustainability risks for Spain 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Spain in the last five years 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A2.2: 

Total grants disbursed under the RRF 

Graph A2.3: 

Fulfilment status of milestones and targets 

Graph A3.1: 

ESIF 2014-2020 total budget by fund 

Graph A3.2: 

Cohesion policy contribution to the SDGs 

Graph A4.1: 

Spain’s progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition 

Graph A5.2: 

Thematic – energy Share in energy mix (solids, oil, gas, nuclear, renewables 

Graph A5.3: 

Thematic – biodiversity Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic – mobility Share of zero-emission vehicles (% of new registrations) 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Municipal waste treatment 

Graph A11.1: 

Performance on evidence-based policymaking indicators 

Graph A11.2: 

Performance on the single market public procurement indicator 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 

Graph A15.1: 

GDP per head (2010) and GDP growth (2010-2019) in Spain 

Graph A15.2: 

Territories most affected by the climate transition in Spain 

Graph A15.3: 

Innovation performance in Spain 

Graph A15.4: 

CO2 emissions from fossil fuels, 2018 

Graph A16.1: 

Issuance of green bonds 

Graph A16.2: 

Evolution of credit activity 

Graph A18.1: 

Indicators on tax wedge 

22 

25 
30 
35 
39 
41 
43 
45 
48 
49 
52 
53 
56 
59 
62 
63 
65 
66 
67 

23 

25 

26 

26 

27 

28 

29 

32 

33 

33 

34 

37 

37 

38 

47 

47 

53 

53 

55 

56 

56 

57 

58 

58 

64 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

of 

four 

dimensions 

This  Annex assesses  Spain’s  progress on  the 
Sustainable Development Goals (SDGs) along 
the 
competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set  developed  to  monitor  progress  on  SDGs  in  an 
EU context. 

to 

related 

While  Spain  performs  well  on  some  SDG 
indicators 
environmental 
sustainability  and  is  improving  on  others,  it 
deteriorated  on  sustainable  cities  and 
communities  (SDG  11).  Spain  has  made  some 
progress  on  energy  consumption 
indicators 
including  the  ‘share  of  renewable  energy  in  gross 
final energy consumption’ (SDG 7) (from 16.2% in 
2015  to  21.2%  in  2020;  EU  average  22.1%)  and 
‘circular material use rate’ (SDG 12) (from 7.5% in 

the 

decarbonisation 

2015  to  11.2%  in  2020;  EU  average  12.8%). 
Nevertheless, it remains below the EU average. As 
for ‘affordable energy’ (SDG 7), the percentage of 
the Spanish population unable to keep their homes 
adequately  warm  is  higher  (10.9%  in  2020)  than 
the  EU  average  (8.2%).  The  Spanish  RRP  includes 
measures  to  address  some  of  the  energy-related 
challenges,  namely  on  the  energy  renovation  of 
buildings, 
energy 
production,  and  the  circular  economy  (including 
implementing the Spanish Strategy for the Circular 
Economy). On SDG 11 Spain is moving away from 
the goal in particular due to a higher share of the 
‘population  living  in  households  suffering  from 
noise’ (from 15.7% in 2015 to 21.9% in 2020; EU 
average  was  17.3%  in  2019),  and  a  lower  ‘share 
of  buses  and  trains  in  total  passenger  transport’ 
(15.4%  compared  to  EU  17.2%  in  2020).  The 
Spanish  RRP’s  largest  investments  therefore  aim 
to foster sustainable mobility (Component 1). 

of 

While  Spain  is  improving  on  some  SDG 
indicators related to  fairness (1, 5, 8, 10), it 
still  needs  to  catch  up  on  poverty  (SDG  1). 
Spain  performs  well  on  the  ‘healthy  life  years  at 
birth’  indicator  (SDG  3)  (69.9  years  in  2019 
compared to 65 years in 2014 and the EU average 

Graph A1.1: Progress towards SDGs in Spain in the last five years 

For detailed datasets on the various SDGs see the annual Eurostat report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/product?code=KS-09-22-019; Extensive country specific data on the short-term progress of Member 
States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu). 
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 

23 

 
 
 
 
 
average  of  2.32%)  and  the  number  of  R&D 
personnel  (SDG  9)  (1.03%  of  active  population  in 
2020 compared to the EU average of 1.43%, see 
Annex  8).  The  Spanish  RRP  includes  important 
reforms  and 
investments  aiming  at  boosting 
innovation and digital skills notably in components 
17,  19,  20,  and  21  but  there  remains  room  for 
improvement  when  it  comes  to  addressing  the 
remaining challenges. 

Spain is improving on SDG indicators related 
to  macroeconomic  stability  (8,  16)  but  faces 
medium-term  challenges.  Spain  has  improved 
on “decent work and economic growth (SDG 8) and 
“peace, justice and strong institutions” in the years 
before  the  pandemic.  Due  to  the  COVID-19 
pandemic  Spain  suffered  from  a  fall  in  ‘real  GDP 
per  capita’  (SDG  8)  from  EUR  23  760  in  2016  to 
EUR  23  510  in  2021  (EU  average:  EUR  27  810). 
Spain  also  showed  a  lower  ‘investment  share  of 
GDP’ (SDG 8) than the EU average (20.3% of GDP 
compared  to  22.3%  for  the  EU  in  2020).  Spain 
faces  challenges  particularly  in  relation  to  the 
sustainability  of  public  finances.  The  Spanish  RRP 
includes a number of measures related to taxation 
and the effectiveness of public spending which are 
expected  to  improve  the  sustainability  of  public 
finances  and  support  substantial  additional 
investments,  which  will  increase  the  “investment 
share of GDP. 

of  64.6  years  in  2019)  and  on  the  percentage  of 
the  population  aged  16  and  above  ‘with  good  or 
very  good  self-perceived  health’  (SDG  2)  (73%  in 
2020  compared  to  the  EU  average  of  69.5%).  In 
addition,  Spain  has  improved  on  several  fairness-
related indicators such as ‘people at risk of poverty 
or  social  exclusion’  (SDG  1)  (27% 
in  2020 
compared  to  28.7%  in  2015),  ‘in-work  at-risk-of-
poverty rate’ (SDG 1) (11.8% in 2020 compared to 
13.1% in 2015) or ‘long-term unemployment rate’ 
(SDG  8)  (6.2%  in  2021  compared  to  9.5%  in 
2016),  and  ‘early  leavers  from  education  and 
in  2021  in  Spain, 
training’  (SDG  4)  (13.3% 
compared  to  19%  in  2016).  However,  Spain  still 
underperforms compared to the EU average on all 
these indicators and problems with poverty, social 
exclusion,  long-term  unemployment  and  early 
school  leaving  persist.  The  Spanish  RRP  includes 
measures  aiming  at  addressing  challenges  in  all 
these  areas.  On  the  negative  side,  the  severe 
housing deprivation rate (SDG 1)  has deteriorated 
(from 1.5% in 2015 to 3.4% in 2020), which is an 
indication of deteriorating living conditions, adding 
to  housing  affordability  problems  among  certain 
groups  in  the  Spanish  population,  including  young 
people,  low-income  households  and  families  with 
children. Social and affordable housing is partially 
addressed by the Spanish RRP (the introduction of 
a new Housing Law encouraging an increase in the 
availability  of  affordable  and  social  housing,  and 
funding for the construction of 20 000 new social 
rental dwellings in energy efficient buildings). 

Spain  performs  below  other  large  Member 
States on productivity. Spain has a high ‘share 
of households with high-speed internet connection’ 
(SDG 9) (93.8% of households in 2021 compared 
to  the  EU  average  of  70.2%).  In  addition,  the 
percentage  of  ‘adults  with  at  least  basic  digital 
skills’  (SDG  4)  (64%  in  2021)  is  above  the  EU 
average  (54%),  though  that  means  that  36%  of 
the  population  aged  between  16  and  74  years 
lacks  basic  digital  skills. 
In  spite  of  some 
improvements  on  the  productivity  indicators,  the 
country  ranks  below  the  EU  average  on  most  of 
them.  For  SDG  8  “decent  work  and  economic 
growth” the percentage of ‘young people neither in 
employment nor in education and training (NEET)’ 
aged  between  15  and  29  (SDG  8)  remains  high 
(15.2%  in  2021)  and  above  the  EU  average 
(13.2% in 2021). Also, for SDG 9 (“innovation”), the 
Spanish  research  and  innovation  system  suffers 
from  underinvestment  as  shown  by  the  ‘gross 
domestic  expenditure  on  R&D’  indicator  (SDG9) 
(1.41%  of  GDP  in  2020  compared  to  the  EU 

24 

 
ANNEX 2: RECOVERY AND RESILIENCE PLAN — IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN — IMPLEMENTATION 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic,  fast  forward  the  twin  transition 
and  strengthen  resilience  against  future 
shocks.  Spain  submitted 
recovery  and 
resilience  plan  (RRP)  on  30  April  2021.  The 
Commission’s  positive  assessment  on  16  June 
2021  and  Council’s  approval  on  13  July  2021 
paved  the  way  for  disbursing  €69.5  billion  in 
grants  under  the  Recovery  and  Resilience  Facility 
over  the  period  2021-2026.  The  key  elements  of 
the Spanish RRP are set out in Table A2.1. 

its 

Table A2.1: Key elements of the Spanish RRP 

(1) See Pfeiffer P., Varga J. and in ’t Veld J. (2021), 
“Quantifying Spillovers of NGEU investment”, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
“An overview of the economics of the Recovery and Resilience 
Facility”, Quarterly Report on the Euro Area (QREA), Vol. 20, 
No. 3 pp. 7-16. 
Source: European Commission 

to  13%  of 

The  implementation  of  the  Spanish  plan  is 
well  underway.  The  Commission  disbursed 
EUR 9 billion  to  Spain  in  pre-financing  in  August 
2021,  equivalent 
the  financial 
allocation.  Spain’s  first  payment  request  was 
positively assessed by the Commission, taking into 
account the opinion of the Economic and Financial 
Committee,  leading  to  a  disbursement  of  EUR  10 
billion in financial support (net of pre-financing) on 
27  December  2021.  The  related  52  milestones 
cover reforms in the areas of sustainable mobility, 
energy  efficiency,  decarbonisation,  connectivity, 
skills,  education,  social  protection,  labour  market, 
taxation 
Their 
satisfactory fulfilment helps to address the related 
Country  Specific  Recommendations  in  2019  and 
2020 (see Annex 4). In April 2022, Spain submitted 
its  second  payment  request,  for  which  the 
Commission’s  assessment 
is  ongoing.  Overall, 
Spain  reports  a  timely  implementation  of  the 
milestones  and  targets  due  by  the  end  of  Q1-
2022, which does not however prejudge the timing 
of 
the  submission  of  subsequent  payment 
requests  or  the  Commission’s  formal  assessment 
of  the  fulfilment  of  the  relevant  milestones  and 
targets. 

administration. 

public 

and 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars displayed on this 
chart amounts to 200% of the estimated cost of the Spanish RRP. The bottom part represents the amount of the primary pillar, 
the top part the amount of the secondary pillar. 
Source: RRF Scoreboard https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html. 

25 

Total allocation EUR 69.5 billion in grants (5.6% of 2019 GDP)Investments and Reforms 110 investments and 102 reforms Total number of Milestones and Targets416Estimated macroeconomic impact (1)Raise GDP by 2.1% by 2026 (0.3% in spillover effects)Pre-financing disbursed EUR 9 billion (August 2021) First instalment EUR 10 billion (December 2021)0%10%20%30%40%50%60%Green transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic, socialand institutionalresiliencePolicies for thenext generation 
 
 
 
     
 
 
 
   
Graph A2.3: Fulfilment status of milestones and 
targets 

The progress made by Spain in implementing 
its  plan  is  published  in  the  Recovery  and 
Resilience  Scoreboard (6).  The  Scoreboard  also 
gives  an  overview  of  the  progress  made  in 
implementing the RRF as a whole, in a transparent 
manner. The graphs below show the current state 
of  play  of the  fulfilled milestones  and  targets,  as 
completed by Spain and subsequently assessed as 
satisfactorily fulfilled by the Commission. 

Graph A2.2: Total grants disbursed under the RRF 

This graph displays the share of satisfactorily fulfilled 
milestones and targets. A milestone or target is satisfactorily 
fulfilled once a Member State has provided the evidence to 
the Commission that it has completed the milestone or target 
and the Commission has assessed it positively in an 
implementing decision. 
Source: RRF Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

This graph displays the amount of grants disbursed so far 
under the RRF. Grants are non-repayable financial 
contributions. The total amount of grants given to each 
Member State is determined by an allocation key and total 
estimated cost of the respective recovery and resilience plan. 
Source: RRF Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

(6)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html 

26 

€ 19.04billionSatisfactorily fulfilledNot fulfilled 
       
 
                                                 
   
 
 
 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

Graph A3.1: ESIF 2014-2020 total budget by fund 

bn EUR in current prices, % of total 
The data for the EAFRD and REACT-EU refer to the period 
2014-2022. 
Source: European Commission, Cohesion Open Data 

support 

In  2021-2027,  EU  Cohesion  policy  funds (7) 
will 
development 
long-term 
objectives  in  Spain  by  investing  EUR  36.26 
billion (8)  including  EUR  868.7  million  from 
the  Just  Transition  Fund  directed 
to 
alleviating the socio-economic impacts of the 
green  transition  in  the  most  vulnerable 
regions.  The  2021-2027  Cohesion  policy  funds 
Partnership  agreements  and  programmes  take 
account  of  the  2019-2020  Country  Specific 
Recommendations  and 
investment  guidance 
provided  as  part  of  the  European  Semester, 
ensuring  synergies  and  complementarities  with 
other  EU  funding.  In  addition,  Spain  will  benefit 
from  EUR  30.9  billion  support  for  the  2023-27 
period from the Common Agricultural Policy, which 
supports  social,  environmental,  and  economic 
sustainability  and  innovation  in  agriculture  and 

rural  areas,  contributing  to  the  European  Green 
Deal, and ensuring long-term food security. 

as 

from 

spent, 

reported 

the  EU  budget.  The 

For  the  period  2014-2020,  the  European 
Structural  and  Investment  Funds  (ESIF)  for 
Spain are set to invest a total of EUR 53.86 
billion (9) 
total 
investment  including  national  financing  amounts 
(Graph A3.1),  representing 
to  EUR 71.60 billion 
around 0.88% of GDP for 2014-2020 and 29% of 
public investment (10). By 31 December 2021, 91% 
of the total was allocated to specific projects and 
leaving 
43%  was 
EUR 40.74 billion  to  be  spent  by  the  end  of 
2023 (11).  Competitiveness  of  SMEs,  research  and 
innovation,  sustainable  and  quality  employment, 
social  inclusion  and  environmental  protection  and 
resource  efficiency 
(totalling  EUR 24.4 billion) 
feature  prominently  among  the  eleven  objectives 
for the Cohesion policy funds. By the end of 2020, 
Cohesion  policy  funds  had  supported  more  than 
90 000 
than 
7.3 million  participants  in  funded  projects,  of 
whom more than 2.4 million gained a qualification 
and more than 340 000 received a job after taking 
part in a Youth guarantee project. The investment 
contributed  to  improving  the  energy  efficiency  of 
more than 30 000 households. 

including  more 

enterprises, 

Cohesion  policy  funds  are  already  making  a 
substantial  contribution  to  the  Sustainable 
In 
Development  Goals  (SDGs)  objectives. 
Spain,  Cohesion  policy  funds  supported  11  of  the 
17  SDGs  with  up 
to  93%  of  expenditure 
contributing to the achievement of the goals in the 
2014-2020 period (Graph A3.1). 

REACT-EU 

instrument 

The 
(Recovery 
Assistance  for  Cohesion  and  the  Territories 
of Europe) under NextGenerationEU provided 
EUR 14 484.9 million in additional funding to 
the  2014-2020  cohesion  policy  allocations 

(9)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and the European Agricultural Fund for Rural Development 
(EAFRD) and the European Maritime and Fisheries Fund 
(EMFF). According to the ‘N+3 rule’, the funds committed 
2014-2020 must be spent by 2023 at the latest (by 2025 
for EAFRD). Data source: Cohesion Open data, cut-off date 
31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF.  

(7)  European Regional Development Fund (ERDF), European 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(8)  Current prices, source: Cohesion Open Data  

(10)  Public investment is gross fixed capital formation plus 

capital transfers, general government. 

(11)  Including REACT-EU. ESIF data on 

https://cohesiondata.ec.europa.eu/countries/ES 

27 

16.423%1.42%36.651%14.220%3.04%EAFRDEMFFERDFESFYEI 
 
     
                                                 
                                                 
 
Graph A3.2: Cohesion policy contribution to the SDGs 

Source: European Commission, DG REGIO 

for  Spain.  This  will  help  to  ensure  a  balanced 
recovery,  foster  convergence  and  provide  vital 
support  to  regions  following  the  coronavirus 
outbreak.  REACT-EU  provided  support  in  Spain  to 
purchase  vaccines,  contribute  to  the  short-time 
work  schemes,  reinforce  the  healthcare  system, 
strengthen 
skills 
development,  promote  energy  efficiency  and 
reduce  material  deprivation  with  direct  food 
delivery. 

education, 

training 

and 

Spain  in  September  2020  for  a  maximum  of 
EUR 21.324 billion,  which  was  disbursed  by  25 
May  2021.  SURE  is  estimated  to  have  supported 
approximately  30%  of  workers  and  15%  of  firms 
for  at  least  one  month  in  2020,  primarily  in 
accommodation  and  food  services,  wholesale  and 
retail trade, and transportation and storage. Spain 
is  estimated 
total  of 
EUR 1.59 billion  on  interest  payments  as  a  result 
of SURE’s lower interest rates. 

to  have  saved  a 

to 

re-allocate 

The  Coronavirus  Response 
Investment 
Initiative (12)  provided  the  first  EU  emergency 
support  to  Spain  in  relation  to  the  COVID-19 
pandemic.  It  introduced  extraordinary  flexibility 
resources  for 
enabling  Spain 
(EUR  2 707 
immediate  public  health  needs 
million).  For  instance,  Spain  shifted  resources  to 
purchase  protective  equipment  and  healthcare 
material, 
reinforcement  of  healthcare  staff, 
working capital for SMEs, and support to digitalise 
the 
public 
administration.  Spain  also  benefited  from  the 
temporary  100%  EU 
incurred 
measures  in  Cohesion  policy,  with  approximately 
EUR 2 726 million in 2021. 

financing  of 

education 

system 

and 

the 

for 

temporary 

unemployment 

Spain  received  support  under  the  European 
to 
instrument 
mitigate 
an 
emergency  (SURE)  to  finance  short-time 
work  schemes,  similar  measures  and  as  an 
ancillary, 
health-related  measures. The 
Council granted financial assistance under SURE to 

support 
in 

risks 

(12)  Re-allocating ESIF resources according to Regulation (EU) 

2020/460 of the European Parliament and of the Council of 
30 March 2020, and Regulation (EU) 2020/558 of the 
European Parliament and of the Council of 23 April 2020. 

28 

via 

the 

provides 

Technical 

Commission 

included  supporting  the  authorities 

tailor-made 
The 
expertise 
Support 
Instrument to support Spain in designing and 
implementing  growth-enhancing 
reforms, 
including  for  implementing  its  RRP.  Since 
2018,  Spain  has  received  assistance  through  52 
technical  support  projects.  Projects  delivered  in 
2021 
in 
evaluating  the  effectiveness  of  Spanish  pre-
insolvency  procedures  and  public  spending  in  the 
autonomous communities. The Commission is also 
assisting  Spain  in  implementing  specific  reforms 
and investments in their RRP, for instance, for the 
monitoring  and  implementation  of  the  green  RRP 
components,  or 
the 
National  Artificial  Intelligence  Strategy.  In  2022, 
new  projects  will  start  to  support,  among  others, 
the  development  of  a  governance  system  for  the 
implementation  of  the  national  plan  for  digital 
skills. 

implementation  of 

the 

Spain  also  benefits  also  from  other  EU 
programmes.  Notably,  the  Connecting  Europe 
Facility,  which 
of 
allocated 
EUR 909.9 million  to  specific  projects  on  strategic 
transport  networks,  and  Horizon  2020,  which 
allocated  EU  funding  of  EUR 6.340 billion  to  R&D 
and innovation. 

funding 

EU 

0.190.370.510.671.302.663.623.845.169.4012.0404812SDG 13 Climate actionSDG 11 Sustainable cities and communitiesSDG 12 Responsible consumption and productionSDG 15 Life on landSDG 6 Clean water and sanitationSDG 7 Affordable and clean energySDG 1 No povertySDG 4 Quality educationSDG 3 Good health and well beingSDG 9 Industry, innovation, infrastructureSDG 8 Decent work and economic growthEUR billion 
                                                 
      
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Spain’s progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (13) 
addressed  to  Spain  in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Spain  to 
date (14),  as  well  as  the  commitments  in  the 
Recovery  and  Resilience  Plan  (RRP) (15).  At  this 
early  stage  of  the  RRP  implementation,  overall 
72%  of  the  CSRs  focusing  on  structural  issues  in 
2019  and  2020  have  recorded  at  least  “some 
progress”,  while  28%  recorded  “limited”  (see 
Graph A4.1).  With  the  further  implementation  of 
the  RRP,  considerable  additional  progress 
in 
addressing structural CSRs is expected in the years 
to come. 

Source: European Commission. 

(13)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX:32021H0729(09)  
2020 CSRs: https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:32020H0826(09)  
2019 CSRs: https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:32019H0905(09) 

(14)  Incl. policy action reported in the National Reform 

Programme, as well as in the RRF reporting (bi-annual 
reporting on the progress with implementation of milestones 
and targets and resulting from the payment request 
assessment). 

(15)  Member States were asked to effectively address all or a 

significant subset of the relevant country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their RRPs. The CSR assessment presented here takes into 
account the degree of implementation of the measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment. Measures foreseen in the annex of 
the adopted Council Implementing Decision on the approval 
of the assessment of the RRP which are not yet adopted nor 
implemented but considered as credibly announced, in line 
with the CSR assessment methodology, warrant “limited 
progress”. Once implemented, these measures can lead to 
“some/substantial progress” or “full implementation”, 
depending on their relevance. 

29 

Limited Progress28%Some Progress64%Substantial Progress8% 
 
                                                 
 
            
 
 
 
 
 
Table A4.1: Summary table on 2019, 2020 and 2021 CSRs 

(Continued on the next page) 

30 

SpainAssessment in May 2022*RRP coverage of CSRs until 2026**2019 CSR1Limited ProgressSome progressEnsure that the nominal growth rate of net primary government expenditure does not exceed 0.9 % in 2020, corresponding to an annual structural adjustment of 0.65 % of GDP.Not relevant anymoreNot applicableTake measures to strengthen the fiscal [framework]Some ProgressRelevant RRP measures being implemented as of 2021and public procurement frameworks at all levels of government.Limited ProgressRelevant RRP measures planned as of 2022Preserve the sustainability of the pension system.Limited ProgressRelevant RRP measures being implemented as of 2022Usewindfallgainstoacceleratethereductionofthegeneralgovernment debt ratio.Not relevant anymoreNot applicable2019 CSR 2Some ProgressEnsure that employment services have the capacity to provide effective supportSome ProgressRelevant RRP measures being implemented as of 2022andensurethatsocialserviceshavethecapacitytoprovideeffectivesupport.Some ProgressRelevant RRP measures being implemented as of 2022Foster transitions towards open-ended contracts,Substantial ProgressRelevant RRP measures being implemented as of 2022including by simplifying the system of hiring incentives.Limited ProgressRelevant RRP measures planned as of 2022Improve support for families,Some ProgressRelevant RRP measures being implemented as of 2021reduce fragmentation of national unemployment assistanceLimited ProgressRelevant RRP measures planned as of 2022and address coverage gaps in regional minimum income schemes.Some ProgressRelevant RRP measures being implemented as of 2021Reduce early school leavingSome ProgressRelevant RRP measures being implemented as of 2021and improve educational outcomes, taking into account regional disparities.Limited ProgressRelevant RRP measures being implemented as of 2021Increasecooperationbetweeneducationandbusinesseswithaviewtoimprovingtheprovisionoflabourmarketrelevantskillsandqualifications,Some ProgressRelevant RRP measures being implemented as of 2021in particular for information and communication technologies.Some ProgressRelevant RRP measures being implemented as of 20212019 CSR 3Some ProgressFocus investment-related economic policy on fostering innovation,Some ProgressRelevant RRP measures being implemented as of 2021resource efficiencySome ProgressRelevant RRP measures being implemented as of 2021and energy efficiency,Some ProgressRelevant RRP measures being implemented as of 2021upgrading rail freight infrastructureSome ProgressRelevant RRP measures being implemented as of 2022and extending electricity interconnections with the rest of the Union, taking into account regional disparities.Some ProgressNot applicableEnhancetheeffectivenessofpoliciessupportingresearchandinnovation.Some ProgressRelevant RRP measures being implemented as of 20212019 CSR4Limited ProgressFurthertheimplementationoftheLawonMarketUnitybyensuringthat,atalllevelsofgovernment,rulesgoverningaccesstoandexerciseofeconomicactivities,inparticularforservices,areinlinewith the principles of that LawLimited ProgressRelevant RRP measures planned as of 2022and by improving cooperation between administrations.Limited ProgressRelevant RRP measures implemented as of 2021 
 
 
 
  
 
Table (continued) 

* See footnote 15.  
** Measures indicated as “being implemented as of 2021” are only those included in the first RRF payment request submitted by 
Spain and positively assessed by the European Commission. 
Source: European Commission. 

31 

2020 CSR1Some ProgressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableStrengthenthehealthsystem’sresilienceandcapacity,asregardshealth workers, critical medical products and infrastructure. Some ProgressRelevant RRP measures being implemented as of 20212020 CSR2Some ProgressSupport employment through arrangements to preserve jobs, Substantial ProgressRelevant RRP measures being implemented as of 2021effective hiring incentives and Limited ProgressRelevant RRP measures planned as of 2022skills development. Some ProgressRelevant RRP measures being implemented as of 2021Reinforce unemployment protection, in particular for atypical workers.Limited ProgressRelevant RRP measures planned as of 2022Improve coverage and adequacy of minimum income schemes and Some ProgressRelevant RRP measures being implemented as of 2021family support, as well as Some ProgressRelevant RRP measures being implemented as of 2021access to digital learning. Some ProgressRelevant RRP measures being implemented as of 20212020 CSR 3Some ProgressEnsuretheeffectiveimplementationofmeasurestoprovideliquidityto SMEs and the selfemployed, including by avoiding late payments. Substantial ProgressRelevant RRP measures being implemented as of 2021Front-load mature public investment projects and Some ProgressRelevant RRP measures being implemented as of 2021promote private investment to foster the economic recovery. Some ProgressRelevant RRP measures being implemented as of 2021Focus investment on the green and digital transition, in particular on fostering research and innovation, Some ProgressRelevant RRP measures being implemented as of 2021cleanandefficientproductionanduseofenergy,energyinfrastructure, Some ProgressRelevant RRP measures being implemented as of 2021water and waste management and Some ProgressRelevant RRP measures being implemented as of 2021sustainable transport.Some ProgressRelevant RRP measures being implemented as of 20212020 CSR 4Limited ProgressImprove coordination between different levels of government and Limited ProgressRelevant RRP measures being implemented as of 2021strengthen the public procurement framework to support recovery in an efficient manner.Limited ProgressRelevant RRP measures planned as of 20222021 CSR1Some ProgressIn2022,usetheRecoveryandResilienceFacilitytofinanceadditionalinvestmentinsupportoftherecoverywhilepursuingaprudent fiscal policy. Preserve nationally financed investment. Full ImplementationNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Some ProgressNot applicableAtthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Some ProgressNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited ProgressNot applicable 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform the  EU  into a  fair and prosperous 
society,  with  a  modern,  resource-efficient 
and competitive economy where there are no 
net  emissions  of  greenhouse  gases  in  2050 
and  where  economic  growth  is  decoupled 
from resource use. This annex offers a snapshot 
of  the  most  significant  and  economically  relevant 
developments  in  Spain  in  the  respective  building 
blocks  of 
is 
complemented by Annex 6 on the employment and 
social impact of the green transition and Annex 7 
for circular economy aspects of the Green Deal.  

the  European  Green  Deal. 

It 

With  additional  measures,  Spain  is  set  to 
overachieve  its  2030  targets  for  the  non-
Emissions  Trading  System  (ETS)  sectors. 
Spain  has  overachieved 
its  2020  target  of 
reducing  greenhouse  gases  (GHG)  emissions  by 
10% in non-ETS sectors (compared to 2005) by 13 
percentage points (pps). However, with the existing 
measures Spain is set to miss its current emission 
reduction  target  for  the  non-ETS  sectors  (-26%), 
but  the  target  could  be  overachieved  and  the 
proposed Effort Sharing Regulation (ESR) target of 
-37.7%  could  be  achieved,  if  additional  measures 
are  implemented.  Spain’s  Climate  Law  aims  at 
reducing  GHG  emissions  by  23%  by  2030 
(compared  to  1990).  The  achievement  of  this 
target  assumes  an  effort  sharing  reduction  of 
39%  for  non-ETS  and  61%  for  ETS  sectors  (both 
compared  to  2005)  according  to  Spain’s  National 
Energy and Climate Plan (NECP). 

In  its  Recovery  and  Resilience  Plan  (RRP), 
Spain allocates 40% of the grants to climate 
objectives  through  crucial  reforms  and 
investments to accelerate the transition to a 
more  sustainable,  low-carbon  and  climate-
resilient  economy (16).  Among  those  measures, 
in  sustainable 
the  RRP 
mobility  aimed  at 
reducing  emissions  from 
transport, the sector where GHG emissions are still 
showing  the  greatest  increase.  Furthermore,  over 
EUR 10 billion of ERDF support will be allocated to 
actions  contributing  to  a greener,  net  zero  carbon 
economy  and  resilient  Europe  during  the  period 
2021-2027. The main driver for decarbonising the 

investments 

includes 

mobility  and  transport  sector  is  a  modal  shift  as 
well  as 
the  promotion  of  alternative  fuels 
transport systems and in particular zero emissions 
transport  systems.  It  is  estimated  that  35%  of 
passenger-kilometres  that  are  currently  travelled 
in conventional vehicles in urban environments will 
shift  to non-emitting forms of transport by 2030, 
according  to  Spain’s  National  Energy  and  Climate 
Plan. 

Spain’s  performance  with  respect  to  fiscal 
indicators  supporting  the  European  Green 
Deal  is  mixed.  While  environmental  taxation 
revenues are lower than the EU average, the share 
of expenditure on environmental protection in total 
government expenditure is higher. In terms of the 
share  of  total  tax  revenues  as  well  as  GDP 
percentage,  Spain’s  energy  and  transport  tax 
revenues  are  lower  than  the  EU  average  and 
continue  to  decrease.  Moreover,  taxation  of 
pollution  and  resources  is  very  low (17).  At  the 
same time, the climate risk to public finances due 
to uninsured assets is relatively low.  

Graph A5.1: Fiscal aspects of the green transition 

(1) Taxation and government expenditure on environmental 
protection. 
Source: Eurostat 

Spain’s  energy  mix  is  still  highly  reliant  on 
oil and petroleum products. In 2020, the share 
of  final  consumption  of  energy  from  natural  gas 
stood at 25%, while oil amounted to 41%. With a 
very  ambitious  NECP,  Spain  has  decided  to  put 
renewable  energy  at  the  forefront  of  its  energy 

(16)  The share of financial allocation contributing to climate 

objectives has been calculated using Annex VI of the RRF 
Regulation. 

(17)  For more information on taxation see Annex 18. 

32 

0.01.02.03.04.05.06.0Environmentaltaxes (% of GDP)Environmentaltaxes (% of totaltaxation)Governmentexpenditure onenvironmentalprotection (% oftotal expenditure)ES (2020)EU27 (2020) 
 
 
                                                 
        
                                                 
 
 
transition  and  decarbonisation  strategy,  standing 
at 17% of final consumption of energy in 2020. By 
2030, 
renewables  would  see  a  substantial 
increase  in  the  energy  mix  (42%  of  gross  final 
energy  consumption),  and  the  NECP  confirms  the 
intention of phasing out coal and decommissioning 
the  remaining  coal  power  plants  by  2030.  Spain 
electricity  mix  is  highly  decarbonized,  with  68.2% 
of  total  demand  from  carbon-free  sources  in 
2021. Coal registered in 2021 the lowest historical 
production  and  the  lowest  participation  in  the 
national generation structure (1.9% of the total). 

Graph A5.2: Thematic – energy 
Share in energy mix (solids, oil, gas, nuclear, 
renewables 

objectives.  Only  around  9%  of  protected  habitats 
and  19%  of  protected  species  have  a  favourable 
conservation  status,  though  there  are  many 
deteriorating  trends  for  species.  Spain  needs  to 
prioritise the restoration of terrestrial, marine and 
freshwater  ecosystems  in  order  to  ensure  good 
conservation status. Moreover, Spain is one of the 
Member  States  with  the  highest  number  of 
invasive alien species of Union concern established 
in  its  territory.  Spain  could  also  further  capitalise 
on its rich natural capital to promote green growth 
and  job  creation,  for  instance,  through  more 
environmentally sustainable forms of tourism. 

Graph A5.3: Thematic – biodiversity 
Terrestrial protected areas and organic farming 

The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste. 
Source: Eurostat 

For terrestrial protected areas data for 2018, and data for the 
EU average (2016, 2017) is lacking. 
Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming). 

Spain has a very rich biodiversity, but further 
progress  needs  to  be  achieved.  27.3%  of  the 
Spanish  territory  is  covered  by  the  EU  Natura 
2000  network  (EU  average  is  18.5%).  This  poses 
important  challenges  in  terms  of  conservation, 
management  and  resources,  but  also  provides 
important  opportunities  to  preserve  biodiversity, 
support  ecosystem  services  and  achieve  positive 
outcomes from a socio-economic perspective. The 
designation  of  Natura  2000  sites 
is  nearly 
completed,  although  some  further  progress  is 
its  marine  component.  The  main 
needed 
challenges  are 
the  necessary 
to  establish 
conservation  objectives  and  measures  to  protect 
and  manage  the  Natura  2000  network  and  to 
the 
implement  properly 
species  protection 
requirements  under 
the  Birds  and  Habitats 
Directives,  also  providing  sufficient  technical, 
human  and  financial  resources.  For  this  purpose, 
site-specific  procedural  tools  as  environmental 
impact  assessments  could  be  considered  to 
respect  the  maintenance  of  their  conservation 

in 

and 

personal 

transport 

costs.  Moreover, 

Air  quality 
in  Spain  remains  cause  for 
concern.  While  the  emission  of  several  air 
pollutants  has  decreased  in  Spain  over  recent 
decades,  air  quality  could  be  further  improved.  In 
particular, 
traffic 
congestion  in  the  major  metropolitan  areas  in 
Spain 
(Madrid  and  Barcelona),  exacerbates 
problems  with  air  quality  leading  to  health  and 
economic 
800 
agglomerations  in  Spain  do  not  fully  comply  with 
the  Urban  Waste  Water  Treatment  Directive.  The 
status  of  water  under  the  Water  Framework 
Directive 
surface  water 
approximately  46%  of  agglomerations  are  failing 
to  achieve  good  ecological  status  and  6%  are 
failing  to  achieve  good  chemical  status.  For 
groundwater  25%  were  failing  to  achieve  good 
quantitative  status  and  35%  were  failing  to 
achieve good chemical status. 

around 

shows 

that 

for 

Despite the progress that Spain has made in 
recent  years,  challenges  remain  in  water 

33 

020406080100200520102015201820192020RenewablesNuclearGasOilSolid fossil fuels, peat and oil shale0510152025302016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
      
      
and 

digitalised  mobility. 

completion  of  the  TEN-T  network  supported  by 
The 
connected 
decarbonisation of maritime and aviation transport 
will require further measures. Spain shall carry out 
reforms  and 
the 
development  and  consistent  use  of  Sustainable 
Alternative Fuels (SAFs) for these transport modes, 
in line with the FuelEU Maritime and the ReFuel EU 
Aviation initiatives. 

to  promote 

investments 

management,  especially  in  the  areas  of  water 
governance,  water  body  rehabilitation  and  water 
efficiency.  Further  infrastructure  investment  are 
needed to improve water management, such as in 
wastewater collection and treatment, reduction of 
leaks  in  the  networks  and  general  water  supply, 
improving  monitoring,  as  well  as  nature  based 
solutions,  floods  prevention  and  river  restoration. 
Moreover, Spain should take further advantage of 
the potential of water reuse. Further measures are 
also needed to face water scarcity and droughts. 

Spain shows a positive development in terms 
of  transport 
infrastructure.  The  transport 
policy implemented  in  Spain  since  the mid-1980s 
has  led  to  a  significant  improvement  in  its 
infrastructure.  However,  today  Spain  needs  to 
tackle  new  challenges  facing  the  road  transport 
system,  to  urgently  reduce  its  greenhouse  gas 
emissions  and  to  become  more  sustainable  and 
efficient.  A  specific  challenge  over  the  coming 
years  will  be  the  implementation  of  the  Spanish 
Strategy  for  Safe,  Sustainable  and  Connected 
Mobility  2030,  adopted  in  2021.  Moreover,  Spain 
has been successfully  opening the rail  market  for 
domestic  rail  services.  The  entire  sector  has 
benefitted from the liberalisation of passenger rail 
traffic  and  the  incorporation  of  new  railway 
companies. 

Graph A5.4: Thematic – mobility 
Share of zero-emission vehicles (% of new 
registrations) 

 Zero emission vehicles include battery and fuel cell electric 
vehicles (BEV, FCEV) 
Source: European Alternative Fuels Observatory. 

of 

reforms 

implementation 

The 
and 
investments  under  the  Spanish  RRP  are 
expected to reduce emissions from transport. 
Notably, the actions under the RRP will boost zero- 
and low-emission vehicles and the transformation 
of urban and metropolitan transport as well as the 

34 

012345678910201620172018201920202021% of new registrationsESEU27 average 
      
Table A5.1: Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999). (2) Distance to target is the gap between Member States’ 2030 target under 
the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. 
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. 
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source: Eurostat, JRC, European Commission, EEA, EAFO  

35 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (1a)242.0-14%-23%-26%-812-38%-200200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%8%17%17%17%18%21%42%Energy efficiency: primary energy consumption (1)Mtoe136.0118.4124.9124.3120.6105.098.5Energy efficiency: final energy consumption (1)Mtoe98.182.284.786.786.573.873.6201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP1.91.91.81.81.81.82.42.42.2Environmental taxes (% of total taxation)% of taxation (2)5.75.55.45.35.14.76.05.95.6Government expenditure on environmental protection% of total exp.2.052.052.122.102.131.831.661.701.61Investment in environmental protection% of GDP (3) 0.220.200.210.220.22-0.420.380.41Fossil fuel subsidiesEUR2020bn5.624.835.465.655.60-56.8755.70-Climate protection gapscore 1-4Net GHG emissions1990 = 10011711312111911394797669GHG emissions intensity of the economykg/EUR'100.320.300.310.300.270.260.320.310.30Energy intensity of the economykgoe/EUR'100.110.110.110.110.110.100.120.110.11Final energy consumption (FEC)2015=100100.0102.1105.3107.7107.591.6103.5102.994.6FEC in residential building sector2015=100100.093.994.399.494.695.3101.9101.3101.3FEC in services building sector2015=100100.0103.4106.6107.8108.399.3102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'101.111.021.020.970.90-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.658553646573561-863762-Years of life lost due to air pollution by NO2per 100.000 inh.209176236170151-12099-Nitrate in ground watermg NO3/litre------21.720.7-Terrestrial protected areas% of total-27.527.9-27.528.0-25.725.7Marine protected areas% of total-7.9--12.0--10.7-Organic farming% of total utilised agricultural area8.28.58.79.39.710.08.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (6)kg/EUR'100.880.970.970.970.980.930.890.870.83Share of zero emission vehicles% in new registrations0.10.20.30.50.82.11.01.95.4645914178812Share of electrified railways%63.663.763.763.863.7-55.656.0-26.626.225.624.822.1-28.928.8-YearESEUShare of smart meters in total metering points (7) - electricity% of total201893.135.8Share of smart meters in total metering points (7) - gas% of total20180.013.1ICT used for environmental sustainability (8)%202176.165.9SPAINEU'Fit for 55'DistanceDistanceProgress to policy targetsNational contribution to 2030 EU targetDigitalFiscal and financialindicators0.9 out of 4 (slight decrease from historical level of 1.3). This is a low risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-201825.120.00.8MobilityNumber of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver) 
 
   
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social dimension.  While measures in this regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the  transition.  Spain’s  green  economy  is  still 
its  development,  supported  by 
limited  and 
investments and reforms included in the Recovery 
and  Resilience  Plan  (RRP),  can  foster  sustainable 
growth and quality job creation; at the same time, 
the  green  transition  is  expected  to  affect  low  to 
middle-income groups to a larger extent. 

the 

under 

dwellings 

emissions. 

reductions 

transition,  allocating  aid 

Spain’s  Recovery  and  Resilience  Plan  (RRP) 
outlines crucial reforms and investments for 
a  fair  green  transition.  The  renovation  of 
residential 
Energy 
Rehabilitation  of  Buildings  Programme  will 
contribute to achieving significant energy savings, 
in 
resource  efficiency  gains  and 
greenhouse 
These 
(GHG) 
gas 
investments are expected to generate employment 
in order to complete the required works and aim to 
support  low-income  households.  Furthermore,  the 
Just  Transition  component  of  the  RRP  includes 
reforms  and  investments  accompanying  the  12 
Just  Transition  Protocols,  covering  areas  affected 
by the closure of coal mines and coal-fired power 
plants. Investments in these areas will ensure the 
reskilling  of  workers  and  people  affected  by  the 
green 
training 
programmes,  personalised  job  search  assistance 
and reskilling pathways. In addition to the RRP, the 
Just  Transition  Fund  (EUR 890 million),  along  with 
the  European  Social  Fund  Plus 
(ESF+)  can 
altogether  help  unlocking  the  potential  for  ‘green 
jobs’  in  Spain,  contributing  to  the  adaptation  of 
workers  and  businesses,  while  at  the  same  time  
mitigating the social impact of the transition in the 
regions  concerned.  Spain’s  integrated  national 
energy  and  climate  plan  (NECP)  of  20  January 
2020 analyses the impacts on energy poverty and 
vulnerable  households,  although  with 
limited 
details on the skills needed for a just transition. It 
includes  clear  targets  to  tackle  energy  poverty, 
notably by reducing the level of four indicators by 
at  least  25%  by  2025  (and  possibly  by  50%): 
share  of  households  unable  to  keep  their  homes 
adequately  warm;  high  share  of  income  spent  in 
energy;  low  absolute  energy  expenditure;  and 
arrears on utility bills.  

to 

its 

carbon 
industries 

Although  the  economy  has  significantly 
footprint,  energy-
reduced 
intensive 
sizeable. 
remain 
Developing the green economy and its strong 
job 
potential  can  contribute  to  quality 
creation. The Spanish economy’s greenhouse gas 
(GHG)  emissions  intensity  decreased  significantly 
between 2015 and 2020 (in terms of gross value 
added)  and  stands  10%  below  the  EU  average, 
with  the  average  carbon  footprint  per  worker  at 
11.12  tonnes  of  GHG  emissions  (against  13.61 
tonnes  in  the  EU)  (see  Graph A6.1).  Two  declining 
sectors have been identified: coal/lignite and fossil 
fuel  based  energy  production (18).  Total  job  losses 
since  2008  in  coal  regions  linked  to  coalmines 
closures  are  estimated  at  11 300  direct  and 
10 000  indirect  jobs (19),  with  further  regional 
challenges  related  to  weak  economic  activity, 
remoteness  and  demographic  decline.  The 
automotive  industry  provides  jobs  for  9%  of  the 
total  employed  workforce  for  whom  up-  and 
reskilling  opportunities  will  be  particularly 
important 
(see  Annex 15).  The  environmental 
goods  and  services  sector  provides  jobs  to  a 
relatively small share of the employed population 
(1.6%  versus  2.1%  in  the  EU) (20),  while  wind  and 
solar  energy  potential  and  energy  efficiency 
further 
improvements 
opportunities  for  green  jobs (21).  Labour  shortages 
linked  to  the  transition  to  a  climate-neutral 
economy  are  identified  in  the  education  sector 
(Eurofound, 2021). 

important 

offer 

(18)  SWD(2021) 275 final. 

(19)  2020 European Semester: Overview of Investment Guidance 
on the Just Transition Fund 2021-2027 per Member State 
(Annex D). 

(20)  There is currently no common EU-wide definition of green 
jobs. The environmental goods and services sector (EGSS) 
accounts only report on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(21)  https://publications.jrc.ec.europa.eu/repository/handle/ 

JRC126047 

36 

 
 
                                                 
 
Graph A6.1: Fair green transition challenges 

Graph A6.2: Energy poverty by income decile 

Numbers are the normalised indicator performance, signifying 
factors relative to the EU27 average. 
Carbon inequality: average emissions per capita top 10% vs 
bottom 50% (2019).  
Source: Eurostat, World inequality database. 

faces 

Spain 

As  for  the  social  dimension  of  the  green 
substantial 
transition, 
challenges,  especially  in  terms  of  energy 
poverty.  Although  improving  since  2015,  the 
share  of  the  population  in  rural  areas  at  risk  of 
poverty  remains  relatively  high  (23.8%  versus 
18.7% in the EU) (22).  The share of the population 
unable  to  keep  their  homes  adequately  warm 
remained  stable  from  2015  to  2020,  at  10.9% 
which  is  above  the  EU  average  (8.2%).  Low-  to 
middle-income  groups  are  significantly  more 
affected  compared  to  the  EU  average,  while  the 
situation of high-income groups is closer to the EU 
average  (see  Graph A6.2).  Consumption  patterns 
vary  across  the  population:  the  average  carbon 
footprint  of  the  top  10% of  emitters is  about  4.5 
times  higher  than  for  the  bottom  50%  of  the 
population (against 5.3 times in the EU). 

HH050: ability to keep home adequately warm,  
HY020: total disposable household income  
Source: Eurostat EU-SILC survey (2020, 2019 for IT and DE). 

Tax  systems  are  key  to  ensuring  a  fair 
transition  towards  climate  neutrality (23). 
Spain’s  revenues  from  total  environmental  taxes 
slightly decreased from 1.93% of GDP in 2015 to 
1.75%  in  2020  (against  2.24%  in  the  EU).  The 
labour  tax  wedge  for  low-income  earners (24) 
decreased from 30.6% in 2015 to 27.9% in 2020 
is  31.6%,  see  Annex 18). 
(the  EU  average 
Redistributive 
accompanying 
measures 
environmental  taxation  can  have  the  potential  to 
foster progressivity and to have a positive impact 
on  the  disposable  income  of  households  in  the 
lowest segments of income distribution (25). 

(22)  As a proxy for potential transport challenges in the context of 

(23)  COM(2021) 801 final. 

(24)  Tax wedge for a single earner at 50% of the national 
average wage (Tax and benefits database, European 
Commission/OECD). 

the green transition (see COM(2021) 568 final). 

(25)  SWD(2021) 641 final PART 3/3. 

37 

0.000.200.400.600.801.001.201.401.60GHG GVA (MS/EU)GHG worker(MS/EU)Empl share EII(MS/EU)AROP rural(MS/EU)Energy poverty(MS/EU)Carbon inequality(MS/EU)SpainEU 2020Spain 20150%5%10%15%20%25%30%12345678910Income decileSpainEuropean Union 
     
                                                 
     
                                                 
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

while 

minimizing 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chains  in  sectors  such  as 
energy and transport, construction and renovation, 
food  and  electronics,  helping  create  sustainable, 
local and well-paid jobs across Europe. 

for 

by 

The  circular  (secondary)  use  of  material  in 
Spain  stood  at  11.2%  in  2020,  compared  to 
the  EU  average  of  12.8%  although  it  is 
following a positive trend. The circular material 
use rate measures the share of material recovered 
and fed back into the economy, thus saving on the 
extraction  of  primary  raw  materials,  in  overall 
material use. 

on 

impacts 

resources 

negative 

Improving  resource  productivity  can  help  to 
the 
minimise 
environment  and  reduce  dependency  on 
volatile  raw  material  markets.  Resource 
productivity indicates how efficiently the economy 
uses  material 
to  produce  wealth, 
dividing gross domestic product (GDP) by domestic 
material  consumption  (DMC).  DMC  measures  the 
total  amount  of  materials  directly  used  by  an 
economy.  With  2.8  purchasing  power  standard 
(pps)  generated  per  kg  of  material  consumed  in 
2020, resource productivity in Spain is well above 
the EU average of 2.2 pps. per kg. (26). This positive 
performance  is  further  supported  by  an  upward 
trend in resource productivity in Spain over the last 
decade from 2.1 pps. per kg in 2011  (27). 

A successful transition to a circular economy 
requires  social  and  technological  innovation, 
as  its  full  potential  can  only  be  achieved  if 
and  when  it  is  implemented  across  all  value 
chains.  Eco-Innovation  is  therefore  an  important 
enabling  factor  for  the  circular  economy.  Product 
design  approaches  and  new  business  models  can 
help to produce systemic circularity in innovations, 
creating  new  business  opportunities.  In  all  five 
components  of  the  Eco-innovation  index  of  2021, 

Spain  performs  above  the  EU  average.  The 
recently  approved  Circular  Economy  PERTE  will 
encourage  eco-design  to  ensure  a  more  efficient 
use of resources. 

The  amount  of  municipal  waste  generated 
has  decreased  overall  in  Spain  over  the last 
decade.  With  a  slight  increase  in  the  past  few 
years, the average amount in Spain in 2020 (455 
kg per capita) remains below the EU average (505 
kg per capita) (28).  

Graph A7.1: Municipal waste treatment 

Source: Eurostat 

substantial 

differences 

Despite  progress  on  the  transition  towards 
the  circular  economy,  waste  management 
remains a significant challenge for Spain, but 
with 
between 
regions.  Spain  is  one  of  the  countries  which  has 
missed  the  EU  target  of  recycling  50%  of 
municipal  waste  by  2020  (the  overall  recycling 
rate was of 36.4%). The EU has set up even more 
ambitious  targets  for  the  next  decade,  including 
achieving  55%  recycling  of  municipal  waste  by 
2025.  The  amount  of  landfilled  waste,  which 
remains considerable, is preventing faster progress 
towards the circular economy. 

For  the  pre-treatment  of  municipal  solid 
waste not collected separately, Spain makes 

(26)  Statistics | Eurostat (europa.eu) 

(27)  Statistics | Eurostat (europa.eu) 

(28)  Statistics | Eurostat (europa.eu) 

38 

4564634624754764550100200300400500600201520162017201820192020Kg per capita Difference waste generated/treatmentLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU 27 
 
 
                                                 
      
                                                 
 
 
provides for authorisations granted by regions for 
to 
collective  waste  management 
producers,  to  have  national  validity;  and  seeks  to 
improve  data  collection  setting  up  a  national 
register  to  keep  track  of  the  production  and 
management of waste.  

systems 

in 

policies 

the  new 

require 
Waste  management 
levels  of 
cooperation  between  different 
government.  Waste  management  is  a  regional 
competence, but waste collection and treatment is 
carried  out  at  local  level  (either  by  a  single 
municipality  or  by  groups  of  them  jointly).  The 
State  Waste  Management  Framework  Plan  2016-
2022  (PEMAR) 
lays  down  the  structure  and 
contents of the regional waste management plans, 
and  extends  the  responsibility  for  achieving  the 
recycling  targets  to  regions,  which  has  been  also  
included 
law  on  Waste  and 
Contaminated  Soils  for  a  Circular  Economy.  There 
is a body for technical cooperation between public 
authorities, the Committee for Coordination in the 
field  of  Waste.  The  aim  of  this  Committee  is  to 
make  recommendations,  conduct  studies,  reports 
and  guidelines,  as  a  body  for  inter-administrative 
coordination  and 
technical  cooperation  and 
collaboration.  Moreover,  existing  mechanisms  to 
avoid 
fragmentation  should  help 
prevent  different  interpretations  from  resulting  in 
different  outcomes 
in  Spain.  Under  the  EU 
Technical  Support  Instrument,  Spain  will  fund  an 
implementation  of 
initiative 
improved 
treatment 
systems at municipal level (Annex 3). 

to  support 
recycling  collection  and 

regulatory 

the 

extensive  use  of  mechanical  biological 
treatment  (MBT)  plants.  As  regards  municipal 
waste  treatment  in  Spain,  the  only  clear  trend 
observed  between  2014  and  2019  is  a  slight 
increase of municipal waste generation, as well as 
a  moderate  increase in  the  share  and  tonnage  of 
the volume of organic waste that is composted or 
digested. Of the 143 biological treatment plants in 
Spain in 2019, 88 received residual municipal solid 
waste,  whereas  only  55  plants  are  equipped  to 
treat  separately  collected  biowaste.  74%  of  the 
municipal  solid  waste  that  is  landfilled  in  Spain 
consists  of  reject  from  mechanical  biological 
treatment,  packaging  sorting,  and  biowaste 
treatment;  and  the  remaining  26  %  is  residual 
municipal  solid  waste  that  is  directly  landfilled 
the 
without  any  pre-treatment (Ministry 
Ecological  Transition  and 
the  Demographic 
Challenge,  2021).  In  summary,  significant  efforts 
are 
prevention, 
increase 
minimisation,  sorting,  reuse  and  recycling  of 
waste, thereby diverting waste away from landfills 
or incinerators. 

needed 

the 

for 

to 

in 

The  Recovery  and  Resilience  Plan  (RRP) 
includes  measures  to  promote  the  circular 
economy  and  improve  waste  management. 
The forthcoming Law on Waste and Contaminated 
Soils for a Circular Economy (Ley 7/2022 of 8 April 
2022)  envisaged 
represents  a 
significant  effort  to  address  the  fragmentation 
challenges  identified  in  waste  management.  It 
introduces  a  harmonised  taxation  scheme  for 
waste  disposal  (landfill  and  incineration)  across 
regions;  compulsory  separate  collection  of  bio-
waste  in  national  legislation.  It  also  reviews  the 
general framework for the application of extended 
it  also 
responsibility.  Furthermore, 
producer 

the  RRP 

Table A7.1: Selected resource efficiency indicators 

Source: Eurostat. 

39 

SUB-POLICY AREA201520162017201820192020EU27 Latest year EU 27CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)2.83.03.12.93.12.82.22020Material Intensity (kg/EUR)0.40.30.30.30.30.40.42020Circular Material Use Rate (%)7.58.28.89.09.611.212.82020Material footprint (Tones/capita)9.49.29.610.39.8-14.62019Waste Waste generation (kg/capita)-2,7742,945--5,2342018Landfilling (% of total waste treated)-53.6-48.2--38.52018Recycling rate (% of municipal waste)30.033.936.134.838.036.447.82020Hazardous waste (% of municipal waste)-2.5-2.3--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)2.22.22.22.32.32.52.32019Private investment in circular economy (% of GDP)0.10.10.10.1--0.12018 
 
       
 
in  the 

lag  behind 

enterprises 
integration  of 
advanced  technologies  such  as  cloud  or  big  data. 
This  gap,  combined  with  a  lack  of  ICT  specialists, 
make  it  difficult  for  SMEs  –  micro-enterprises  in 
particular  –  to  attract  talent  and  to  benefit  from 
the  digital  economy.  The  investments  included  in 
the  RRP  are  expected  to  increase  the  share  of 
firms with a basic level of digital intensity and to 
foster 
the  adoption  of  advanced  digital 
technologies. 

Spain  shows  a  satisfactory  performance  on 
digital public services. Spain is at the forefront 
in  digital  public  services  within  the  EU  and 
continues to update its services and infrastructure, 
including through the RRP, to respond to the rapid 
evolution of technology and citizens’ needs. 

ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

integration  of  digital 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  four  cardinal  points (29).  This 
Annex describes Spain’s DESI performance. Spain’s 
Recovery  and  Resilience  Plan  (RRP)  is  devoting 
to  digital 
28.2%  of 
(EUR 19.6 billion) (30).  The  RRP  puts  a  particular 
focus  on  promoting 
the  digitalisation  of 
businesses,  including  SMEs  (25%  of  the  total 
digital  budget),  strengthening  the  digital  skills  of 
the  Spanish  population  (22%),  improving  digital 
connectivity in the whole country (15%), improving 
the  digitalisation  of  public  services  (28%),  and 
supporting digital-related R&D and the deployment 
of digital technologies (10%). 

investment 

total 

the 

The  lack  of  ICT  specialists  is  the  main 
challenge for Spain in the  DESI dimension of 
human capital. Spain shows a good performance 
on  basic  digital  skills  and a  medium  performance 
on female ICT specialists, but performs below the 
EU  average  on  the  ICT  specialists  indicator.  The 
shortage  of  ICT  specialists  is  a  productivity-
constraining factor, especially for SMEs and micro-
enterprises, and a key challenge for Spain. The RRP 
includes  significant  investments  in  digital  skills 
that  will  help  to  improve  Spain’s  performance  in 
this area.  

Spain is one of the EU’s best  performers on 
digital  connectivity.  Spain  performs  particularly 
well  in  Fixed  Very  High  Capacity  Network  (VHCN) 
coverage, but, until now, was only a mid-performer 
on  5G  coverage,  mainly  due  to  some  delays  in 
auctioning  all  5G  pioneer  bands.  In  turn,  a  rapid 
increase in 5G coverage is now expected following 
the  auction  of  the  700MHz  band  ended  in  July 
2021 and the 26GHz band to be auctioned by the 
end  of  2022,  as  well  as  all  the  measures 
envisaged in Spain’s RRP. 

The  low  degree  of  digitalisation  of  SMEs  is 
also  a  key  challenge  for  Spain.  Even  though 
the  rate  of  SMEs  having  at  least  a  basic  level  of 
digital  intensity  is  above  the  EU  average,  Spanish 

(29)  2030 Digital Compass: the European Way for the Digital 

Decade Communication, COM (2021) 118 final 

(30)  The share of financial allocation contributing to digital 

objectives has been calculated using Annex VII of the RRF 
Regulation. 

40 

 
 
  
                                                 
 
Table A8.1: Key digital economy and society index indicators 

(*) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities. 

Source:  Digital Economy and Society Index 

41 

EUEU top-performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA64%54%79%% individuals202120212021ICT specialists3.7%3.9%4.1%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists19%19%19%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage89%92%94%70%100%% households201920202021202120215G coverage (*)NA13%59%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA60%55%86%% SMEs202120212021Big data11%9%9%14%31%% enterprises20182020202020202020CloudNANA27%34%69%% enterprises202120212021Artificial IntelligenceNANA8%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA8775100Score (0 to 100)202120212021Digital public services for businessesNANA9482100Score (0 to 100)202120212021Spain 
 
  
 
 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  Annex  provides  a  general  overview  on 
the  performance  of  Spain’s  research  and 
innovation  system.  Spain 
is  a  moderate 
innovation  performer  according  to  the  2021 
edition of the European Innovation Scoreboard (31), 
and 
its  performance  remains  below  the  EU 
average. Innovation suffers from underinvestment 
in  R&D.  Total  R&D  intensity  reached  1.41%  in 
2020, still far below the EU average.  

improving 

Low  and  stagnant  public,  and  notably  also 
private,  R&D  investment,  have  prevented 
its  research  and 
Spain  from 
innovation (R&I) performance, which remains 
subdued,  despite  some  pockets  of  research 
excellence.  The  country’s  share  of  scientific 
publications  among  the  top  10%  most  cited 
scientific  publications  worldwide  is  below  the  EU 
average  and  has  remained  stagnant  since  2010 
(9.24%  in  2018  compared  to  9.3%  in  2010). 
Private  R&D  intensity  remains  comparatively  low, 
at a value close to half of the EU average, and as 
a  result,  overall  performance  of  the  research  and 
innovation  system  as  measured  by  patents,  has 
also  remained  well  below  the  EU  average, 
preventing  any  increase  in  the  pace  of  Spain’s 
technological transformation. The Spanish National 
Recovery  and  Resilience  Plan  (RRP)  will  greatly 
increase R&D and innovation investments and help 
address  the  persistent  gaps  in  both  private  and 
public R&D investment.  

and 

improved 

Spain’s  future  competitiveness  and  green 
and  digital  transitions  depend  on  its  ability 
to  translate  sustained  investment  efforts 
into  economic  growth  through  business 
knowledge 
innovation 
circulation.  Despite  certain  measures  to  support 
private  R&D  investment,  the  policy  mix  does  not 
seem not to yield the expected results as business 
R&D  remains  poor.  This,  coupled  with  a  lack  of 
sufficient  incentives  and  effective  governance 
structures,  has  resulted  in  weak  business-science 
links  and  a  modest  share  of  employment  in 
innovative enterprises, hindering Spain’s economic 
transformation 
productivity 
sectors. 

towards 

higher 

Spain  plans  to  address  this  challenge  by 
means  of  punctual  reforms  in  its  Law  of 
Science  and  Innovation  and  with  targeted 
further 
investments.  However,  Spain  could 
improve  and  foster  the  cooperation  between 
universities, research organizations and businesses 
by  implementing  the  recent  recommendations  of 
the  OECD-EC  Roadmap  on  Knowledge  Transfer. 
The  Roadmap  points  to  particular  measures  to 
promote  and  sustain  business  innovation  such  as 
increasing  the 
linked  to 
knowledge  transfer  activities,  creating  effective 
intermediary  bodies,  and 
introducing  more 
effective  initiatives  at  the  base  of  the  innovation 
ladder (32). 

institutional  funding 

(31)  2021 European Innovation Scoreboard, Country profile: Spain 
https://ec.europa.eu/docsroom/documents/45936/attachment
s/1/translations/en/renditions/native  

(32)  Roadmap and Policy Paper Improving knowledge transfer 
and collaboration between science and business in Spain 
(2021) https://community.oecd.org/community/cstp/ 
roadmap-innova-es  

42 

 
 
                                                 
                                                 
 
Table A9.1: Key research, development and innovation indicators 

Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 
Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit 

43 

CompoundEUannual growthaverage2010-20R&D Intensity (GERD as % of GDP)1.361.221.241.251.410.32.32Public expenditure on R&D as % of GDP0.660.580.540.550.62-0.60.78Business enterprise expenditure on R&D (BERD) as % of GDP0.70.640.70.70.781.11.53Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 9.39.29.24::-0.19.9PCT patent applications per billion GDP (in PPS)1.71.61.4::-2.33.5Public-private scientific co-publications as % of total publications5.66.36.76.66.41.59.05Public expenditure on R&D financed by business enterprise (national) as % of GDP0.050.0340.0320.035:-3.80.054New graduates in science & engineering per thousand pop. aged 25-3411.115.915.815.3:2.516.3Total public sector support for BERD as % of GDP0.1560.1160.117::-3.60.196R&D tax incentives: foregone revenues as % of GDP0.0270.0290.026::-0.40.1Share of environment-related patents in total patent applications filed under PCT (%)15.9 13,3 9,9:  :-5,7 12,8 Venture Capital (market statistics) as % of GDP0.0210.0280.0440.0460.0549.70.054Employment in fast-growing enterprises in 50% most innovative sectors3.24.86.26.1:7.45.52020Spain2010201520182019Finance for innovation and Economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation  
 
 
     
 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence  over  the  long  run (33). A  major 
source  of  productivity  for  the  EU  economy  is  a 
well-functioning  single  market,  where  fair  and 
effective  competition  and  a  business  friendly 
environment  are  ensured,  in  which  small  and 
medium  enterprises  (SMEs)  can  operate  and 
innovate  without  difficulty.  Businesses  and 
industry  rely  heavily  on  robust  supply  chains  and 
are facing bottlenecks that bear a negative impact 
on firms’ productivity levels, employment, turnover 
and entry/exit rates. This may impact the Member 
States’  capacity  to  deliver  on  Europe’s  green  and 
digital transformation. 

labour  productivity  has  been 
Spanish’s 
decreasing  steadily  since  2010 (34),  and 
currently  stands  at  90%  of  the  EU  average. 
Labour productivity in Spain is counter-cyclical (35), 
unlike  in  the  majority  of  developed  economies, 
mainly  due  to  structural  deficiencies 
in  the 
functioning  of  the  labour  market.  Spanish  SMEs 
productivity, measured as the ratio of value added 
to  employment,  was  EUR  31 100,  below  the  EU 
average  of  EUR  40 000 (36).  Spain’s  Recovery  and 
Resilience  Plan  (RRP)  includes  measures  to  boost 
productivity  in  areas  such  as  the  labour  market, 
R&D,  vocational  training,  skills  and  digitisation  of 
SMEs,  as  well  as  better  regulation  and  better 
coordination 
of 
government. 

different 

between 

levels 

improvements.  Despite 

Spain  is  well  integrated  into  the  Single 
is  scope  for  further 
Market,  but  there 
recent 
regulatory 
reforms,  a  number  of  professions  (civil  engineer, 
architect and tourist guide) have been identified in 
the  past  as  facing  higher  regulatory  restrictions 
than  the  EU  average (37).  The  RRP  has  included 
measures  to  improve  regulation.  The  forthcoming 
Law “Create and Growth”, part of the RRP and due 
for  final  approval  by  Q4  2022,  aims  to  improve 
the  business  regulation  framework,  to  remove 
barriers  to  access  and  pursuit  of  economic 

activities, and to amend the Law of Market Unity, 
which  is  a  key  better-regulation  instrument  in 
Spain  whose  full  implementation  has  been  the 
subject  of  country  specific  recommendations  over 
the  last  years.  Other  reforms  in  the  RRP  are 
specific 
expected 
professions,  such  as  the  amendment  of  the  Law 
on “lawyers and solicitors (procuradores)”. 

barriers 

remove 

to 

in 

Spanish firms have been heavily impacted by 
the COVID-19 crisis. As a result, the number of 
vulnerable  firms  has  increased (38).  The  numbers 
of  bankruptcies  might  also  increase  significantly 
when  the  existing  moratoria  on  declaration  of 
insolvency  is  concluded  on  30  June  2022.  A 
reform  of  the  Insolvency  Law  is  due  in  Q2-2022 
as  part  of  the  RRP.  The  rate  of  late  payments  in 
Spain  is  similar  to  the  EU  average  (45%),  and  is 
decreasing. A reform to promote early payments in 
commercial transactions is expected to be part of 
the forthcoming Law “Create and Growth”, with the 
aim  to  reduce  the  average  payment  periods  in 
commercial  transactions.  A  new  law  on  start-ups 
to  foster  their  creation  and  growth 
is  also 
expected  by  Q4-2022.  Spain  is  not  in  a  critical 
situation  as  regards  access  to  finance,  either  for 
loans or for equity (39). Nevertheless a measure in 
the RRP will strengthen the Compañia Española de 
Reafianzamiento SME S.A. (CERSA) with the aim to 
provide  support  to  SMEs  in  the  form  of  financial, 
commercial and technical guarantees. 

Spain  has  been  affected  by  recent  global  supply 
chain  disruptions,  to  some  extent  reflecting  a 
strong  reliance  on  extra-EU  trade.  The  ratio  of 
intra EU–to-extra EU trade shows that Spain (1.35) 
relies  to  a  higher  extent  on  extra-EU  trade  than 
the  EU  average 
(1.59).  Spanish  companies 
reported  shortages  in  the  materials  and  labour 
the 
necessary  for 
manufacturing  industry,  and  in  particular  in  the 
automotive,  chemical,  pharmaceutical  and  textile 
sectors. The tourism sector, which before the crisis 
represented  12.4%  of  GDP,  accounted  for  just 
5.5% of GDP in 2020 due to the crisis, though this 
share has rebounded significantly in 2021.  

their  activity,  mostly 

in 

(33)  Annual Sustainable Growth Survey 

(34)  Statistics | Eurostat (europa.eu) 

(35)  Bank of Spain 

(36)  SME Fact-Sheet Spain 2021 

(37)  European Commission on Regulated Professions (COM(2016) 

820 final) 

(38)  Bank of Spain 

(39)  SAFE 

44 

 
 
                                                 
                                                 
 
Table A10.1: Key Single Market and Industry Indicators 

(Continued on the next page) 

45 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]75.7262.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]11.2219.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]13.117.6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]129.590.6104.5106.398.431.6%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]145535180%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]3436250%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]5.6%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.160.140.150.160.18-11%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]57.8054.6051.5051.2013%47.8%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]35.14.53.8-21.1%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]-0.1-0.3-0.3-0.4-75%0.4%Investment dynamicsHEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependencies 
 
 
 
  
 
Table (continued) 

(*) latest available 
. 
Source:  See above in the table the respective source for each indicator in the column “description”. 

46 

Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.521.431.331.321.3513%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])2   20%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]45%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageBelow averageBelow averageBelow averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageBelow averageBelow averageBelow averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]4256%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]84.49183.882.72.1%70.1Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]83.899.7100.9100.5-16.6%105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]33.940.640.3n.a.n.a.-16%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.960.880.780.7430.1%0.56EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.120.110.150.34-66.1%0.18% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]84.166.95.448.4%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]4339393043.3%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]53514457-7%70.8%Public procurement SINGLE MARKET79.4Compliance - cooperation EC and MSBUSINESS ENVIRONMENT - SMEsBusiness demographyAccess to finance 
 
  
 
ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  to  building 
resilience  for  the  sustainable  development  of  the 
EU economy.  

of 

the 

effectiveness 

public 
Overall, 
administration  in  Spain  is  below  the  EU 
average  and  has  been  declining  since 
2017 (40). While Spain has made progress on the 
digitalisation  of  its  public  administration  and  the 
provision  of  digital  services  (78.8  score  in  the  e-
government  benchmark  compared  to  the  EU 
average  of  73),  the  quality  of  legislation  is 
weakened  by  regulatory  fragmentation,  limited 
expost  evaluation  of  policies  (Graph A11.1)  and 
frequent  use  of  emergency  procedures  for  the 
adoption  of  laws.  Reforms  planned  under  the 
Spanish Recovery and Resilience Plan (RRP) seek to 
improve  the  evaluation  of  public  policies  and 
spending  through  the  creation  of  a  National 
Evaluation  Office.  Further  measures  will  aim  to 
overcome persistent challenges in the coordination 
between  levels  of  government  and  make  reform 
efforts more effective.  

Graph A11.1: Performance on evidence-based 
policymaking indicators 

RIA: regulatory impact assessment 
Source: OECD (iREG indicators) 

Selected  features  of  Spain’s  public  financial 
management  require  attention. 
It  has  a 
relatively  strong  legal  fiscal  framework  (including 

(40)  Worldwide Governance Indicators, 2020.  

47 

created 

(Graph A11.2).  Spain 

for  numerical  fiscal  rules  and  the  medium-term 
budgetary  framework).  Despite  the  results  of  the 
Single  Market’s  public  procurement 
indicator, 
Spain’s evolution in the past three years has been 
positive 
the 
independent Office for Regulation and Supervision 
of Public Procurement and the National Evaluation 
Office.  Nevertheless  in  2018.  The  RRP  aims  to 
further strengthen public procurement. To this end, 
the 
it 
implementation  of  the  public  procurement  reform 
provided in Law 9/2017 on public sector contracts. 
This  reform  requires:  i)  making  the  National 
Evaluation Office fully operational and ii) adopting 
the long due National Public Procurement Strategy. 
In  addition,  measures  will  be  taken  to  advance 
electronic  procurement  and  data  sharing  at  all 
government levels. 

includes  a  milestone 

finalise 

to 

Graph A11.2: Performance on the single market 
public procurement indicator 

The competition and transparency indicators are triple-
weighted, whereas the efficiency and quality indicators have 
unitary weights. All others receive a 1/3 weighting in the SMS 
composite indicator. 
Source: Single market scoreboard 2020 data 

legal 

faces 

justice 

system 

initiatives  aimed  at 

The 
efficiency 
challenges.  In  particular, the  disposition time  for 
civil  and  commercial  cases  in  the  Supreme  Court 
remains very high (888 days in 2020, compared to 
681 in 2018). The Government is taking a number 
of 
increasing  the 
efficiency of the justice system. The quality of the 
justice system is good overall. The Parliament has 
adopted  a  new  law  strengthening  the  legal  aid 
scheme  and  further  investment  in  digitalising 
justice  is  ongoing.  Additional  courts  have  been 
opened  in  response  to  the  COVID-19  pandemic, 
but  the  low  number  of  judges  per  inhabitant  is  a 

00.20.40.60.811.21.41.61.82ESEU27averageESEU27averageMethodologyRIAOversightStakeholder consulationSystematic adoptionEx-post evaluationTransparency 
 
      
                                                 
 
 
Table A11.1: Public administration indicators 

"(1) High values stand for good performance barring indicators # 7 and 8. 
(2) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as the 
existence of key enablers for the provision of those services. 
(3) Break in the series in 2021. 
(4) Defined as the absolute value of the difference between the share of men and women in senior civil service positions. " 
Source:  ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal Governance 
Database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD Indicators of Regulatory Policy and Governance (# 12). 

of measures to improve recruitment and to reduce 
the  share  of  temporary  workers  in  the  public 
sector. 

challenge.  As  regards  judicial  independence,  no 
systemic deficiencies have been reported (41).  

Demographic  developments  also  affect  the 
public  sector.  Maintaining  the  administrative 
capacity  could  be  problematic  due  to  the  large 
proportion of civil  servants older than 55 (56.3 % 
of  the  central  administration  is  expected  to  retire 
by  2030),  and  the  large  share  of  temporary 
contracts. The RRP addresses these risks by means 

(41)  For more detailed analysis of the performance of the justice 

system in Spain, see the 2022 EU Justice Scoreboard 
(forthcoming) and the country chapter for Spain of the 
Commission’s 2022 Rule of Law Report (forthcoming). 

48 

ES20172018201920202021EU27162.065.063.067.073.070.82nananana78.870.93nananana94.781.1468.968.968.968.9na56.8555.054.857.257.858.255.3614.315.515.414.620.618.6742.621.617.614.213.821.8825.025.427.530.331.121.390.920.920.920.92na0.72101.92.02.02.0na1.511-9.0-8.7-8.7-8.7na-0.7121.61nana1.76na1.7E-government Public Financial Management Evidence-based policy makingIndicator (1)Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorShare of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) 2021 open data maturity indexScope Index of Fiscal InstitutionsShare of public administration employees with tertiary education, levels 5-8  (3)Index of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Educational attainment level, adult learning, gender parity and ageingOpen government and independent fiscal institutionsParticipation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3) 
                                                 
 
      
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

provision of ALMPs, with a focus on youth and the 
long-term  unemployed.  Tackling  these  challenges 
is key to Spain contributing to the achievement of 
the 2030 EU headline target on employment. 

Table A12.1: Social scoreboard 

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  Annex 
provides  an  overview  of  Spain’s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

in 

the 

with 

to 
regard 
Short-time  work 

The  initial  shock  of  the  COVID-19  crisis 
highlighted 
long-standing  structural 
challenges facing the Spanish labour market, 
youth 
especially 
unemployment. 
schemes 
(ERTEs)  cushioned  the  impact  of  the  health  crisis 
on  employment.  Following  a  positive  evolution  in 
2021, unemployment and employment rates were 
back  to  their  pre-pandemic  levels  in  Q4-2021. 
However,  young  people  face  the  highest  rate  of 
the  EU  and  suffer  from 
unemployment 
significant  labour  market  segmentation  (in  Spain, 
in January 2022, before the entry into force of the 
new law on the menu of contracts,  almost one in 
four  contracts  (2021)  and  close  to  85%  of  newly 
signed  contracts  were  fixed-term;  67%  and  88% 
respectively among the young). Job precariousness 
makes  access  to  affordable  housing  difficult 
especially for young people in urban areas. As part 
of  its  Recovery  and  Resilience  Plan  (RRP),  Spain 
passed  two  major 
labour  reforms  aimed  at 
reducing  temporary  hiring  in  both  public  and 
private sectors, notably by simplifying the menu of 
contracts  and  increasing  sanctions  and  controls. 
Also,  the 
in 
December  2021  has  modified  training  contracts 
for young workers. 

labour  market  reform  approved 

Long-term  unemployment 
remains  well 
above the EU average. To address the problem, 
the  RRP  envisages  reforms  to 
improve  the 
effectiveness  of  active  labour  market  policies 
(ALMPs),  reinforce  the  capacity  of  central  public 
employment  services  and  ensure  the  provision  of 
personalised,  integrated  and  coordinated  services, 
taking into account regional disparities. In addition, 
the  European  Social  Fund 
is  already 
supporting  diverse  measures  to  strengthen  the 

(ESF) 

49 

Update of 29 April 2022. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2022. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
Source: Eurostat 

Despite  recent  improvements,  the  rate  of 
early  leavers  from  education  and  training 
and  of  low-skilled  adults  remains  very  high. 
This  hinders  the  transition  from  school  to  work, 
exacerbating  youth  unemployment  and  fuelling 
skills  polarisation  (see  Annex 13).  The  share  of 
learning 
adults  (aged  25-64)  participating 
activities  over  the  past  four  weeks  had  been 

in 

13.364.015.210.65.867.714.86.293.827.031.823.421.68.245.50.4Critical situationTo watchWeak but improvingGood but to monitorOn averageSocial Scoreboard for SPAINEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24) (2021)Individuals' level of digital skills (% of population 16-74) (2021)Youth NEET(% of total population aged 15-29) (2021)Gender employment gap (percentage points) (2021)Income quintile ratio (S80/S20) (2020)Dynamic labour markets and fair working conditionsEmployment rate(% population aged 20-64) (2021)Unemployment rate(% population aged 15-74) (2021)Long term unemployment(% population aged 15-74) (2021)GDHI per capita growth (2008=100) (2020)Social protection and inclusionAt risk of poverty or social exclusion (in %) (2020)At risk of poverty or social exclusion for children (in %) (2020)Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) (2020)Disability employment gap (ratio) (2020)Housing cost overburden (% of population) (2020)Children aged less than 3 years in formal childcare (% of under 3-years-olds) (2020)Self-reported unmet need for medical care (% of population 16+) (2020)Better than averageBest performers 
 
 
 
   
 
 
 
increasing over recent years, being 14.4% in 2021 
(versus 10.8% in the EU)  (42). However, it remains 
persistently  low  among  low-skilled  people  (5.2%). 
Tackling education and adult learning challenges is 
key  to  Spain  contributing  to  the  achievement  of 
the  2030  EU  headline  targets  on  skills  and 
employment.  Spain’s 
its 
modernised  Vocation  Education  and  Training 
system and its National Digital Competences Plan 
can  help  in  the  development  of  skills  relevant  to 
the labour. 

implementation  of 

income 
context  of  pre-existing 
In  a 
inequalities  and  high  risks  of  poverty  and 
social  exclusion,  the  COVID-19  crisis  further 
affected social cohesion. The share of people at 
risk of poverty or social exclusion (AROPE) remains 
among  the  highest  in  the  EU  (27%  in  2020 
compared  to  21.9%  in  the  EU),  especially  for 
children (31.8% in 2020 compared to 24.2% in the 
EU).  Eurostat  flash  estimates  on  the  at-risk-of 
poverty  rate  for  income  year  2020,  point  to  an 
increase,  including  for  children.  Other  groups 
particularly  at  risk  include  migrants  and  people 
is  rather 
with  disabilities.  Social  expenditure 
oriented  towards  the  older  generations  and  social 
transfers  (income  year  2019)  excluding  pensions 
have  a  low  impact  on  child  poverty  reduction (43). 
Income  support  to  children  in  Spain  (among  the 
lowest in the EU) builds largely on reducing the tax 
burden,  which  is  of  limited  advantage  for  low-
income  families.  In  this  context,  the  new  child 
benefit  for  low-income  families  has  the  potential 
to  improve  support  to  these  families.  The  new 
Family  Law  envisaged  in  the  RRP  is  expected  to 
further strengthen material support for children in 
vulnerable  situations  and  to  be  complemented 
with  a  review  of  support  for  families  through  the 
tax  system.  Spain  will  invest  at  least  EUR  527 
million from the European Social Fund Plus (ESF+) 
for  the  implementation  of  the  European  Child 

(42)  Adult training participation increased in Spain from 9.4% in 
2016 to 11% in 2020. Data for 2021 cannot be fully 
compared with previous years as for a break in the series 
following a new methodology for the EU Labour Force 
Survey, https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=EU_Labour_Force_Survey_-
_new_methodology_from_2021_onwards#Main_changes_in
troduced_in_2021. 

(43)  As it is based on income year 2019, SILC 2020 does not fully 
capture the effect of measures taken in 2020 to address the 
impact of COVID-19 crisis such as social transfers via ERTEs 
or the introduction of the national minimum income scheme 
on poverty reduction. Nonetheless, material deprivation 
indicators already reflect the impact of those measures. 

Guarantee to support children at risk of poverty or 
is 
social  exclusion.  Unemployment  assistance 
currently  scattered  across  multiple  schemes, 
resulting 
low  coverage  and  effectiveness. 
Temporary  workers  in  particular  have  limited 
effective  access  to  permanent  coverage  due  to 
strict eligibility conditions.  

in 

Operating  at  their  full  potential,  the  new 
national  minimum  income  scheme  and  the 
new  child  benefit  can  reduce  the  depth  of 
poverty.  However,  the  coverage  of  the  national 
minimum income scheme is as yet incomplete (44). 
Regions  have  not  made  major  changes  to  top  up 
and  complement  it  with  their  own  schemes.  Self-
reported  unmet  needs  for  medical  care  were 
relatively  low,  but  the  pandemic  disrupted  access 
to  non-COVID-19  care  for  many  patients.  There 
are significant regional disparities in investment in 
primary care and in  the health system in general. 
Overall,  there  is  scope  for  reinforced  social  policy 
action in order for Spain to contribute to achieving 
the 2030 EU headline target on poverty reduction. 

(44)  In 2021, only about 28% of the potential beneficiaries 

received it according to simulations run by the European 
Commission Joint Research Centre, based on the EUROMOD 
model / EU-SILC. 

50 

 
                                                 
 
                                                 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Spain’s  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  strategic  framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training  Monitor.  Spain’s  education  and  training 
system  struggles  with  quality  and  equity 
challenges that could worsen due to the pandemic. 
Spain lags significantly behind the EU average and 
EU-level  targets  in  terms  of  the  early  school 
leaving rate. 

Plans  to  ensure  universal  access  to  early 
childhood  education  and  care  (ECEC)  must 
focus on equity and quality. Spanish education 
policies increasingly focus on improving access for 
children  living  in  areas  with  a  higher  risk  of 
poverty and social exclusion as well as rural areas. 
The  Recovery  and  Resilience  Plan  (RRP)  includes 
the creation of 65 000 free public places for ECEC. 
For  2021,  the  distribution  of  EUR 200  million  has 
been  agreed  with 
regional  authorities 
the 
(autonomous  communities).  To  better  assess  the 
quality of ECEC provision for children aged 0-3, a 
reliable 
is 
of 
needed including at regional level (45). 

indicators 

standard 

set 

The rate of early leavers from education and 
training continues to fall, particularly among 
young  men.  According  to  national  data (46),  the 
rate  in  2021  (13.3%)  was  the  lowest  rate  ever. 
Among women it remains much lower (9.7%) than 
among  men  (16.7%)  and  has  fallen  more  steeply 
over  time.  78.8%  of  the  population  aged  20-24 
has secondary education level (ISCED 3) or higher, 
which  is  still  below  the  EU  average  (84.3%  in 
2020).  Furthermore,  70%  of  students  leave  basic 
vocational  and  educational  training  (VET)  without 
finishing it. The RRP invests substantial amounts in 
programmes to combat early school leaving. 

Segregation  in  primary  education  is  high. 
TIMSS and PISA indicate that Spain has one of the 
highest  degrees  of  school  segregation  at  primary 
school  level in  the  EU (47).  However,  the  level  of 

(45)  https://www.educacionyfp.gob.es/revista-de-

educacion/en/numeros-revista-educacion/numeros-
anteriores/2021/394/394-8.html  

(46)  https://www.educacionyfp.gob.es/prensa/actualidad/ 
2022/01/20220128-abandonoeducativo.html 

(47)  https://dobetter.esade.edu/es/segregacion-escolar-

esadeecpol  

is  equal  to  the  EU  average 
Parents’ 
schools. 

segregation 
in 
preferences, 
secondary 
household,  socio-economic,  transport  conditions, 
and  services  offered  by  schools  determine  school 
choices.  The 
segregation  differs 
significantly between regions. 

level  of 

The 

teaching. 

A  curricular  reform  aims  to  strengthen 
reform, 
competence-based 
envisaged under the new Education Act, will affect 
ECEC,  primary  and  secondary  education.  It  will 
include methodological guidelines for teaching and 
competence-based 
to  a 
learning  according 
curriculum.  The  reform  will  also  have  a  stronger 
focus  on  digital  competences,  education  for 
sustainable 
citizenship 
education.  Furthermore,  it  include  the  preparation 
of support, guidance and teaching material, as well 
as 
least  4 000 
teachers 
professionals). The roll out of the new curricula is 
expected by 2022-2023.  

development 

training 

and 

for 

(at 

on 

education 

development 

Green  skills  will  be  fostered  through  the 
Action  Plan  2021-2025  on  Environmental 
(PAEAS).  The 
and  Sustainable  Education 
Annual  Work  Programme  2022 (48)  for  the  PAEAS 
was  approved  in  December  2021.  It  includes 
for 
guidelines 
incorporating 
teaching 
sustainable 
identifying  new  competences 
methodologies; 
concerning 
in  all 
professional  sectors;  updating  and  creating  new 
VET  degrees  on  conservation  and  restauration  of 
the  environment;  calls  for  innovation  projects  on 
sustainable  education;  training  for  teachers  on 
sustainable  development;  and  seminars  on 
education for sustainable development (addressed 
to all citizens). 

sustainable  development 

into 

initial 

teachers’ 

training  curricula 

A reform of the teachers’ profession is in the 
pipeline.  The  regulations  that  serve  as  the  basis 
for 
(both 
bachelor's  and  master's  degrees)  needs  to  be 
adapted  to  the  recent  reform  of  the  educational 
law,  and  requires  adaptation  to  key  competences, 
new 
digital 
education. The reform also provides more selective 
access to teacher education. 

teaching  methodologies, 

and 

(48)  https://www.miteco.gob.es/es/ceneam/plan-accion-
educacion-ambiental/programa-trabajo-2022-
paeas_tcm30-534147.pdf  

51 

 
 
                                                 
                                                 
 
Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

The 2018 EU average on PISA reading performance does not include ES; Data is not yet available for the remaining EU-level 
targets under the European Education Area strategic framework, covering underachievement in digital skills, exposure of 
vocational educational training graduates to work based learning and participation of adults in learning. 
Source:  Eurostat (UOE, LFS); OECD (PISA).  

The forthcoming higher education reform has 
been intensively debated. The planned reform 
under the Spanish RRP is in consultation with 
stakeholders and expected by 2023. 

Study  choices  in  higher  education  are  not 
labour  market  needs. 
well  aligned  with 
is  among  the 
Tertiary  education  attainment 
highest 
in  the  EU,  and  continues  to  grow, 
particularly for women. However, the employment 
rate for recent tertiary graduates in Spain is below 
the EU average. In addition, the number of Science, 
Technology,  Engineering  and  Mathematics  (STEM) 
graduates,  including  women,  is  declining  since 
2015. 
and 
Communications Technology (ICT) specialists in the 
labour  force  is  growing,  including  female  ICT 
specialists, but both remain below the EU average 
(see Annex 7). 

Information, 

share 

The 

of 

52 

96%96.8%91.9%97.3%201992.8%2019Reading< 15%16.2% 20.4%23.2%201822.5%2018Mathematics< 15%22.2% 22.2%24.7%201822.9%2018Science< 15%18.3% 21.1%21.3%201822.3%2018< 9 %20.0%11.0%13.3%9.7%Men24.0%12.5%16.7%11.4%Women15.8%9.4%9.7% 7.9%Cities17.0%9.6%11.5% 8.7%Rural areas24.6%12.2%15.5%10.0%Native17.5%10.0%11.3%8.5%EU-born37.2%20.7%28.5% 21.4%Non EU-born32.4%23.4%22.0% 21.6%45%41.0%36.5%48.7%41.2%Men34.9%31.2%43.1%35.7%Women47.0%41.8%54.4%46.8%Cities47.3%46.2%54.2%51.4%Rural areas31.9%26.9%40.9%29.6%Native45.7%37.7%54.0%42.1%EU-born28.0%32.7%38.5%40.7%Non EU-born20.2%27.0%30.1%34.7%35.2% 38.3%35.5%201938.9%201920152021IndicatorTargetSpainEU27SpainEU27Participation in early childhood education (age 3+)Low achieving 15-year-olds in:TotalBy genderBy degree of urbanisationEarly leavers from education and training (age 18-24)Share of school teachers (ISCED 1-3) who are 50 years or overBy country of birthTotalBy genderBy degree of urbanisationBy country of birthTertiary educational attainment (age 25-34) 
 
      
 
Public  expenditure  on  health  is  projected  to 
increase by 1.3 pps. of GDP by 2070 (compared to 
0.9  pps.  for  the  EU),  raising  long-term  fiscal 
sustainability concerns.  

Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 

ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in Spain. 

Life  expectancy  in  Spain  is  higher  than  the 
EU  average  despite  a  fall  by  more  than  19 
months due to the COVID-19 pandemic. As of 
17  April  2022,  2.19  cumulative  COVID-19  deaths 
per  1 000 
inhabitants  and  248  confirmed 
cumulative COVID-19 cases per 1 000 inhabitants 
were  reported.  Spain  fares  comparatively  well  in 
avoiding  deaths  from  treatable  causes.  Ischaemic 
heart  disease,  stroke  and  cancer  are  the  leading 
causes of death. 

Graph A14.1: Life expectancy at birth, years 

(reference scenario) 
Source: European Commission/EPC (2021). 

Spain  faces  health  workforce  shortages  and 
an uneven distribution of staff. The number of 
nurses  is  low  and  shortages  negatively  impact 
primary  care.  Working  conditions 
remain  a 
increasing  use  of  temporary 
challenge,  with 
contracts (41.9% of all health workers in 2020, up 
from  28.5%  in  2012),  which  since  the  start  of 
pandemic  has  mainly  been  explained  by  special 
recruitment  schemes  to  respond  to  the  surge  in 
demand. Spain has a low number of hospital beds, 
which  has  remained  stable  for  a  decade.  The 
COVID-19  pandemic  put  a  strain  on  acute  and 
intensive care unit beds. 

Through  its  Recovery  and  Resilience  Plan 
(RRP),  Spain  plans  to  invest  EUR  1.7  billion 
(2.5  %  of  the  total  RRP)  in  health  care.  The 
investments  will 
renew  hospital  equipment, 
strengthen  digital  health  infrastructure,  improve 

Source: Eurostat. 

Health spending relative to GDP in Spain was 
below  the  EU  average  in  2019.  Spending  per 
capita on outpatient care is below the EU average, 
whereas  spending  on  outpatient  medicines  is 
above  the  EU  average.  Current  efforts  aim  to 
rationalize the use of medicines, including the use 
of  antimicrobials.  The  public  share  of  health 
expenditure is comparatively low (70.6% in 2019). 

Table A14.1: Key health indicators 

Notes: Doctors' density data refer to practising doctors except for FI, EL, PT (licensed to practice) and SK (professionally active). 
Nurses' density data refer to practising nurses (imputation from year 2014 for FI) except for IE, FR, PT, SK (professionally active) 
and EL (nurses working in hospitals only). More information: https://ec.europa.eu/health/state-health-eu/country-health-profiles_en  
Source: Eurostat database; except: * Eurostat database and OECD, ** ECDC.  

53 

80.580.980.981.081.380.483.083.583.483.584.082.4201520162017201820192020EUSpain6.65.70.91.302468EUSpain% of GDP20192070increase20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)66.865.564.662.692.1 (2017)Cancer mortality per 100 000 population229.8226.6221.9218.3252.5 (2017)Current expenditure on health, % GDP 9.09.09.09.19.9 (2019)Public share of health expenditure, % of current health expenditure71.670.570.370.679.5 (2018)Spending on prevention, % of current health expenditure 2.12.12.12.12.8 (2018)Acute care care beds per 100 000 population246.9249.6249.4247.5387.4 (2019)Doctors per 1 000 population *3.83.94.04.43.8 (2018)Nurses per 1 000 population *5.55.75.95.98.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **25.625.024.623.318.314.5 (2020) 
 
          
 
          
 
 
          
 
use 

of  medicines, 

public  health  and  the  crisis  preparedness  system, 
skills,  prevention,  and  pharmaceutical  policies 
(rational 
innovative 
pharmaceuticals).  The  PERTE  “Vanguard  Health”, 
with  an  expected  overall  public  and  private 
investment of EUR 1.5 billion, will be an umbrella a 
number  of  actions  for  the  transformation  of  the 
National  Health  System.  Furthermore,  the  RRP 
includes  mechanisms 
temporary 
employment of health workers and to improve the 
equity of the health system. 

reduce 

to 

54 

 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

and 2019 (around 0.5%) (51). In 2018, expenditure 
on R&D was low, at 1.24% of GDP in 2018, around 
1 pp  below 
the  EU  average,  and  mainly 
concentrated in a few regions.  

transition 

challenges 

between  Spanish 

differ 
Climate 
significantly 
regions, 
requiring  major  efforts  to  keep  Spain  on 
track for the 2030 climate targets. Renewable 
generation  is  regionally  very  concentrated,  with 
almost  half  of  the  electricity  generated  from 
renewable  energy  produced  in  Castilla  y  León, 
Galicia and Andalucía. CO2 emissions on the other 
hand,  are  concentrated  in  regions  with  heavy 
industry  that  will  likely  have  to  adapt  their 
processes  to  the  green  transition.  Spain  can 
leverage  the  EUR 890  million  it  will  receive  from 
the  Just  Transition  Fund  (JTF)  to  address  the 
socioeconomic  and  environmental  impacts  of  the 
transition  on  the  regions  that  have  closed  coal 
recent  years 
mines  and  power  plants 
(Graph A15.2).  Moreover, 
inequalities 
persist  on  energy  poverty.  Less  developed  and 
urbanized regions have the highest proportions of 
their population living in energy poverty. 

in 
regional 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  Member  States.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development 
Regional 
disparities  remain  significant  in  Spain  with  a 
noticeable difference between the capital  and the 
northern  regions  on  the  one  hand,  and  the 
southern regions on the other hand.  

regions. 

across 

all 

Only  four  regions  in  Spain  had  a  GDP  per 
head  (in  purchasing  power  standard,  PPS) 
above  the  EU  average  in  2019.  The  GDP  in 
Madrid corresponded to 124% of the EU average, 
in  Extremadura  and 
almost  double 
Andalucía (49). Moreover, in the years from 2010 to 
2019,  regions  in  Spain  have  been  diverging  in 
terms of GDP per head (Graph A15.1) (50). 

than 

Graph A15.1: GDP per head (2010) and GDP growth 
(2010-2019) in Spain 

(1) Bubble size corresponds to the population size, 2019 
Source: European Commission 

Labour productivity varies extensively across 
Spanish regions. In 2018, gross value added per 
person  employed  was  highest  in  País  Vasco  and 
Madrid,  at  112%  and  116%  of  the  EU  average 
in 
respectively,  but 
Andalucía,  Murcia  and  Extremadura.  At  the  same 
time,  some  of  the  regions  with  the 
lowest 
productivity 
rate  –  Canarias,  Andalucía  and 
lowest 
Extremadura  –  also 
productivity  growth  in  the  period  between  2010 

it  remained  below  90% 

registered 

the 

(49)  Measured in terms of the population-weighted coefficient of 

variation.  

(50)  Disparities in GDP per head in Spain increased after the 

(51)  The Eurostat figures available on labour productivity levels 

2008 crisis hit the European economy, and they started to 
decline only after 2014, remaining nevertheless larger than 
in the pre-crisis period. 

latest year are from 2018. Growth rates in labour 
productivity, at the regional level, are estimated by the EC-
JRC, and cover until 2019 (Source: ARDECO) 

55 

-0.50.00.51.01.52.05060708090100110120130140Annual real GDP per head growth 2010-2019GDP (PPS) per head in 2010 (EU = 100)Capital regionOther NUTS2 regionsNational averageEU27 
 
     
                                                 
                                                 
 
Table A15.1: Spain, selected indicators at regional level 

Ciudad Autónoma de Ceuta, Ciudad Autónoma de Melilla R&D expenditure reference year: 2015. 
Source: Eurostat, EDGAR database. 

Graph A15.2: Territories most affected by the 
climate transition in Spain 

Graph A15.3: Innovation performance in Spain 

Source: European Commission 

Source: European Commission 

Innovation  is  asymmetric  among  regions. 
Spain’s  innovation  performance  has  increased 
13.4%  between  2014  and  2021,  although  it 
remains  below  the  EU  average  with  a  value  of 
96%.  The  innovation  index  of  País  Vasco,  Madrid, 
Navarra  and  Cataluña  are  all  above  110%  of  the 
EU  average,  while  the  value  for  Castilla-La 
Mancha, Extremadura and Canarias remains below 
75%. 

56 

conditions 

remain.  Overall, 

In 2020, the unemployment rate in Spain was 
higher than the EU average in all the Spanish 
regions,  and  significant  disparities  in  labour 
market 
the 
unemployment  rate  in  Spain  was  the  second 
highest in  the  EU,  with  an  average  rate  of  15.5% 
versus  7.1% 
regions, 
unemployment rates were the lowest (10-11%) in 
regions such as País Vasco, La Rioja and Navarra, 
while  the  rates  exceeded  22%  in  Andalucía, 
Canarias  and  Ceuta  and  Melilla.  Between  2019 
and  2020,  following  the  COVID-19  outbreak,  the 

the  EU.  Across 

in 

NUTS 2 RegionGDP per head (PPS)Productivity (GVA (PPS) per person employed)Real productivity growthGDP per head growthUnemployment rateR&D expenditurePeople at risk of poverty or social exclusion Regional Competitiveness IndexCO2 emissions from fossil fuels  per headEU27=100, 2019EU27=100, 2018Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019% of active population, 2020% of GDP, 2018% of individuals 2020Range 0-100, 2019tCO2 equivalent, 2018European Union1001001.001.397.12.1921,9(e)57.37.2España911010.770.8215.51.2427.043.66.10Galicia82971.270.9912.00.9425.340.27.4Principado de Asturias80980.450.3814.10.8127.243.221.6Cantabria841010.810.3912.10.8524.347.48.7País Vasco1181160.970.919.52.0113.663.66.1Comunidad Foral de Navarra1111090.830.8410.11.7012.351.96.3La Rioja971040.220.4210.80.8220.041.04.2Aragón991010.560.7411.70.9218.841.811.6Comunidad de Madrid1241120.931.2112.51.7021.270.83.0Castilla y León86980.710.7812.11.3219.437.611.7Castilla-La Mancha72950.890.6017.70.5330.730.211.2Extremadura67890.500.8521.80.6138.019.06.3Cataluña1071080.790.8912.61.5423.353.54.2Comunidad Valenciana80960.640.7916.21.0629.741.24.1Illes Balears971061.080.6616.10.4020.037.311.1Andalucía68890.480.4322.30.9236.927.24.9Región de Murcia75850.821.0216.20.9630.231.16.8Ciudad Autónoma de Ceuta72920.15-0.2924.50.0638.817.63.3Ciudad Autónoma de Melilla6688-0.07-0.4523.60.0741.16.72.4Canarias73920.390.2122.60.4739.826.85.2 
 
 
 
 
      
 
unemployment  rate  increased  most  in  tourist-
intensive regions (4.4 pp in Baleares and 2.1 pp in 
Canarias and Valencia). 

Graph A15.4: CO2 emissions from fossil fuels, 
2018 

Source: European Commission 

Disparities persist between continental Spain 
and  Canarias.  The  GDP  of  Canarias  represented 
73% of the EU average in 2019. The proportion of 
the population at risk of poverty or social exclusion 
in Canarias in 2020 (39.8%) was also higher than 
the  Spanish  average  (27%).  The  economy  of  the 
islands  was  hit  particularly  hard  by  the  pandemic 
crisis,  given  their  dependency  on  the  tourism 
sector, which represents around 35% of their GDP. 
In  2020,  unemployment  increased  by  +2.5 pps  to 
22.6%,  more  than  for  the  national  average 
(+1.4 pps).  Disparities  also  remain  very  high 
between  the  autonomous  cities  of  Ceuta  and 
Melilla and the Spanish average. 

57 

 
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

abundant  central  bank  liquidity,  which  stood  at 
11.4% of total liabilities.  

Graph A16.2: Evolution of credit activity 

2005=100 
Source: ECB 

Lending  activity  moderated  markedly 
in 
2021,  a  trend  that  continued  in  the  first 
months  of  2022.  The  deceleration  in  credit 
activity in 2021 was driven mainly by the sluggish 
lending  to  non-financial  corporations,  also  due  to 
the  gradual  decline  in  lending  supported  by  state 
guarantees.  By  contrast,  lending  to  households, 
supported  by  both  mortgage  and  consumer 
lending, proved to be more resilient in 2021 and in 
the first quarter of 2022. 

important 

the  most 

improvements 

This  Annex  provides  an  overview  of  key 
developments  in  Spain’s  financial  sector. 
Despite 
in  non-bank  financing, 
financial 
banks  are 
intermediaries  in  Spain.  The  banking  sector  in 
Spain  is  large  and  mostly  domestically  owned. 
Banking sector concentration is significant with the 
five  largest  banks  having  a  share  of  66.4%  of 
assets at the end of 2020, only slightly lower than 
in previous years. Due to the  increase in deposits, 
which  outpaced  loan  growth,  the  loan-to-deposit 
ratio  declined  to  83.3%  in  Q3-2021.  The  market-
funding ratio has hovered around 40% since 2017 
and  stood  at  43%  at  the  end  of  2020.  After  a 
robust increase in 2019 and 2020, the issuance of 
green bonds increased markedly in 2021. 

Graph A16.1: Issuance of green bonds 

Source: Bloomberg 

The  banking  sector  has  weathered  well  the 
pandemic  period.  Supported  by 
retained 
earnings,  the  solvency  ratio  rose  to  17.2% in  Q3-
2021,  slightly  higher  than  in  2020.  Nevertheless, 
the  largest  banks  still  have  lower  capital  buffers 
compared  to  other  euro  area  countries,  partially 
due to the less frequent use of internal models by 
Spanish  banks.  The  public  guarantees  and  loan 
moratoria  have  supported  asset  quality,  with  the 
non-performing  loans  ratio  falling to  2.9%  in Q3-
2021.  The increase  in  forborne  loans  needs  to  be 
monitored  closely  as  the  full  impact  of  the 
pandemic  on  asset  quality  is  not  yet  fully  visible. 
After  the  negative  result  in  2020,  profitability 
rebounded, with return on equity reaching 11% in 
Q3-2021.  Banks  have  maintained  comfortable 
liquidity  positons  in  2021,  also  benefiting  from 

58 

0.00.51.01.52.02.502004006008001000120014001600180020002015201620172018201920202021All bonds cumulative (lhs)green bonds issued to all bonds (rhs)bn EUR%-15-10-50510152009201020112012201320142015201620172018201920202021Total privateNFCHH% 
 
 
      
      
 
 
Table A16.1: Financial soundness indicators 

(1) Last data: Q3-2021 
Source: ECB, Eurostat, Refinitiv. 

59 

20172018201920202021Total assets of the banking sector (% of GDP)234.4219.8215.1257.8251.9Share (total assets) of the five largest bank (%)63.768.567.466.4-Share (total assets) of domestic credit institutions (%)195.595.395.295.094.9Financial soundness indicators:1- non-performing loans (% of total loans)4.43.73.12.82.9- capital adequacy ratio (%)15.415.415.716.817.2- return on equity (%)7.08.26.7-3.511.0NFC credit growth (year-on-year % change)0.2-1.90.07.90.8HH credit growth (year-on-year % change)-0.50.40.2-0.60.6Cost-to-income ratio (%)152.653.353.450.252.9Loan-to-deposit ratio (%)189.390.692.685.583.3Central bank liquidity as % of liabilities7.97.96.110.911.4Private sector debt (% of GDP)139.2132.7128.6146.4-Long-term interest rate spread versus Bund (basis points)123.8102.591.388.672.1Market funding ratio (%)40.942.143.643.0-Green bond issuance (bn EUR)2.83.27.48.617.4 
 
   
 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 

The  Macroeconomic 
Imbalance  Procedure 
matrix presents the main elements of the in-
depth  review  undertaken  for  Spain 
in 
accordance  with  Article  5  of  Regulation  (EU)  No 
1176/2011  on  the  prevention  and  correction  of 
macroeconomic  imbalances,  as  summarised  in 
SWD(2022)631 (52). For Member States selected in 
the  2022  Alert  Mechanism  Report  it  presents, 
separately  for  each  source  of  imbalances  and 
adjustment issue, the main findings regarding the 
gravity  and 
identified 
challenges, as well as policy response and gaps. 

the  evolution  of  the 

prudential 

Spain is still facing vulnerabilities relating to 
high  external  and 
internal  debt,  both 
government and private, in a context of high 
unemployment. After the initial  shock caused by 
the COVID-19 pandemic, external and private debt 
to  GDP  ratios  resumed  their  declining  trends 
observed prior to the outbreak of the pandemic in 
2021,  supported  by  the  rebound  in  GDP  growth. 
Private debt ratios are still higher than before the 
COVID-19  crisis,  primarily  because  Spain  was  hit 
particularly hard by the pandemic, and stand well-
fundamental-based 
and 
above 
benchmarks.  The  net 
investment 
position  improved  in  2021,  to  reach  its  highest 
level  since  2005,  although  more  improvement  is 
needed  given  its  size.  The  current  account  has 
been  in  surplus  in  recent  years,  although  it 
narrowed in 2020 and 2021. The government debt 
to GDP ratio increased by 25 pps in 2020 to 120% 
before  declining  to  118.4%  of  GDP  in  2021-  still 
well  above  its  2019  level.  However,  the  average 
maturity of debt has been extended to over eight 
years, and the interest burden has been locked in 
for  a  substantial  period  at  record  low  levels.  The 
unemployment  rate  started  to  decrease  again  in 
2021,  but  labour market segmentation  and  youth 
unemployment remains high.  

international 

Going  forward,  external  and  internal  debt 
ratios  are  expected  to  continue  improving 
moderately. Private sector debt ratios returned to 
a  declining  path  in  2021.  The  public  guarantees 
schemes  and  loan  moratoria  have  alleviated  the 
impact  of  the  pandemic  on  borrowers  and  bank 
balance  sheets  as  asset  quality  has  been 

(52)  European Commission (2022), COMMISSION STAFF 
WORKING DOCUMENT In-Depth Review for Spain in 
accordance with Article 5 of Regulation (EU) No 1176/2011 
on the prevention and correction of macroeconomic 
imbalances.  

safeguarded.  The  NPLs 
ratio  for  corporates 
decreased  to  4.29%  in  December  2021,  down 
from  4.51%  at  the  end  of  December  2020 (53). 
Government  debt  is  set  to  gradually  decrease,  in 
view of significant nominal GDP growth rates and 
as  the  deficit  is  forecast  to  narrow  significantly 
over  the  coming  years,  after  a  2021  budgetary 
outcome  1.5  pp  better  than  foreseen  in  autumn 
2021.  However,  downside  risk  to  this  outlook  are 
predominant 
large  global 
in  a  context  of 
uncertainty, including on the evolution of monetary 
conditions,  which  could  affect 
the  ongoing 
consolidation  process.  Reducing  external  liabilities 
further  will  require  maintaining  sustained  current 
account  surpluses  and  measures  to  reduce  the 
dependence  on 
imports.  The  current  account 
balance remained in positive territory in the course 
of 2021 (from -0.4% of GDP in Q1 to 4.8% in Q4), 
thanks  to  the  recovery  of tourism  receipts,  and  is 
forecast to continue strengthening gradually going 
forward.  The  unemployment  rate  is  expected  to 
remain  below  pre-pandemic  levels  in  2022  and 
2023, supported by a more resilient labour market 
and  the  positive  impact  of  the  reforms  passed  at 
the  end  of  2021.  These  actions  include  the  new 
RED  mechanism,  -a  new  employment  flexibility 
and  stabilisation  scheme-,  and  encompass  legal 
changes aiming at reducing the use of temporary 
in  favour  of  permanent  types  of 
contracts 
contracts.  

in 

the 

steering 

A  number  of  policy  initiatives  can  prove 
further 
fundamental 
deleveraging  process  in  the  private  and 
public  sector,  and  sustaining  strong  current 
account  surpluses  that  can  reduce  the  stock 
of  external  liabilities.  The  RRP,  thanks  to  its 
cross-cutting  nature  and  scope,  has  the  potential 
to  provide  significant  impetus  for  addressing 
Spain’s  macroeconomic  vulnerabilities.  Measures 
intended to facilitate preventive debt restructuring 
and  debt  relief  for  natural  persons  are  under 
preparation, which will contribute to facilitating the 
adjustment of private debt stock. Measures aimed 
at improving the efficiency of both the expenditure 
and  revenue  side  will  contribute  to  accelerating 
the  downward  trajectory  of  public  debt.  Reforms 
regulatory 
are 
fragmentation  and  boost  the  innovation  of  firms 
and  regions,  which  adversely  affect  growth  and 
productivity.  Reforms  on  active  labour  market 
policies,  to  be  implemented  by  end-2022  are 

ongoing 

reduce 

the 

to 

(53)  Spanish Central Bank data 

60 

 
 
                                                 
                                                 
 
Staff  Working  Document  (SWD  (2022)631  final), 
its 
the  Commission  has  considered 
Communication  “European  Semester  –  2022 
Spring  Package”  (COM(2022)600  final)  that 
experience 
Spain 
macroeconomic imbalances. 

continues 

to 

in 

expected to boost labour productivity by upskilling 
and reskilling of the labour force.  

For  those  reasons,  and  more  generally  on  the 
basis  of  the  elements  of  the  in-depth  review 
undertaken  for  Spain  under  Regulation  (EU)  No 
1176/2011  on  the  prevention  and  correction  of 
macroeconomic imbalances as summarised in the 

61 

 
 
Table A17.1: Assessment of Macroeconomic Imbalances matrix 

Gravity of the challenge 

Evolution and prospects 

Policy response 

Imbalances (unsustainable trends, vulnerabilities and associated risks) 

The  reduction  of  Spain’s  external  net  debtor 
position  came  to  a  halt  in  the  first  half  of  2020, 
mainly  due  to  the  contraction  in  GDP,  but  it 
resumed  in  2021.  The  current  account  surplus  is 
expected  to  expand  in  the  coming  years  on  the 
back of the gradual normalisation of international 
tourism  that  started  in  the  second  half  of  2021. 
Along with the recovery of GDP, this is expected to 
contribute to a declining NIIP.  

The  strong  deterioration  of  the  export  market 
share  in  2020  and  early  2021  reflects  the 
dependence  on  tourism  of  the  Spanish  economy. 
The  export  market  share  is  expected  to  bounce 
back in the next years on the back of the gradual 
normalisation of international travels. 

The  drop  in  GDP  and  the  government’s  crisis 
response  measures  lead  to  a  sharp  deterioration 
of  public  finances  in  Spain  with  the  government 
deficit  increasing  to  11%  in  2020.  The  deficit 
narrowed  to  6.9%  in  2021  and  is  foreseen  to 
narrow  further  in  2022  and  2023  (to  4.9%  and 
4.4%,  respectively).  The  structural  balance  was  -
3.8% in 2021 and is projected to remain at -3.5% 
and -4.3%, in 2022 and 2023, respectively. 

Government  debt  is  forecast  to  decrease  further 
to  115.1%  and  113.7%  in  2022  and  2023, 
respectively.  

External 
position 

Public debt 

negative 

a 
investment 

net 
Spain  maintains 
international 
position, 
although  recovering  to  70%  of  GDP  in 
2021 from 85.5% of GDP  in 2020. While 
this  is  the  strongest  position  since  2005, 
and 
it 
fundamental-based 
The 
current  account  has  shown  surpluses  in 
if  narrowing  over 
recent  years  even 
2020-21  with 
the 
pandemic. 

prudential 
benchmarks. 

impact  of 

remains 

above 

the 

Before  2020,  the  general  government 
debt-to-GDP  ratio  was  on  a  downward 
path and stood at 95.5% of GDP in 2019. 
It rose by around 26 percentage points in 
2021,  to  120%  of  GDP  due  to  the 
combined  effect  of  the  large  negative 
government balance, the fall in  economic 
activity  and  the  inclusion  of  SAREB’s 
liabilities in the total public debt. It eased 
slightly to 118.4% in 2021, well above its 
2019 level. 

While Spain does not appear to face fiscal 
sustainability risks in the short run, in the 
medium-term  risks  persist  due  to  the 
worsening  outlook  for  public  finances 
caused  by  the  pandemic  and  the  high 
level  of  public  debt.  However,  the  low 
average interest payment on debt and the 
longer  average  maturity  of  public  debt 
the 
over 
vulnerabilities. 

the  past 

reduce 

years 

Private debt 

The  debt  of  the  private  sector  stood  at 
140.9% of GDP (in consolidated terms) in 
Q3-2021,  representing  an  increase  of 
11.3 pps since the beginning of 2020. The 
debt  of  non-financial  corporations  (NFCs) 
accounted 
for  81.1%  of  GDP  and 
household  debt  to  59.8%  of  GDP.  Both 
NFC  and  households  debt  ratios  are 
above  prudential  and  fundamental-based 
benchmarks 
strong 
indicating 
deleveraging needs remain.  

that 

reflecting 

the  gradual  pick-up 

Following  the  outbreak  of  the  crisis,  the  private 
debt to GPD ratio increased to a large  extent due 
to  the  sizeable  fall  in  GDP.  Corporate  debt 
increased  more  than  household  debt.  The  total 
stock of debt has been moderately declining since 
Q1-2021, 
in 
economic  activity  experienced  throughout  the 
year.  The  public  guarantees  schemes  and  loan 
moratoria  have  alleviated  the  impact  of  the 
pandemic  on  borrowers  and  bank  balance  sheets. 
The NPLs ratio for corporates decreased to 4.29% 
in  December 2021,  down  from  4.51%  at  the  end 
of December 2020. The latest available data point 
in  2022, 
at  a  possible  credit  deterioration 
warranting therefore further oversight. 

Unemployment 

Adjustment issues 

Following  the  steady  decline  of  the 
unemployment rate in the years  previous 
to the pandemic it continued in 2021 with 
the  measures  taken  with  the  pandemic. 
Nonetheless,  the  unemployment  rate  is 
one  of  the  highest  in  Europe.  Structural 
unemployment  hampers  the  adjustment 
process of the economy.  

The  unemployment  rate  is  expected  to  decline 
in  2022  and  2023,  below  the  pre-
further 
pandemic levels. It will remain though  among the 
highest  in  the  EU,  particularly  among  young 
people (31% in Q4-2021).  

The  use  of  temporary  contracts  is  expected  to 
decline,  on  the  back  of  the  legislative  changes 
adopted in December 2021. 

of 

levels 

High 
labour  market 
segmentation  (permanent  vs.  temporary 
employment)  have  marked  the  Spanish 
economy over the past decade. 

Reducing  decisively  Spain’s  large  external  liabilities 
requires  sustaining  current  account  surpluses  for  an 
extended  period  of  time.  The  mix  of  reforms  and 
investments  foreseen  and  under  implementation  in  a 
number  of  areas  under  the  Recovery  and  Resilience 
Plan    have  the  potential  to  further  significantly  raise 
the  competitiveness  of  Spain’s  business  sector  and 
exports.  Moreover,  the  Plan  also  envisages  policies 
targeted  to  reduce  dependency  on  energy  imports, 
which  are  also  conducive  of  improving  the  current 
account 
balance. 
 Further  competitiveness  gains  can  be  expected  if  the 
recovery  of  labour  productivity  is  coupled  with  wage 
moderation and a gradual slowdown of inflation. 

A  more  efficient  tax  system  and  improvement  in  the 
quality  of  public  spending  –  important  deliverables  in 
the  RRP  -  can  decisively  contribute  to  reducing  the 
structural deficit. A package of measures in the area of 
taxation,  including  combating  tax  fraud  and  a  wide-
ranging  tax  reform  is  underway  and  set  to  enter  into 
force  by  Q1  2023.  The  framework  for  carrying  out 
spending  reviews  was  strengthened  and  topics  for  the 
2022-2026  cycle  of  spending  reviews  have  been 
the  National 
already 
defined.  By 
Procurement  Strategy  designed 
the 
improve 
efficiency  and  sustainability  of  public  procurement,  is 
scheduled  to  be  adopted.  The  relinking  of  pensions  to 
inflation  will  increase  pensions  expenditures,  and  the 
introduction  of  offsetting  measures  to  be  adopted  in 
2022 under the  RRP is needed to mitigate risks to the 
long-term fiscal sustainability.  

end-2022, 

to 

A comprehensive reform aimed at the modernisation of 
the  insolvency  framework  is  being  implemented  by 
means  of  a  law  set  to  enter  into  force  in  Q2  2022, 
including  additional  instruments  aimed  at  facilitating 
preventive debt restructuring and debt relief for natural 
persons.  In  addition,  a  set  of  measures  intended  to 
provide  support  to  SMEs  in  the  form  of  financial 
guarantees  through  CERSA  will  be  adopted  by  Q4 
2023. This will allow access to long-term financing and 
working capital operations to businesses. 

Short-time  work  schemes  (‘ERTEs’)  were  vital  to 
preserve  employment  over  the  COVID-19  crisis.  In 
addition,  several  measures  were  taken  to  protect  the 
self-employed  by  means  of  tax  deferrals  and  benefits 
for  suspension  of  activity.  The  reform,  which  is 
fostering a shift to permanent contracts, is expected to 
stabilize employment and help boost productivity. 

implementation  of 

the  new  RED 
A  successful 
mechanism 
in  force  since  March  2022  and  the 
upcoming  reforms  of  active  labour  market  policies  in 
the  RRP  are  essential  to  increase  resilience  of  the 
labour  market,  reduce  the  unemployment  rate  and 
boost 
through  upskilling  and 
reskilling of the labour force.  

labour  productivity 

Source: European Commission 

62 

 
 
 
 
 
 
 
 
 
 
less  damaging  for  growth,  were  closer  to  the  EU 
aggregate. 

Spain’s  labour  tax  burden  is  relatively  low 
across the  income  distribution.  The  labour tax 
wedge  for  Spain  in  2021  was  lower  than  the  EU 
average  at  various  income  levels,  i.e.  for  single 
people at the average wage (100%) as well as at 
67%  of  the  average  wage.  The  tax  wedge  was 
substantially  lower  at  50%  income  level.  Second 
earners  at  a  wage  level  of  67%  of  the  average 
wage,  whose  spouse  earns  the  average  wage, 
faced  a  tax  wedge  slightly  higher  than  the  EU 
average.  In  addition,  the  difference  between  their 
tax  wedge  and  that  of  single  people  at  the  same 
wage was slightly above the EU average. In 2020 
the tax-benefit system helped reduce inequality as 
measured  by  the  GINI  coefficient  by  slightly  less 
than the EU average. 

ANNEX 18: TAXATION 
ANNEX 18: TAXATION 

This  Annex  provides  an 
indicator-based 
overview  of  Spain’s  tax  system.  It  includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax that Spain derives most revenue from, the tax 
burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance  and  on  the  risks  of  aggressive  tax 
planning activity. 

information  on 

Spain’s  tax  revenues  are  relatively  low  in 
relation to GDP, with the highest contribution 
from  labour  taxation.  In  2020,  Spain’s  tax 
revenues as percentage of GDP were considerably 
below  the  EU  aggregate.  Labour  tax  revenues  as 
percentage  of  GDP  were  also  low  in  comparative 
terms,  but  given  overall  low  tax  revenues,  the 
share  of  labour  taxes  in  total  tax  revenues  was 
the  EU  aggregate.  However, 
slightly  above 
revenues 
and 
environmental  taxes  were  significantly  below  the 
EU aggregate both as share of GDP and as share 
of  total  taxation.  Revenues  from  capital  taxes  in 
2020  were  close  to  the  EU  aggregate  as 
percentage  of  GDP  but  relatively  high  as  a  share 
of  total  tax  revenues.  While  revenues  from 
property  taxes  were  relatively  high,  both  as 
percentage  of  GDP  and  of  total  tax  revenues, 
revenues from recurrent property taxes, which are 

consumption 

taxes 

from 

Table A18.1: Indicators on taxation 

(1) Forward-looking Effective Tax Rate (OECD). 
(*) EU-27 simple average as there is no aggregated EU-27 value. 
For more data on tax revenues as well as the methodology applied see European Commission, Directorate-General for Taxation 
and Customs Union, Taxation trends in the European Union: data for the EU Member States, Iceland, Norway and United Kingdom: 
2021 edition, Publications Office, 2021, https://data.europa.eu/doi/10.2778/843047 and the ‘Data on Taxation’ webpage (data 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en). For more details on VAT GAP see 
European Commission, Directorate-General for Taxation and Customs Union, “VAT gap in the EU : report 2021”, Publications 
Office, 2021, https://data.europa.eu/doi/10.2778/30877 
Source: European Commission, OECD. 

63 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)31.334.734.836.837.940.139.940.1Labour taxes (as % of GDP)16.616.817.519.820.020.720.721.5Consumption taxes (as % of GDP)8.19.69.49.110.811.111.110.8Capital taxes (as % of GDP)6.68.47.87.97.18.28.17.9Total property taxes (as % of GDP)2.12.72.62.71.92.22.22.3Recurrent taxes on immovable property (as % of GDP)1.01.21.11.21.11.21.21.2Environmental taxes as % of GDP1.61.81.81.72.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)30.529.227.927.927.933.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)39.739.439.439.039.341.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)23.323.323.319.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)7.27.27.16.98.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)9.69.131.931.8VAT Gap (% of VTTL)6.36.911.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)3.23.42.610.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)5.56.86.047.846.236.7SpainEU-27Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity Risk 
 
 
 
 
   
 
Graph A18.1: Indicators on tax wedge 

The tax wedge is defined as the sum of personal income taxes and employee and employer social security contributions net of 
family allowances, expressed as a percentage of total labour costs (the sum of the gross wage and social security contributions 
paid by the employer). It is calculated for specific types of tax payers in terms of household composition and income level 
expressed as % of average wage. Data on tax wedges can be consulted in the ‘Tax and benefit database’ by ECFIN 
https://europa.eu/economy_finance/db_indicators/tab/  
(1) The second earner average tax wedge measures how much extra personal income tax (PIT) plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), “Taxing Wages 2016”, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en  
(*) EU-27 simple average as there is no aggregated EU-27 value. 
Source: European Commission. 

Spain  is  doing  well  on  the  digitalisation  of 
the tax administration, which can help reduce 
tax  arrears  as  well  as  cut  compliance  costs. 
Outstanding 
tax  arrears  have  declined 
slightly  by  0.5 pps.  to  9.1%  of  total  net 
revenue.  This  is  significantly  below  the  EU27 
average of 31.8%, though that average is inflated 
by very large values in a few Member States. The 
Annual  Report  on  Taxation  2021  highlights  scope 
for  improvement  in  the  rate  of  tax  return  e-
filing. (54)  The  VAT  gap  (an  indicator  of  the 
effectiveness of VAT enforcement and compliance) 
has increased slightly by 0.6 pps. to 6.9%, which is 
the  EU-wide  gap  of  10.5%. 
still  below 
forward-looking 
Furthermore, 
the 
effective  corporate 
rates  were 
considerably above the EU average in 2020. 

average 
income 

tax 

(54)  European Commission, Directorate-General for Taxation and 
Customs Union, Annual Report on Taxation 2021 : review of 
taxation policies in the EU Member States, Publications 
Office, 2021, https://data.europa.eu/doi/10.2778/294944, 
see section 2.1.4 Improving tax administration of the Annual 
Report on Taxation 2021 for further details 

64 

27.935.739.343.739.8At 50% of Average Wage (Singleperson)At 67% of Average Wage (Singleperson)At 100% of Average Wage (Singleperson)At 167% of Average Wage (Singleperson)For second earner at 67% of AverageWage (Two earner couple, 1st earner100% of AW) (1)Tax wedge 2021 (%)ESEU-27 (*) 
                                                 
      
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A19.1: Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares 
(2) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
Source: Eurostat and ECB as of 2 May 2022, where available; European Commission for forecast figures (Spring forecast 2022) 

65 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)3.6-1.32.02.1-10.85.14.03.4Potential growth (y-o-y)3.61.20.31.00.20.51.21.3Private consumption (y-o-y)3.9-2.01.51.0-12.04.60.83.8Public consumption (y-o-y)5.71.40.62.03.33.1-0.50.4Gross fixed capital formation (y-o-y)5.7-8.53.44.5-9.54.38.35.8Exports of goods and services (y-o-y)4.61.04.32.5-20.114.713.64.6Imports of goods and services (y-o-y) 8.3-5.24.11.2-15.213.98.34.8Contribution to GDP growth:Domestic demand (y-o-y)4.9-3.01.61.8-8.24.12.03.4Inventories (y-o-y)0.0-0.20.2-0.2-0.50.50.00.0Net exports (y-o-y)-1.31.80.20.5-2.20.52.00.0Contribution to potential GDP growth:Total Labour (hours) (y-o-y)1.60.1-0.10.50.10.10.60.5Capital accumulation (y-o-y)1.70.70.30.50.30.30.50.6Total factor productivity (y-o-y)0.30.40.20.0-0.10.00.10.2Output gap3.4-4.3-4.22.1-9.1-4.9-2.2-0.2Unemployment rate9.219.120.814.115.514.813.413.0GDP deflator (y-o-y)3.80.50.61.31.12.23.72.4Harmonised index of consumer prices (HICP, y-o-y)3.22.30.70.8-0.33.06.31.8Nominal compensation per employee (y-o-y)3.22.00.62.3-1.42.93.33.5Labour productivity (real, hours worked, y-o-y)0.61.70.60.2-0.3-1.80.51.7Unit labour costs (ULC, whole economy, y-o-y)3.40.40.03.06.10.22.11.2Real unit labour costs (y-o-y)-0.5-0.1-0.61.74.9-2.0-1.5-1.1Real effective exchange rate (ULC, y-o-y)2.4-1.7-0.5-0.1....Real effective exchange rate (HICP, y-o-y)1.2-0.50.2-1.60.70.7..Net savings rate of households (net saving as percentage of net disposable income)3.14.62.64.210.8...Private credit flow, consolidated (% of GDP)27.1-0.7-3.11.14.42.4..Private sector debt, consolidated (% of GDP)166.6198.3153.5128.6146.5138.3..of which household debt, consolidated (% of GDP)73.583.267.356.962.458.4..of which non-financial corporate debt, consolidated (% of GDP)93.1115.186.271.784.179.8..Gross non-performing debt (% of total debt instruments and total loans and advances) (2).4.45.32.72.5...Corporations, net lending (+) or net borrowing (-) (% of GDP)-3.95.96.43.76.17.27.27.3Corporations, gross operating surplus (% of GDP)20.423.823.923.622.022.723.924.6Households, net lending (+) or net borrowing (-) (% of GDP)-4.5-0.21.01.76.11.60.50.3Deflated house price index (y-o-y)9.7-8.21.24.12.2...Residential investment (% of GDP)11.36.94.55.96.05.4..Current account balance (% of GDP), balance of payments-7.8-3.92.32.10.80.91.82.1Trade balance (% of GDP), balance of payments-5.0-0.93.42.91.51.5..Terms of trade of goods and services (y-o-y)0.5-0.90.1-0.52.2-1.2-4.00.8Capital account balance (% of GDP)0.60.40.40.30.40.9..Net international investment position (% of GDP)-70.5-91.3-88.1-75.0-84.9-70.0..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)-39.5-71.8-62.7-46.8-52.4-40.0..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)121.0155.2157.3159.9187.5181.1..Export performance vs. advanced countries (% change over 5 years)7.8-4.4-0.80.8-6.4...Export market share, goods and services (y-o-y)-2.7-3.81.4-0.8-10.34.38.60.4Net FDI flows (% of GDP)4.00.10.60.51.7-0.8..General government balance (% of GDP)1.3-9.3-4.8-3.1-10.3-6.9-4.9-4.4Structural budget balance (% of GDP)..-2.0-3.9-4.3-3.8-3.5-4.3General government gross debt (% of GDP)40.762.7102.398.3120.0118.4115.1113.7forecast 
 
 
 
 
        
 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks  for  Spain  over  the  short,  medium  and 
long term. It follows the same multi-dimensional 
approach as the 2021 Fiscal Sustainability Report, 
updated  on  the  basis  of  the  Commission  2022 
spring forecast. 

permanently  weaker  than  in  the  baseline.  The 
‘adverse interest-growth rate’ scenario assumes a 
less  favourable  snowball  effect  than 
in  the 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

the  S1  and  S2  fiscal 
Table 2  shows 
indicators  and  their  main 
sustainability 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 

the 

baseline 

presents 

Table 1 
debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU.  

Graph 1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions.  The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 

Table A20.1: Debt sustainability analysis for Spain 

Source:  European Commission 

66 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)98.3120.0118.4115.2113.8115.0114.2114.0114.6114.7114.8115.2115.8116.1Change in debt-2.221.6-1.5-3.2-1.41.2-0.8-0.30.60.10.10.40.60.3of whichPrimary deficit0.88.04.72.92.42.51.91.71.81.81.81.71.81.8Snowball effect-1.013.0-6.1-6.6-4.3-1.2-2.7-1.9-1.2-1.7-1.6-1.3-1.2-1.5Stock-flow adjustment-1.90.6-0.10.50.50.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)16.027.023.621.921.321.120.420.120.420.420.420.520.620.8S1S2Overall index (pps. of GDP)5.21.9of whichInitial budgetary position1.52.7Debt requirement4.0Ageing costs-0.3-0.8of whichPensions-0.5-2.2Health care0.41.2Long-term care0.10.6Others-0.4-0.4                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators85951051151251351452019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p90859510511512513514520192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
   
 
change 

in  ageing-related 

projected 
public 
expenditure  such  as  pensions,  health  care  and 
long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
fiscal 
classification 
(Table A20.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

scenarios  and  stochastic  simulations,  most 
pointing  to  high  risks  (Tables  A20.1  and  A20.2). 
Moreover,  the  sustainability  gap  indicator  S1 
signals  that  an  adjustment  of  5.2  pps.  of  GDP  of 
the structural primary balance would be needed to 
reduce  debt  to  60%  of  GDP  in  15  years’  time 
(Table 2).  Overall,  the  high  risk  reflects  the 
currently 
large  deficit  and  high  debt,  and 
sensitivity to adverse shocks. 

the  DSA  points 

Long-term  risks  to  fiscal  sustainability  are 
medium.  Over  the  long  term,  the  sustainability 
gap indicator S2 (at 1.9 pps. of GDP) points to low 
risks,  while 
to  substantial 
vulnerabilities,  leading  to  the  overall  medium  risk 
assessment.  The  S2  indicator  suggests  that,  to 
stabilise  debt  over  the  long  term,  it  will  be 
necessary  to  address  the  unfavourable  initial 
budgetary position and future budgetary pressures 
stemming  from  population  ageing  related  to 
long-term  care  expenditure 
health  care  and 
(Table 2).   

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection  indicator  (S0)  does  not  signal  major 
short-term fiscal risks (Table A20.2). 

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are  high.  Both  elements  of  the  Commission’s 
medium-term  analysis  lead  to  this  conclusion. 
First,  the  debt  sustainability  analysis  (DSA)  shows 
that government debt, is projected to remain at a 
high  level  (around  116%  of  GDP  in  2032)  in  the 
baseline (Table 1). This debt path is also sensitive 
to  possible  shocks  to  fiscal,  macroeconomic  and 
financial  variables,  as  illustrated  by  alternative 

Table A20.2: Heat map of fiscal sustainability risks for Spain 

(1) Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty.  
Source:  European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

67 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMMEDIUMHIGHHIGHHIGHHIGHDebt level (2032), % GDP116108119125119Debt peak year20212021203220322032Fiscal consolidation space89%72%90%89%89%Probability of debt ratio exceeding in 2026 its 2021 level41%Difference between 90th and 10th percentiles (pps. GDP)38Short termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)OverallLOWMEDIUMDeterministic scenariosStochastic projectionsLOWHIGHHIGHHIGH