COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Spain and delivering a Council opinion on the 2023 Stability Programme of Spain
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Spain, economic policy, economic recovery, economic reform, energy policy, fiscal policy, housing policy, renewable energy, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.5.2023  SWD(2023) 609 final  COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Spain and delivering a Council opinion on the 2023 Stability Programme of Spain {COM(2023) 609 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Spain faces a more demanding 
scenario with increased resilience 

Spain  weathered  well  the  effects  of  the 
Russian  war  of  aggression  against 
Ukraine.  Real  GDP  grew  by  5.5%  last  year 
mainly driven by external demand, including a 
significant  rebound  in  international  tourism, 
and  by  the  dynamism  of  private  consumption 
(see Annex 20). The latter was supported by a 
resilient  labour  market  and  fiscal  support 
measures.  However,  the  loss  of  purchasing 
power,  the  tightening  of  financial  conditions, 
and economic uncertainty all took a heavy toll 
on  private  expenditure  during  the  second  half 
of  the  year,  with  vulnerable  and  low-income 
households being particularly affected. 

The  labour  market  remained  remarkably 
resilient. Employment grew last year by 3.1% 
to  above  pre-pandemic  levels,  reaching  close 
to  70%  of  working  age  population  but  still 
below  the  EU  average.  Following  the  2021 
labour  market 
the  number  of 
reform, 
temporary employees has fallen steadily in the 
private sector amid continued job creation (see 
Graph 1.1).  The  unemployment  rate  declined 
further  to  12.9%,  which  is  the  lowest  rate 
since 2008. However, it remains almost double 
the  EU  average,  with  structural  pockets  of 
vulnerability, including very high long-term and 
youth unemployment and still a high share of 
fixed-term  contracts  in  the  public  sector  (see 
Annex 14). 

Moderate  nominal  wage  growth  coupled 
with high inflation led to a decline in real 
wages.  Nominal  wage  growth  per  head (1) 
remained  moderate  in  2022  (2.9%),  well 

(1)  Wages and salaries over total full-time equivalent 

employees. 

below  inflation,  resulting  in  a  substantial 
decline in real terms (-5%). 

The  energy  shock  was  mainly  channelled 
through  import  prices.  Despite  low  direct 
exposure  to  supply  disruptions,  Spain  has  a 
large  external  dependence  on  international 
markets  (see  Annex 7).  The  surge  in  energy 
prices  contributed  to  push  up  HICP  inflation, 
which  peaked  in  the  summer  and  averaged 
8.3% 
in  2022  (see  Graph 1.2).  Generally, 
inflation eased down in the second half of last 
year on the back of lower energy inflation and 
limited  second-round  effects  from  wages. 
However,  the  pass-through  to  goods  and 
services  accelerated,  particularly 
to  food 
products  and  hospitality,  leading  to  higher 
prices for consumers. 

Graph 1.1: Unemployment rate (% of labour 
force) and share of temporary employees (% 
of total employees) (2008-2022) 

Source: INE, own calculations. 

2 

05101520253035080910111213141516171819202122%Unemployment rateShare of temporary employees 
 
 
                                                 
   
 
Graph 1.2: HICP headline and core inflation (% 
y-o-y rate) (2021-2023) 

(1) Core inflation: excluding energy and unprocessed food 
Source: Eurostat, own calculations. 

Competitiveness showed resilience to the 
energy  shock.  Terms  of  trade  deteriorated 
significantly  in  2022,  but  labour  productivity 
gains and moderate wage increases helped to 
maintain  cost  competitiveness,  while  unit 
profits recovered strongly. Export performance 
was  very  positive,  supported  by  the  recovery 
of  international  tourism,  contributing  to  Spain 
regaining global market shares (see Annex 20). 

for 

The  fiscal  deficit  continued  to  decline 
despite  significant  measures  to  reduce 
the  impact  of  energy  prices.  The  cost  of 
government  measures  to  mitigate  the  impact 
of  the  energy  shock  in  2022  is  estimated  at 
1.6%  of  GDP,  of  which  only  0.5%  of  GDP 
accounted 
to 
vulnerable  firms  and  households  (see  Box 1). 
The  double-digit  increase  in  tax  revenues  has 
offset  the  impact  of  these  measures  and 
helped  to  reduce  the  fiscal  deficit  from  6.9% 
of  GDP  in  2021  to  4.8%  in  2022.  The  debt 
ratio  also  decreased  from  118.3%  of  GDP  in 
2021 to 113.2% in 2022 supported by strong 
nominal GDP growth. (see Annex 20). 

targeted  measures 

The  economy  is  projected  to  expand  by 
1.9% in 2023. Downside risks to the outlook 
are  the  impact  of  prolonged  tightening  of 
financial conditions and the materialisation of 
further disruption on the energy markets. GDP 
is expected to gradually pick up over this year, 
sustained by stronger private consumption and 

3 

of 

tourism. 

normalisation 

The 
further 
implementation of the recovery and resilience 
plan  (see  Annex  3)  and  cohesion  policy 
programmes  (see  Annex  4)  are  also  set  to 
job 
boost 
creation  will  support  further  reductions  in  the 
unemployment  rate  to  12.7%  in  2023  (see 
Annex 20). 

investment  growth.  Moderate 

inflation 

Annual  headline 
is  set  to 
gradually  ease  and  reach  4%  in  2023. 
Lower inflation is expected on the back of the 
expected  further  moderation  of  energy  prices. 
In  turn,  core  inflation  is  projected  to  stay  at 
high levels over the forecast horizon. 

is 
Nominal  wage  growth  per  head 
expected  to  accelerate  in  2023  up  to 
3.9%,  marginally  below 
inflation.  The 
government  increased  the  minimum  wage  by 
8%  for  2023,  up  to  gross  EUR 1 080  per 
month (14 instalments per year). In the public 
sector,  the  budget  set  a  2.5%  wage  increase 
increased  by 
for  2023; 
1 percentage point depending on inflation and 
nominal  GDP  developments.  Going  forward, 
the multi-year wage agreement reached within 
the  social  dialogue  process  will  contribute  to 
limiting  second-round  effects  and  mitigating 
the  inflation-driven  loss  in  purchasing  power, 
while ensuring competitiveness is protected. 

this  could  be 

Macroeconomic  vulnerabilities  related  to 
high  private,  government  and  external 
debt  are  receding  but  remain  present.(2) 
Favoured by high nominal GDP growth, strong 
export  performance,  and 
labour  market 
resilience,  private,  public  and  external  debt 
ratios  declined  in  2022.  Yet,  they  remain  at 
(see  Annex 22).  The 
still  elevated 
reduction of public and private indebtedness is 
expected  to  slow  down  this  year  given  the 
worse economic outlook and the tightening of 
financial  conditions  (see  Annex 18).  Further 
reductions  in  external  debt  will  also  remain 
conditional  on  energy  market  developments, 
including  potential  new  disruptions  of  energy 
supplies. 

levels 

(2)  European Commission (2023), In-Depth Review for 

Spain, Commission staff working document (COM(2023) 
632 final). 

-2024681012%yoyHeadline inflationCore inflation 
   
                                                 
shocks  have  aggravated  structural  challenges 
identified  by  the  social  scoreboard  under  the 
European  Pillar  of  Social  Rights.  Transfers 
continue  to  have  limited  effects  on  income 
inequality  and  poverty  reduction  –  child 
poverty 
remain 
comparatively  high  and  have  worsened 
compared  with  pre-pandemic  levels.  Regional 
disparities remain wide, including in areas like 
innovation  and  educational  outcomes,  with 
some  geographical  areas  further  stressed  by 
demographic and climate challenges. 

in  particular 

-  which 

to 

Growth-enhancing  policies  are  needed  to 
complement  fiscal  consolidation 
(see 
Annexes  18  to  22).  The  effects  of  population 
ageing,  particularly  affecting  health  and 
pension  expenditure,  will  pose  an  increasing 
challenge 
debt 
ensuring 
sustainability.  Keeping  the  momentum  for  tax 
reforms  is  also  needed  to  ensure  that  the 
recent  increase  in  tax  revenues  becomes 
permanent. Targeted investments and growth-
enhancing  reforms  would  support  medium-
term  fiscal  adjustment,  and  would  contribute 
to  reducing  high  private  debt  levels  and 
improving external competitiveness. 

public 

contribute 

to  addressing 

Full  implementation  of  policy  measures 
will 
the 
remaining  challenges  (see  Annexes  2  to  5). 
Spain needs to advance on its country-specific 
recommendations, making use of the potential 
of the RRF funds and other available EU funds, 
notably  cohesion  policy  funds,  to  reduce 
resilience 
vulnerabilities 
capacities. 

increase 

and 

Macro socio-economic and 
environmental challenges remain 

Further efforts are needed to consolidate 
progress  towards  the  UN’s  Sustainable 
Development  Goals  (SDGs)  (see  Annex 1). 
Spain  has  improved  particularly  in  gender 
equality,  quality  of  education,  and  climate 
action. However, it still needs to catch up with 
the  EU  average  on  several  SDGs,  particularly 
on  no  poverty,  decent  work  and  economic 
growth,  and  reduced  inequalities.  Moreover, 
Spain  is  falling  back  from  the  target  on 
sustainable cities and communities. 

Spain 

needs 

The  green  transition  requires  continued 
policy  action  (see  Annexes  6  to  8).  To 
transform  the  economy  under  the  European 
Green  Deal, 
significant 
investments  and  further  reforms  to  improve 
energy  efficiency  and  decarbonisation,  and 
clean  and  sustainable  mobility,  to  scale  up 
manufacturing  of  clean  technologies,  and 
water and waste management, and to support 
the  reskilling  and  upskilling  of  the  workforce. 
grid 
Improvements 
infrastructure  would  help  untap  the  full 
potential of renewable energy. 

permitting 

for 

in 

keep 

factors 

hampering 
Structural 
productivity  growth  (see  Annexes  9  to  13). 
Weak  productivity  performance  has,  over  the 
last  decade,  further  widened  the  gap  with  EU 
peers.  This  has  been  driven,  among  other 
factors,  by  low  private  R&D  expenditure  and 
the  business  environment, 
shortfalls 
including  market 
size-
fragmentation, 
concerns  on 
dependent 
legislation  quality.  Digital  skills  are  improving, 
but 
and 
mismatches  persist,  including  in  green  and 
innovation skills. 

regulation,  and 

significant 

shortages 

other 

in 

The  energy  crisis  heightened  social 
challenges  (see  Annexes  14  to  17).  Rising 
inflation  and  decreasing  housing  affordability 
–  particularly  challenging  in  the  rental  sector 
of  urban  areas-  disproportionately  affected 
vulnerable  households.  Measures  mitigating 
the  impact  on  energy  poverty  were  mostly 
untargeted and therefore fiscally costly. These 

4 

 
 
Box 1: 

Energy policy response in Spain 

Spain adopted various support measures to mitigate the impact of energy price inflation 
on households and businesses. For 2023, the Commission 2023 spring forecast projects 
its gross budgetary costs to amount to 0.6 % of GDP (3). Most measures do not preserve 
the price signal and are untargeted. Most measures will be in place until 31 December 
2023. 

In  2022,  the  government  successively  extended  reduction  of  VAT  on  electricity  (from 
21%  to  10%,  and  then  to  5%  since  September),  the  reduction  of  the  special  tax  on 
electricity (from 5.5% to 0.5%) and the suspension of the tax on the value of electricity 
production; these have been in place since 2021. The reduction of VAT was extended to 
gas  as  from  October  2022.  The  energy  social  voucher  has  become  more  generous, 
including higher discounts in electricity  bills and higher subsidies for heating.  In 2023, 
this  measure  was  enhanced  by  a  lump  sum  subsidy  of  EUR 200  for  low-income 
households. The generalised vehicle fuel rebate of 20 cents per litre, which was in place 
between April  and December 2022,  has been substituted in 2023 by a more targeted 
support  to  road  and  maritime  transport  and  to  agriculture  and  fishing  sectors.  Other 
measures  include  price  discounts  for  using  public  transport  and  allowing  collective 
heating systems to benefit from regulated gas tariffs. 

The cost of these measures will be partly offset by measures related to the temporary 
solidarity  contribution by energy producers, credit institutions and wealthier taxpayers, 
which will be in place until the end of 2024. 

Spain  also  introduced  the  ‘Iberian  mechanism’.  The  measure  covers  part  of  the  fuel 
costs of gas and coal-fired power plants with the aim of reducing wholesale and retail 
electricity  prices.  It  is  financed  by  the  ‘congestion  income’  obtained  by  the  Spanish 
transmission  system  operator  as  a  result  of  cross-border  electricity  trade  between 
France and Spain, and by a charge imposed by Spain and Portugal on certain buyers in 
the Iberian wholesale electricity market. 

Spain applies a national measure in application of Council Regulation (EU) 2022/1854: a 
1.2% tax rate on 2022 and 2023 net turnover applies to petroleum, gas and electricity 
firms when their turnover exceeds EUR 1 bn (4). 

Spain also took measures to increase energy savings. Royal  Decree-Law 14/2022 laid 
down  provisions  to  promote  energy  savings  and  efficiency  by  ruling  out  heating  or 
cooling buildings and premises: i) above 19 degrees (for heating), below 27 degrees (for 
cooling);  ii)  irrespective  of  the  energy  source;  and  iii)  with  an  obligation to  have doors 
that  close  automatically  (to  prevent  energy  waste).  In  addition,  Royal  Decree-Law 
18/2022  and  the  ‘Plan  Más  Seguridad  Energética’  (+SE),  approved  in  October  2022, 
include 73 energy security measures, also with regard to savings and efficiency. 

(3)  For 2022, gross budgetary costs of measures amounted 
to 1.6% of GDP. Some of the measures outlined in this 
box were already in place in 2022. 

(4)  Member States can keep national measures that are 
equivalent to the solidarity contribution regulated in 
Council Regulation (EU) 2022/1854 provided they are 

compatible with the objectives of the regulation and 
generate higher or comparable proceeds. These 
measures must also cover the extraordinary and 
unexpected profits of businesses active in the 
extraction of crude petroleum, natural gas, coal, and 
refinery sectors. 

5 

 
 
                                                 
                                                                        
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

capacity  as  to  ensure  the  effective  and 
efficient  absorption  of  the  recovery  and 
resilience and other EU and national available 
funds.  In  particular,  Spain  has  expressed  its 
intention  to  request  EUR  84  bn  in  loans  and 
will benefit from a higher RRP grant allocation. 
The revised plan will also include a REPowerEU 
chapter, to be funded at least partially by the 
additional  REPowerEU  grants.  The  following, 
more  detailed  review  of  measures  being 
implemented under the RRP in no way implies 
formal  Commission  approval  or  rejection  of 
any payment requests. 

Supporting the green transition 

Reforms have been approved to pave the 
way  for  higher  shares  of  renewable 
energy  sources.  Spain  launched  calls  for 
applications to support both renewable energy 
facilities integrated in buildings and production 
renewable  energy 
processes,  and  also 
communities.  The  framework  for  regulatory 
sandboxes  provides  for  a  test  environment 
that will allow electricity market participants to 
get  regulatory  exemptions  to  test  innovative 
solutions  in  the  energy  sector.  Spain  also 
adopted  a  system  of  guarantees  of  origin  to 
verify  the  origin  of  gases  claiming  to  be 
renewable, including hydrogen. The REPowerEU 
initiative  provides  a  unique  opportunity  to 
scale up and support energy-related measures 
to  further  enhance  Spain’s  decarbonisation 
objectives. 

Spain  adopted  a  new  framework  for  a 
methodical  development  of  mobility.  A 
strategy was approved to increase the security 
and sustainability of the mobility network. This 
will be through better protection of people and 
goods, and prioritising daily mobility, economic 
and  social  equity,  energy  efficiency  and  the 
fight against climate change. Furthermore, the 
strategy  includes  measures  to  enhance  the 

Progress on the recovery and 
resilience plan in 2022 

investments 

Spain’s recovery and resilience plan (RRP) 
aims  to  address  the  key  challenges 
related to the green transition, the digital 
transition  and  to  economic  and  social 
resilience.  It  consists  of  102  reforms  and 
112 
that  are  supported  by 
EUR 69.5  bn  in  grants,  representing  6.5%  of 
GDP  (see  Annex  3  for  more  details).  RRP 
measures  implemented  so  far  include  labour 
market reforms, a first set of pension reforms, 
the  Tax  Administration 
modernisation  of 
Agency  and  tax  fraud  prevention,  approval  of 
the Public Health Strategy, and a review of the 
Insolvency  Law,  the  Science,  Technology  and 
on 
Innovation 
Telecommunications,  the  law  on  integrated 
Vocational  Training  System  and  the  general 
law on Audio-visual Communication. Based on 
data published by the Spanish authorities, the 
investments  supported  by  the  RRP  are  well 
under  way,  and  78%  of  the  more  than 
EUR 50 bn  budgeted  in  2021  and  2022  had 
the  end  of  2022. 
been  committed  by 
EUR 19.6 bn  was  transferred  to  regions  to 
implement  investments  under  the  RRP.  Box 1 
contains  a  summary  of  key  deliverables  in 
2023 and 2024. 

Law, 

law 

the 

The  implementation  of  Spain’s  recovery 
and  resilience  plan  has  so  far  been  well 
underway,  however  it  is  facing  some 
challenges  going  forward.  Spain  submitted 
3  payment  requests,  corresponding  to  121 
in  the  plan  and 
milestones  and  targets 
resulting in an overall disbursement of EUR 28 
bn.  While  Spain  has  been among  the  Member 
States  most  advanced  in  the  implementation 
of  the  plan, it is  now  expecting to  revise it  to 
more  than  double  its  size.  This  should  be 
accompanied  by  sufficient  administrative 

6 

 
 
 
connectivity of the transport system, including 
multimodal 
connectivity,  by  means  of 
digitalising  the  network  and  technological 
progress. Spain has also taken important steps 
on  electromobility,  notably  by  strengthening 
the  operational  and  regulatory  framework. 
This  will 
the  deployment  of 
recharging  infrastructure  to  boost  the  use  of 
electric  vehicles,  including  the  obligation  for 
installation  of  charging  points  in  car  parks 
attached  to  residential  and  non-residential 
buildings. 

facilitate 

Adopted  reforms  provide  support  for 
energy-efficient  renovations.  Spain  put  in 
place  aid  programmes  and  tax  incentives  for 
energy  efficiency  renovations  and  extended 
the coverage of one-stop shops for renovation 
across  different 
levels  of 
government.  The  regulatory  framework  was 
also approved to build at least 20 000 energy-
efficient  dwellings  for  social  rent  or  at 
affordable  prices.  These  measures  are 
expected  to  contribute  to  achieving  National 
Energy and Climate Plan (NECP) targets. 

regions  and 

and 

Spain  took  steps  towards  a  circular 
economy.  Under  the  Strategic  Projects  for 
Economic  Recovery 
Transformation 
(PERTEs),  the  project  on  the  circular  economy 
will  invest  over  EUR 492  million  by  2026  in 
industrial 
improving  circular  economy 
sectors  and  in  three  key  sectors:  plastics, 
textile, and goods for renewable energy. Spain 
also  introduced  taxes  on  single-use  plastic 
packaging and the deposit of waste in landfill, 
incineration, and co-incineration plants, as well 
as revision of the tax on fluorinated gases. 

in 

Measures  were  adopted  to  advance  on 
water management reforms. New technical 
standards  for  the  safety  of  dams  and  their 
reservoirs  were  approved  and  the  national 
sanitation,  water 
plan 
efficiency,  savings,  reuse  and  infrastructure 
safety (Plan DSEAR) was adopted. 

for  wastewater, 

7 

Reinforcing economic and social  
resilience 

improve  employability  of 

Spain  approved 
reforms  broadening 
education  opportunities  and  supporting 
higher  employability.  The  new  Vocational 
and  Education  Training  System,  approved  in 
2022,  aims  to  increase  the  attractiveness  of 
vocational and education training programmes 
and 
low-skilled 
adults.  The  newly  adopted  curricula  for 
compulsory  education  and  the  baccalaureate 
introduce  a  flexible  and  open  model  that 
provides  guidance  and  advice  to  favour 
student  progress,  also  taking  account  of 
special  learning  needs.  Reforms  are  being 
complemented  by  investments  supporting  an 
inclusive  digital  transformation  of  education 
and  the  reskilling  of  workers  affected  by  the 
transition to a low carbon economy. 

for 

contract 

The  labour  market  reform  approved  in 
December  2021  is  helping  to  reduce 
temporary  employment  in  the  private 
sector. Streamlining of the range of contracts 
for  hiring  on  a 
rules 
included  stricter 
temporary  basis  and  reinforcement  of  the 
open-ended 
discontinuous 
activities  (fijos-discontinuos).  New  contracts 
signed  during  2022  point  to  a  widespread 
reduction in the share of fixed-term contracts, 
falling overall to 62% from 90% in 2019 (the 
year  before  the  COVID-19  pandemic).  As  for 
temporary  employees  in  the  private  sector 
their  share  fell  to  14.8%  in  Q4-2022,  down 
from  23.9%  one  year  before.  The  reform 
package 
permanent 
included 
mechanism to adjust to cyclical and structural 
shocks (Mecanismo RED), which was activated 
in 2022 for workers in travel agencies. 

also 

a 

Spain  adopted  measures  to  strengthen 
social  services  and  inclusion  policies.  An 
in-depth  evaluation  was  undertaken 
to 
understand the progress of the long-term care 
reform  process  initiated  in  2020,  and  its 
impacts.  The  reception  system  for  migrants 
and applicants for international protection was 
its  capacity  and 
reformed 
efficiency,  adjusting 
to  existing  and 
estimated future needs. 

improve 
it 

to 

 
to 

renew 

obsolete 

Measures were adopted to strengthen the 
healthcare system.  An investment plan was 
approved 
hospital 
equipment with new high-tech medical devices 
(Plan  INVEAT),  including  redressing  regional 
infrastructure.  Spain  also 
imbalances 
approved 
improving 
the  action  plan  for 
primary  care  and  the  public  health  strategy, 
which will help to strengthen healthcare across 
the country. 

in 

Closing the productivity gap and  
supporting the digital transition 

the 

outcomes 

improve 
Spain  approved  reforms  to 
educational 
provide 
and 
appropriate  skills.  The  new  Vocational  and 
Education  Training  System  aims  to  address 
skills  shortages  and  mismatches,  to  better 
adapt  to  the  future  needs  of  the  economy, 
transitions.  The  new 
including 
curricula  for  compulsory  education  and  the 
baccalaureate  introduce  a  competence-based 
model  that  promotes  deep  learning  and  aims 
to improve educational outcomes. Reforms are 
being  complemented  by 
in 
providing digital training to teaching staff, and 
supplying  devices  and 
improved  school 
connectivity for learning. 

investments 

twin 

The 

system. 

innovation 

The newly approved Science Law aims to 
improve the performance of the research 
reform 
and 
improves  the  governance  and  coordination  of 
the  Science,  Technology  and 
Innovation 
Information  System.  The  new  framework 
provides  for  progress  in  the  scientific  career, 
helps knowledge transfer of scientific research 
to  applied  products  and  services,  includes  a 
framework  for  regulatory  sandboxes  to  R&I 
investments. 
projects 
Complementary R&I plans provide for strategic 
investment with regions, enhancing knowledge 
innovation  and 
generation, 
territorial  cohesion  in  the sector.  Furthermore, 
the  RRP  is  deploying  R&I  investments  in 
strategic 
sustainable 
such 
automotive. 

technological 

facilitates 

sectors 

and 

as 

Spain  adopted  reforms  to  streamline  the 
business  environment.  Spain  approved  the 
reform of the insolvency framework, making it 
more  efficient  and  establishing  a  dedicated 
electronic  procedure  for  micro-enterprises  to 
reduce  the  cost  and  duration  of  insolvency 
procedures. The new framework is expected to 
support the reduction of high levels of private 
debt.  A  new  legislative  framework  contributes 
to reducing barriers and removes requirements 
for  access  to  the  professional  practice  of 
lawyers 
The 
Telecommunications  Law  also  cuts  red  tape 
for high-capacity network deployment. 

procuradores. 

and 

Relevant  measures  were  approved  to 
improve  digitalisation.  Spain  approved  a 
new  Telecommunications  Law 
that  will 
facilitate  the  deployment  of  high-capacity 
networks.  As  part  of  the RRP,  other  important 
reforms  have  been  adopted,  like  the  Law  on 
5G  cybersecurity  and  the  assignment  of  the 
26 GHz  band  for  5G.  These  measures  will 
further  strengthen  connectivity  and  notably 
accelerate 5G deployment. 

Reinforcing fiscal sustainability  
and reducing macroeconomic  
imbalances 

Spain approved a first set of reforms for 
the  pension  system.  A  new  revaluation 
mechanism  was  introduced  to  maintain  the 
purchasing  power  of  pensions,  while  new 
economic incentives target a better alignment 
of  the  effective  and  the  legal  retirement  age. 
Spain reformed the social security contribution 
system  for  the  self-employed  to  equalise  the 
treatment  of  workers  and  the  self-employed, 
and  to  increase  contributions  to  the  pension 
system.  The  regulatory  framework  for  the 
supplementary  pension  system  was  also 
revised  to  cover  workers without  occupational 
pension schemes in their companies, and self-
employed  who  do  not  have  access  to  these 
second-pillar schemes. 

Fight  against  tax  fraud  and  evasion  was 
stepped  up.  The  measures  included  setting 
stricter  rules  for  cash  payments,  lowering  the 

8 

 
 
of 

half 

than 

nearly 

scholarships,  R&D  support  systems,  active 
labour  market  policies,  and  postal  services. 
More 
300 
recommendations  by  AIReF  have  been 
addressed  according  to  the  latest  monitoring 
report. Spain approved the policy areas for the 
spending  review  studies  that  will  be  carried 
out  in  2022-2026.  A  report  assessing  the 
alignment  of  spending  policies  with  the  UN’s 
Sustainable  Development  Goals  was  also 
published. 

Measures were adopted to strengthen the 
public  procurement  framework.  Spain 
established  the  National  Evaluation  Office 
within  the  Independent  Office  for  Regulation 
and  Supervision  of  Public  Procurement.  It  will 
assess 
of 
concession  contracts.  On  1 April  2022,  the 
National  Evaluation  Office  published  its  first 
regarding  a  municipal  concession 
report 
contract to deliver urban cleaning services. 

sustainability 

financial 

the 

to 

its 

for 

fraud 

commit 

threshold  for  publishing  the  names  of  people 
with tax arrears, banning software that can be 
used 
(“dual-use 
tax 
software”),  and  introducing  a  reference  value 
for  the  tax  base  in  property  taxation.  Spain 
list  of  non-cooperative 
also  updated 
jurisdictions 
tax  purposes.  The  Tax 
Administration  Agency  increased  its  staff  and 
the  number  of  tax  investigations,  and  it 
improved 
the 
submission  of  personal  and  corporate  tax 
declarations.  The  agency  also  took  measures 
for  a  better  use  of  taxpayer  data  received 
from  abroad  and  to  increase  transparency 
among large corporate taxpayers. 

facilitating 

systems 

IT 

Spain  adopted  measures  to  improve  the 
quality  of  public  spending.  The 
first 
monitoring  report  was  published  on  the 
implementation  of  recommendations  included 
in spending review studies by the Independent 
Authority  for  Fiscal  Responsibility 
(AIReF). 
These  covered  policy  areas  such  as  hospital 
pharmaceutical  products  and  equipment, 
support to business competitiveness, university 

9 

 
Box 2: 

Key  deliverables  expected  under  the  recovery  and  resilience  plan  in  2023-
2024 

 

 

 

 

Entry into force of the Housing Law, including actions supporting the increase in housing 
supply in compliance with nearly zero-energy buildings 

Entry into force of the Water Law 

Entry into force of the Sustainable Mobility Law 

Entry into force of the law improving the efficiency of judicial procedures 

  Approval of PERTE projects in three strategic areas, including electric vehicles 

 

 

 

 

 

 

Entry into force of the organic Law on the university system 

Entry into force of the amendment to the Employment Law 

Entry  into  force  of  the  reform  to  simplify  and  increase  the  effectiveness  of  the 
recruitment incentive system, taking into account the recommendations issued by AIReF 

Entry into force of amendment of Royal Decree Law 8/2015 reforming the regulation of 
non-contributory unemployment support 

into  force  of 

Entry 
recommendations 

the 

tax 

reforms  derived  from 

the  expert  committee 

Entry  into  force  of  the  regulatory  reforms  needed  to  implement  the  working  group’s 
recommendations to modify or abolish 15 tax benefits 

  Updated  projections  showing  how  the  pension  reforms  undertaken  in  2021  and  2022 

ensure long-term fiscal sustainability 

Source: CID Annex. 

10 

 
 
FURTHER PRIORITIES AHEAD 

In  addition,  further  progress 

(RRP),  Spain 
the 
In 

Beyond those tackled in the recovery and 
faces 
resilience  plan 
additional  challenges. 
current 
uncertain geopolitical context, accelerating the 
green  transition  will  continue  to  be  a  key 
is 
priority. 
required  on  fiscal  sustainability, 
tackling 
structural  barriers  to  business  growth  and 
productivity, addressing key social issues, such 
as housing affordability and child poverty, the 
correction  of  macroeconomic  imbalances,  and 
these 
the  circular  economy.  Addressing 
further 
challenges  will  also  help  make 
progress  in  achieving  the  SDGs  where  Spain 
currently 
further 
improvement, namely those relating to poverty 
housing 
(SDG 1), 
(SDG 11),  clean  water  and  sanitation  (SDG  6) 
and sustainability of public finances (SDG 17). 

inequalities 

(SDG 10), 

shows 

room 

for 

Ensuring the sustainability of  
public finances 

and 

geopolitical 

A  credible  consolidation  path  remains 
critical to ensure fiscal sustainability and 
Fiscal 
expectations  are  met. 
that 
sustainability  continues  to  be  challenged  by 
the  high 
level  of  public  debt  and  the 
unfavourable  initial  budgetary  position.  These 
challenges become more crucial in the current 
uncertain 
financial 
environment. While government revenues have 
recently  evolved  better  than  expected,  the 
these 
of 
structural 
developments  remain  uncertain.  Spain  has 
also  legislated  several  measures  to  cushion 
the  impact  of  high  energy  prices,  but  these 
need  to  be  further  targeted  to  vulnerable 
households  and  firms.  Credible  medium-term 
fiscal  consolidation  plans  are  necessary. 
Implementing  effective  and  broad  reforms  of 
taxation  and  continuously  monitoring  the 
sustainability  of  the  pension  system  remain 

nature 

part 

of 

important priorities. Targeted investments and 
reforms  would  support 
growth-enhancing 
medium-term  fiscal  adjustment  and  help  to 
meet expectations in the long-term. 

Revenue  and  expenditure  measures 
become  more  urgent  given  an  ageing 
population.  Demographic  developments  are 
expected  to  lead  to  a  significant  increase  in 
costs  related  to  healthcare,  long-term  care, 
and  pensions.  Concerns  on  sustainability  gaps 
over  the  medium  and  long-term  will  increase 
unless  there  are  compensating  measures  on 
the  revenue  and  expenditure  side.  In  this 
regard, following expert recommendations, the 
tax  reforms  included  in  the  RRP  aim  to  make 
the system more effective, increasing revenue, 
supporting the green transition, and promoting 
fairness.  On  the  expenditure  side,  spending 
reviews  remain  a  key  element to  improve the 
quality  and  efficiency  of public  spending.  This 
is  particularly  relevant  for  healthcare,  to 
address regional access and quality disparities, 
and  the  significant 
in 
primary  care.  For  pensions,  the  reforms 
included  in  the  RRP  need  to  be  carefully 
designed  and  implemented  as  a  consistent 
package; this is to ensure that they contribute 
positively  to  mitigating  medium-  and  long-
term  risks  while  ensuring  sufficient  levels  of 
pensions. 

investment  needs 

Accelerating the green transition 

Despite  low  direct  exposure  to  Russian 
fossil  fuels,  the  surge  in  energy  prices 
experienced  in  2022  underlines  the  need 
for  Spain  to  accelerate  its  transition 
towards clean energy. Despite the low direct 
exposure  to  Russian  gas,  businesses  and 
consumers have been facing a high increase in 
energy  prices 
in  2022.  Public  support 
measures  implemented  by  the  government 
have been mostly of an untargeted nature. As 

11 

 
 
 
Despite 

increase 

generation. 

a  result,  some  of  them  may  be  potentially 
limiting  price  signals  to  improve  demand 
efficiency  in  the  medium  term.  The  'Iberian 
mechanism'  may  also  have  a  similar  effect: 
in 
while  helping  to  curtail  the 
wholesale  electricity  prices,  it  also  lessened 
in 
incentives  to  reduce  gas  consumption 
electricity 
these 
challenges,  and  others linked  to  droughts  and 
the  fall  in  hydropower  generation,  Spain’s 
consumption  of  natural  gas  has  dropped  by 
10.8% in the period August 2022-March 2023, 
compared  with  the  average  gas  consumption 
over  the  same  period  in  the  last  5  years, 
above its 7% reduction target (5). While energy 
prices  have  decreased,  uncertainty  remains 
requires 
next  winter,  which 
regarding 
continued  efforts  to  structurally  reduce  gas 
demand. 

to 

improvements 

While  Spain  is  progressing  in  deploying 
renewables,  much  more 
is  needed. 
According to the projections supporting the Fit-
for-55  package,  Spain  should  aim  to  install 
67 GW  of  wind  power  and  35 GW  of  solar 
power  by  2030.  Spain  is  one  of  the  Member 
States  with  the  highest  installed  capacity  of 
wind  and  solar  power,  with  approximately 
49.8 GW (6).  Some 
the 
permitting  procedures,  in  particular  for  self-
consumption,  have  helped  to  make  further 
technologies 
progress 
(Annexes  7  and  12).  However,  Spain  has  a 
for  new 
large  backlog  of  applications 
renewable  energy  plants.  Measures 
to 
renewable 
the  deployment  of 
accelerate 
energy  could  include  further  streamlining  and 
digitalising  permitting  procedures,  allocating 
network  capacity 
to  projects  faster  and 
in 
supporting 
processing  permits  by  ensuring  appropriate 
skills  and  staffing in  permitting  authorities  as 
well  as  by  improving  coordination  among  all 
levels of government. 

the  work  of  authorities 

in  deploying 

these 

In  the  context  of  the  green  transition, 
labour  shortages  in  several  key  sectors 
have  increased  in  recent  years,  linked  to 
a  lack  of  relevant  skills.  This  is  creating 

(5)  Spain has been granted a derogation therefore their 

target is 7% instead of 15% 

(6)  IRENA (2023), Renewable capacity statistics 2023. 

transition, 

bottlenecks  in  the  transition  to  a  net-zero 
economy.  In  2022,  labour  shortages  were 
reported in Spain for several  occupations that 
required  specific  skills  or  knowledge  for  the 
electronics 
green 
as 
technicians (7).  Upskilling  and 
engineering 
reskilling for the green transition, including for 
people most affected, and promoting inclusive 
labour  markets  are  essential  policy  levers  to 
accelerate  the  transition  to  net-zero  and 
ensure its fairness (see Annex 8). 

such 

Network  capacity  constraints  limit  the 
further  integration  of  renewables  in  the 
electricity grid. Spain is one of the countries 
with  the  highest  shares  of  smart  meters  but 
additional  investments  in  storage  would  be 
integrate  additional  renewable 
needed  to 
electricity. 
cross-border 
its 
Furthermore, 
electricity  interconnection  level  (5.4%)  is  still 
significantly below the interconnection targets 
for 2020 (10%) and 2030 (15%). 

have 

payments 

Further  investment  in  energy-efficient 
housing would help alleviate affordability 
challenges.  Significant  loss  in  purchasing 
power,  sustained  growth  in  rental  prices,  and 
all 
higher  mortgage 
aggravated affordability problems, particularly 
for vulnerable households (see Annexes 1 and 
14).  Under  the  RRP,  Spain  has  committed  to 
deliver a new housing law and investments to 
provide  energy-efficient  affordable  and  social 
housing.  Successfully  delivering  on  these 
commitments  becomes  more  relevant  in  the 
current  context.  Supply  remains  constrained 
under  the very  limited  provision  of  affordable 
and social housing, which is significantly lower 
than  the  EU  average.  Spain's  current  national 
energy  and  climate plan  envisages  1.2 million 
renovations  of  residential  buildings  by  2030, 
with the RRP covering around a third of them. 
Deploying  additional  energy-efficient  housing 
in  areas  with  pronounced  shortages  and  in  a 
time  of  stressed  markets,  including  through 
renovation  and  electrification,  could  help 
contain  energy  consumption  and  address  the 

(7)  European Labour Authority (2023), EURES Report on 
labour shortages and surpluses 2022. Definitions of 
shortages differ across countries. Skills and knowledge 
requirements are based on the ESCO (European Skills 
Competences and Occupations) taxonomy of skills for 
the green transition. 

12 

 
                                                 
                                                 
green  transition,  as  well  as  support  the 
vulnerable  households  that  are  more  exposed 
to energy poverty (see Annex 6). Well-targeted 
social  and  affordable 
in 
cooperation  with  the  private  sector  can  help 
limit the fiscal impact. 

rental  housing 

8). 

(see 

Transport  remains  heavily  reliant  on  oil 
fuels. The sector accounts for a large share of 
greenhouse  gas  emissions  and  contributes  to 
air  pollution,  which  is  still  above  the  EU 
average 
Insufficient 
Annex 
infrastructure  and  access  to  public  transport 
remains  a  concern  in  rural  areas.  Electro-
mobility  deployment  is  underdeveloped  both 
from  the  supply  and  demand  side.  Measures 
included  in  the  RRP  have  the  potential  to 
transform  urban/metropolitan  transport  and 
the  Trans-European  Transport 
strengthen 
Network, 
new 
to 
helping 
technologies in the sector. 

introduce 

Decoupling economic growth from  
resource use 

Further measures are needed to meet the 
EU  waste  management  targets.  The 
circular  economy  strategy  is  due  to  further 
increase  ambitions  in  waste  management.  In 
this regard, Spain's rate for recycling municipal 
waste  falls below the 2020 EU  target (36.7% 
vs  50%)  and  the  Commission’s  Early  Warning 
Report  alerts  that  Spain  is  at  risk  of  also 
missing  the  2025  EU  target.  The  share  of 
waste  being  landfilled  is  also  well  above  the 
EU  average 
illegal 
landfilling  has  not  been  eradicated.  In  2022, 
as part of the RRP, Spain approved the Law on 
waste  and  contaminated  soils  for  a  circular 
economy, which should help reduce landfill. 

(52%  vs  23%)  and 

EU  circular  economy  goals  and  water 
management  also  represent  challenges 
for  Spain.  The  EU’s  new  circular  economy 
action  plan  aims  at  doubling  circular  material 
use by 2030. However, Spain’s circular use of 
material  remains  below  the  EU  average  (8% 
vs  11.7%  in  2021).  On  the  positive  side,  the 
target to reduce the consumption of resources 
by  30%  has  been  met  and  the  Spanish 
lower  than  the  EU 
material  footprint 

is 

is 

there 

scope 

investment 

to  promote 

for 
average.  However, 
improvement  on  construction  and  demolition 
waste  management.  Furthermore,  innovation 
and 
the  circular 
economy are key to ensuring greater resource 
efficiency.  Spain  suffers  severely  from  water 
stress  and  water  is  becoming  scarcer  due  to 
climate  change.  Challenges  remain,  especially 
in  the  areas  of  water  governance,  waterbody 
rehabilitation, 
and 
use 
including  urban 
management  of  water, 
wastewater 
improved 
infrastructure  and  further  promoting  water 
reuse. 

recovery 

efficient 

through 

and 

Addressing structural challenges 
to boost productivity 

further 

reforms  would 
Productivity-enhancing 
ensure 
of 
remediation 
a 
macroeconomic vulnerabilities. Besides the 
beneficial  effect  of  strong  nominal  GDP 
growth  since  2021,  significant  policy  steps 
were  taken  across  several  areas,  accelerating 
the  deleveraging  process  in  the private  sector 
and supporting a reduction in the high level of 
unemployment (see Annex 22). Policy progress 
in the areas affected by vulnerabilities is being 
effectively 
supported 
implementing  the  RRP,  given  its  wide-ranging 
reforms  and  investments  covering  the  major 
vulnerabilities across diverse policy fields, and 
with  investments  in  various  cohesion  policy 
programmes.  However,  further  measures  to 
boost  the  productivity  and  competitiveness  of 
firms,  and  to  address  skills  mismatches  and 
shortages,  would  ensure  a  deleveraging  trend 
in the private, public, and external sector. 

primarily 

by 

Increasing  R&D  investment  and  stronger 
links  with  the  scientific  ecosystem  can 
boost  the  productivity  of  firms.  Spain  is 
one  of  the  EU  countries  with  the  lowest 
investment  in  R&D  (1.4%  of  GDP  in  2021, 
compared with 2.2% in the EU). Business R&D 
is  particularly  low  compared  with  the  EU 
average  (0.8%  GDP  vs  1.5%  in  the  EU), 
indicating that the full potential of the private 
sector  remains  untapped  (see  Annex  11). 
Notwithstanding  the  measures  taken  as  part 
of  the  RRP,  further  steps  to  improve  the 

13 

 
 
efficiency  of  public  support  for  R&D  and  the 
quality  of  innovation  output  would  be  highly 
beneficial.  Following  OECD  recommendations, 
science-business  linkages  could  be  further 
strengthened  to  support  private  innovation. 
This  would  include  improving  the  governance 
of  public  research  organisations  towards  a 
performance-based 
and 
reinforcing  the  skills  of  technology  transfer 
offices. 

functioning 

to 

improve  capital  and 

There  is  scope  for  further  improving  the 
the 
business  environment.  Built  upon 
measures  to  support  business  creation  and 
growth  included  in  the  RRP,  a  multiplicity  of 
size-dependent  regulation  measures  could  be 
labour 
reviewed 
allocative  efficiency.  Measures  hampering 
business  growth  include  significant  increases 
in labour, accounts and tax requirements when 
turnover 
certain  employee  or 
crossing 
thresholds  (see  Annex  12).  The  constitutional 
distribution  of  competence  has  increased  the 
capacity  of  regional  governments  to  adopt 
legislation  over time.  As  part  of  the  RRP,  new 
tools  have  been 
improve 
coordination  across  public  administrations, 
including  an  observatory  of  good  regulation 
practices  and  the  sectoral  conference  for 
improving  the  business  environment.  The  RRP 
includes measures to foster an early payment 
culture in  commercial  transactions.  The  effect 
of  these  measures  would  be  strengthened  by 
a fully-fledged sanctioning system, for which a 
draft  has  remained  under  discussion  in  the 
Congress  since  2020  and  was  only  approved 
for the road transport sector in 2021. 

introduced 

to 

reduce 

Improving  legislation  quality  and  judicial 
economic 
efficiency  would 
distortions.  These  shortfalls  particularly 
hamper business creation and growth, as well 
as  entrepreneurship,  investment  rates  and 
productivity  (see  Annex  13).  The  time  to 
resolve  civil  and  commercial  cases  remains 
long  given  the  levels  of  judicial  bottlenecks, 
particularly  in  the  Supreme  Court  caused  by 
the  prolonged  non-renewal  of  the  Council  of 
the  Judiciary  in  charge  of  nominating  top 
judges and protracted discussions on adapting 
the  Council’s  appointment  system  in  line  with 
European Standards on judicial independence. 

in 

Skills  shortages and mismatches  need to 
be addressed to support economic growth 
and  the  twin  transitions,  and  to  reduce 
high  unemployment.  Further  labour  market 
the  RRP,  such  as  the  new 
reforms 
Employment  Law, 
review  of  hiring 
the 
incentives,  and  the  modernisation  of  Public 
Employment  Services  (PES),  all  have  the 
potential  to  improve  job-matching  efficiency 
and  address  skill  mismatches  to  a  larger 
extent  if  there  is  agreement  in  the  social 
dialogue  process.  This  would  eventually 
contribute  to  reducing  high  unemployment 
relative to the EU – particularly long-term and 
youth  unemployment  –  and  achieve  Spain’s 
2030  national  employment  target  of  76%  of 
(see  Annex  14). 
working  age  population 
Notwithstanding 
education 
reforms  and  investments  included  in  the  RRP 
their  expected  positive  effects  on 
and 
educational  outcomes  and  skills,  major  gaps 
remain in the provision of the necessary skills 
to 
transition, 
information  and  communications  technology 
(ICT)  specialists,  and  science,  technological, 
engineering 
(STEM) 
graduates  (see  Annexes  8,  10  and  15).  These 
challenges are particularly acute for small and 
medium-sized  enterprises,  which  struggle  to 
attract  talent  and  are  still  far  from  reaching 
the Digital Decade targets. 

and  mathematics 

the  green 

contribute 

relevant 

the 

to 

Tackling social and cohesion 
challenges 

inequality 

The capacity of social transfers to reduce 
is 
income 
poverty  and 
improving but remains limited. Most of the 
support  to  households  takes  place  via  non-
refundable  fiscal  transfers  in  the  tax  system, 
limiting  the  effectiveness  in  reducing  poverty, 
particularly  for  families  with  children  (see 
Annex 14). The tax reform included in the RRP, 
if  ambitious,  has  the  potential  to  have  a 
positive  impact  on  fiscal  progressivity  and  to 
support  vulnerable  households  and  families 
with  children.  The  minimum  vital 
income 
included  in  the  RRP  sets  the  basis  for  the 
review  of  non-contributory  financial  benefits. 
The  full  and  swift  implementation  of  further 

14 

 
measures,  such  as  the  integration  pathways 
for beneficiaries, are expected to increase the 
take-up rate to its full potential, increasing the 
capacity to provide effective support to people 
at  risk  of  poverty  or  social  exclusion  and 
contributing towards Spain’s national target on 
the reduction of poverty by 2030. 

disparities 

remain  wide, 
Regional 
including in areas such as innovation and 
educational  outcomes.  Public  investment 
with EU cohesion policy support is key to help 
in  strengthening  their  competitive 
regions 
advantages  and  improving  their  access  to 
European  markets  (see  Annex  17).  Some 
geographical areas are particularly stressed by 
demographic  and  climate  challenges.  The 
ageing  of  civil  servants,  staff  shortages  and 
the  high  share  of  temporary  employees  all 
merit  continuous  monitoring  to  guarantee  the 
provision  of  basic  public  services  benefiting 
social cohesion (see Annexes 15 and 16). This 
is  particularly 
compulsory 
relevant 
education and primary care. 

for 

15 

 
KEY FINDINGS 

Spain’s  recovery  and  resilience  plan 
includes measures to address a series of 
structural challenges through: 

  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; 

  investing 

in  digital  skills  and  training, 

artificial intelligence and cybersecurity; 

  adopting labour market reforms to improve 
structural 

reduce 

and 

quality 

job 
unemployment; 

  supporting  the  upskilling  and  reskilling  of 

workers and improving employability; 

  reinforcing  economic  and  social  resilience 
by  fostering  a  reduction  of  early  school 
leaving; and 

  reforming  the  pension  system  to  preserve 
its  financial  sustainability  in  the  face  of 
demographic challenges. 

Spain  should  maintain  the  momentum  in  the 
steady  implementation  of  its  recovery  and 
resilience  plan  and  swiftly 
the 
REPowerEU  chapter  with  a  view  to  rapidly 
Continued 
starting 
sufficient  administrative  capacity  should  be 
ensured in view of the size of the plan. 

implementation. 

finalise 

its 

Beyond  the  reforms  and  investments  in 
the  recovery  and  resilience  plan,  Spain 
would benefit from: 

  ensuring  public  debt  sustainability  and 
the 
meeting  fiscal  expectations  given 

16 

demographic challenges and their effect on 
pension and healthcare expenditure; 

  reducing  reliance  on  fossil  fuels,  further 
accelerating  the  deployment  of  renewable 
streamline 
to 
energy,  by 
permitting  procedures  and 
improving 
access to the grid; 

continuing 

  supporting 

investments 

storage, 
transmission,  distribution  and  cross-border 
interconnections capacity for electricity; 

in 

  supporting  availability  of  social  and 
housing, 
affordable 
including 
and 
accelerating  the  electrification  of  buildings 
and the penetration of electromobility; 

energy-efficient 

renovation, 

through 

  investing  in  recycling  municipal  waste  and 
reusing  materials,  including  water,  and 
enhancing  efforts  on  sustainable  water 
management more broadly; 

  improving  the  business  environment  and 
regulation  to  support  productivity  and 
business growth, including by reducing late 
payments; 

  addressing skills shortages, promoting skills 
needed  for  the  green  transition,  increasing 
R&D  investment  and  reinforcing  links  with 
the scientific ecosystem; 

  increasing  the  capacity  of  social  transfers 
to  reduce  income  inequality  and  poverty, 
particularly for families with children; 

  reducing the gap between regions, building 

on the effective use of EU funding; 

  ensuring the quality of public services given 
the ageing of civil servants, staff shortages 
temporary 
and 
employees, 
affecting 
particularly 
compulsory  education  and  primary  care; 
and  ensuring  administrative  capacity  for 

share  of 

the  high 

 
 
the  effective  absorption  and  higher  impact 
of the Recovery and Resilience Facility  and 
other available EU and national funds. 

17 

 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan - overview 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy security and affordability 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

A22.  Macroeconomic imbalance procedure assessment matrix 

21 

24 

24 

26 

29 

31 

34 

35 

35 

40 

45 

48 

48 

51 

54 

57 

60 

62 

62 

65 

67 

69 

71 

71 

73 

75 

76 

79 

 
 
 
LIST OF TABLES 

A2.1. 
Summary table on 2019-2022 CSRs 
A3.1. 
Key elements of the Spanish RRP 
A5.1. 
Resilience indices summarising the situation across RDB dimensions and areas 
A6.1. 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
A7.1. 
Key Energy Indicators 
A8.1. 
Key indicators for a fair transition in Spain 
A9.1. 
Overall and systemic indicators on circularity 
A10.1.  Key Digital Decade targets monitored by DESI indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the single market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Spain 
A14.2.  Situation of Spain on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A18.1.  Financial soundness indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Spain 
A21.2.  Heat map of fiscal sustainability risks - Spain 
A22.1.  Assessment of macroeconomic imbalances matrix 

LIST OF GRAPHS 

Progress towards the SDGs in Spain in the last 5 years 
Spain’s progress on the 2019-2022 CSRs (2023 European Semester) 
Disbursements per pillar 
Total grants disbursed under the RRF 
Fulfilment status of milestones and targets 
Cohesion policy funds 2021-2027 in Spain : budget by fund 
Synergies between cohesion policy funds and the RRF with its six pillars in Spain 
Cohesion policy funds contribution to the SDGs in 2014-2020 and 2021-2027 in Spain 
Thematic – greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2021 
Energy mix (top) and Electricity mix (bottom), 2021 
Thematic – environmental investment needs and current investment, p.a. 2014-2020 
Underground gas storage levels in Spain 
Share of gas consumption per sector, 2021 
Gas consumption per industrial sector, 2021 (% of total gas consumption in industry) 
Spain´s retail energy prices for industry (top) and households (bottom) 
Public (top) and Private (bottom) R&I investment in Energy Union R&I priorities 
Fair transition challenges in Spain 
Distributional impacts of energy prices due to rising energy expenditure (2021-2023) 
Trend in material use 
Treatment of municipal waste 
Innovation performance 2015-2022 

A1.1. 
A2.1. 
A3.2. 
A3.1. 
A3.3. 
A4.1. 
A4.2. 
A4.3. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A7.4. 
A7.5. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1. 
A12.1.  Labour productivity by sector, average annual growth 2000-19 
A12.2.  Business environment and productivity drivers 
A13.1.  Spain. Ratio of 25-49- to 50–64-year-olds by sector and occupation 
A13.2.  Spain. Performance on the single market scoreboard governance tools 
A13.3.  Spain. a) Number of new primary laws adopted; b) Performance in ex post evaluation of legislation; c) Median time to adopt 

laws and share of laws adopted within 30 days or less 

A15.1.  Early leavers from education and training, 2010 and 2022 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2019-2070 
A17.1.  GDP per capita (2010) and GDP growth (2010-2019) - Spain 
A18.1.  Evolution of credit activity 

22 

27 
29 
34 
35 
40 
45 
49 
51 
54 
57 
60 
62 
63 
65 
67 
71 
73 
75 
78 
78 
79 

25 
26 
29 
29 
30 
31 
31 
32 
35 
36 
37 
40 
41 
41 
41 
43 
45 
46 
48 
49 
54 
57 
58 
60 
60 

61 
65 
67 
67 
69 
71 

 
 
A19.1.  Tax revenues from different tax types as % of total taxation revenue 
A19.2.  Tax wedge for single and second earners as a % of total labour costs, 2022 

LIST OF MAPS 

A17.1.  Regional competitiveness index 2022 

74 
74 

69 

23 

 
 
 
 
 
CROSS-CUTTING INDICATORS 
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  and  the 
environmental crisis, 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  the  SDGs  in  an 
EU context. 

related 

While Spain is improving on most of the SDG 
environmental 
indicators 
sustainability (SDGs 2, 7, 9, 12, 13, 14, 15), it 
is  moving  away  from  SDG  11  (Sustainable 
cities  and  communities).  It  also  needs  to 
catch up with the EU average on some of the 

to 

indicators  (SDGs  9,  14,  15).  Spain  has  made 
some  progress  on  energy indicators, including  the 
share  of  renewable  energy  in  gross  final  energy 
consumption (SDG 7; from 17% in 2016 to 20.7% 
in  2021).  Nevertheless,  it  remains  below  the  EU 
average  (21.8%).  Spain’s  recovery  and  resilience 
plan (RRP)  includes measures to address some of 
the  energy-related  challenges,  namely  on  the 
energy 
the 
of 
decarbonisation of energy production. On SDG 11, 
Spain  is  moving  away  from  the  goal  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 17.3% in 2019), and a 
lower share of buses and trains in total passenger 
transport (15.4% compared to 17.2% in the EU in 
2020).  The  Spanish  RRP  aims 
to  promote 
sustainable mobility by making large investments. 

buildings  and 

renovation 

While  Spain  is  improving  on  some  SDG 
indicators related to fairness (SDGs 3, 4, 5, 8, 
10), it still needs to catch up on poverty (SDG 
1).  Spain  performs  well  on  healthy  life  years  at 

Graph A1.1: Progress towards the SDGs in Spain in the last 5 years 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators – Eurostat (europa.eu). The status of each SDG in a country is the aggregation of all indicators for the specific goal 
compared to the EU average. A high status does not mean that a country is close to reaching a specific SDG, but signals that it is 
doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 20 January 2023. Data mainly refer to 2016-2021 or 2017-2022. 

24 

 
 
 
 
 
 
research  and  innovation  system  suffers  from 
underinvestment,  as  shown  by  gross  domestic 
expenditure  on  R&D  ((SDG 9;  1.43%  of  GDP  in 
2021 compared to the EU average of 2.27%) and 
R&D personnel (1.09% of the active population in 
2021 compared to the EU average of 1.50%, see 
Annex  8).  The  Spanish  RRP  includes  significant 
reforms  and 
investments  aimed  at  boosting 
innovation and digital skills, but there is still room 
for  improvement  on  addressing  the  remaining 
challenges. 

Spain is improving on SDG indicators related 
to  macroeconomic  stability  (SDGs 8,  16,  17), 
but  still  needs  to  catch  up  compared  to  the 
EU.  It  improved  on  SDG  8  (Decent  work  and 
economic growth) and SDG 16 (Peace, justice and 
strong institutions) in the years before the COVID-
19  pandemic.  Spain  has  not  yet  reached  its  pre-
pandemic real GDP per capita (SDG 8; (EUR 23 780 
in  2016  vs  EUR 23 450  in  2021)  and  remains 
below the EU average of EUR 27 880. It also has a 
lower  investment  share  of  GDP  (SDG  8)  than  the 
EU average (19.8% of GDP compared to 22.4% for 
the  EU  in  2021).  Spain  faces  challenges  in 
particular  on  the  sustainability  of  public  finances. 
The  Spanish  RRP 
includes  several  measures 
related to taxation and the effectiveness of public 
spending.  These  are  expected  to  improve  the 
sustainability  of  public  finances  and  support 
substantial  additional 
investments,  which  will 
increase the investment share of GDP. 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

birth (SDG 3; 66.3 years in 2020 compared to 64.0 
years in 2015, with the EU  average 64.0 years in 
2020)  and  on  the  share  of  people  with  good  or 
very  good  perceived  health  (71.2%  in  2021 
compared  to  the  EU  average  of  69.0%).  In 
addition,  Spain  has  improved  on  several  fairness-
related indicators such as people at risk of poverty 
or  social  exclusion  (SDG  1;  27.8%  in  2021 
compared to 28.8% in 2016), the in work at-risk-
of-poverty rate (SDG 1; 12.7% in 2021 compared 
to  13.1%  in  2016),  the  long-term  unemployment 
rate  (SDG  8;  6.2%  in  2021  compared  to  9.5%  in 
2016),  and  early  leavers  from  education  and 
training (SDG 4; 13.3% in 2021, compared to 19% 
in 2016). However, it is still performing worse than 
the  EU  average  on  all  these  indicators,  and 
challenges  persist  on  poverty  reduction,  social 
exclusion,  long-term  unemployment  and  early 
school leaving. The Spanish RRP includes measures 
aimed at addressing challenges in all these areas. 
the  severe  housing 
On 
deprivation  rate  has  deteriorated  (SDG  1;  from 
1.5%  in  2015  to  3.4%  in  2020),  which  indicates 
poorer  living  conditions.  This  adds  to  more  acute 
housing  affordability  challenges  for  the  most 
vulnerable,  including  young  people,  low-income 
households  and  families  with  children.  On  SDG  7 
(Affordable  and  clean  energy),  the  share  of  the 
Spanish  population  unable  to  keep  their  homes 
adequately  warm  is  twice  as  high  as  the  EU 
average (14.2% in 2021 vs EU average 6.9%). The 
Spanish  RRP  partially  addresses  social  and 
affordable energy efficiency housing (with funding 
for  the  construction  of  20 000  new  social  rental 
dwellings 
in  energy-efficient  buildings  and 
measures  such  as  renovation  to  increase  energy 
efficiency). 

the  negative  side, 

is 

Spain 
improving  on  all  SDGs  on 
productivity (SDGs 4, 8, 9), but still needs to 
catch  up  with  the  EU  average  in  some  of 
them  (SDGs  8  and  9).  It  has  a  high  share  of 
households  with  a  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  of  54%.  Despite  some  improvements  in 
the productivity indicators, the country ranks below 
the  EU  average  on  most  of  them.  On  SDG  8 
(Decent  work  and  economic  growth), 
the 
percentage  of  young  people  not  in  employment, 
education  or  training  aged  15-29  remains  high 
(SDG  8;  14.1%  in  2021)  and  is  above  the  EU 
average (13.1% in 2021). In addition, the Spanish 

25 

 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Spain’s progress on the 2019-2022 
CSRs (2023 European Semester) 

The Commission has assessed the 2019-2022 
country-specific  recommendations  (CSRs) (15) 
addressed  to  Spain  as  part  of  the  European 
Semester. These recommendations concern a wide 
range of policy areas that are related to 14 of the 
17 Sustainable Development Goals (see Annexes 1 
and 3). The assessment considers the policy action 
taken  by  Spain  to  date (16)  and  the  commitments 
in its recovery and resilience plan (RRP) (17). At this 
stage  of  RRP  implementation,  79%  of  the  CSRs 
focusing  on  structural  issues  from  2019-2022 
have recorded at least ‘some progress’, while 21% 
recorded  ‘limited  progress’  (see  Graph  A2.1).  As 
the  RRP  is  implemented  further,  considerable 
progress in addressing structural CSRs is expected 
in the years to come. 

Source: European Commission 

(15)  2022 CSRs: EUR-Lex - 32022H0901(09) - EN - EUR-Lex 

(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(09) - EN - EUR-Lex 

(europa.eu) 
2020 CSRs: EUR-Lex - 32020H0826(09) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(09) - EN - EUR-Lex 
(europa.eu) 

(16)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(17)  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 considers the 
degree of implementation of the measures included in the 
RRP and of those carried out outside of the RRP at the time 
of assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which are not yet adopted or 
implemented but considered 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. 

26 

No progress0%Limited progress21%Some progress63%Substantial progress14%Fully implemented2% 
 
 
 
 
 
 
 
                                                 
      
 
 
 
Table A2.1: Summary table on 2019-2022 CSRs 

(Continued on the next page) 

27 

SpainAssessment in May 2023*RRP coverage of CSRs until 2026**Revelant SDGs2019 CSR 1Limited 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 applicableSDG 8, 16Take measures to strengthen the fiscal [framework]Some ProgressRelevant RRP measures being implemented as of 2021SDG 8, 16and public procurement frameworks at all levels of government.Limited ProgressRelevant RRP measures being implemented as of 2022SDG 9Preserve the sustainability of the pension system.Substantial ProgressRelevant RRP measures being implemented as of 2022SDG 8Usewindfallgainstoacceleratethereductionofthegeneralgovernment debt ratio.Not Assessed / No Input to AddNot applicableSDG 8, 162019 CSR 2Some progressEnsure that employment services have the capacity to provide effective supportSome ProgressRelevant RRP measures being implemented as of 2022SDG 8andensurethatsocialserviceshavethecapacitytoprovideeffective support.Some ProgressRelevant RRP measures being implemented as of 2022SDG 1, 2, 10Foster transitions towards open-ended contracts,Substantial ProgressRelevant RRP measures being implemented as of 2022SDG 8including by simplifying the system of hiring incentives.Some ProgressRelevant RRP measures being implemented as of 2023SDG 8Improve support for families,Some ProgressRelevant RRP measures being implemented as of 2021SDG 1, 2, 10reduce fragmentation of national unemployment assistanceLimited ProgressRelevant RRP measures planned as of 2022SDG 1, 2, 10and address coverage gaps in regional minimum income schemes.Substantial ProgressRelevant RRP measures being implemented as of 2021SDG 1, 2, 10Reduce early school leavingSome ProgressRelevant RRP measures being implemented as of 2021SDG 4and improve educational outcomes, taking into account regional disparities.Some ProgressRelevant RRP measures being implemented as of 2021SDG 4, 10, 11Increasecooperationbetweeneducationandbusinesseswithaviewtoimprovingtheprovisionoflabourmarketrelevantskillsandqualifications,Some ProgressRelevant RRP measures being implemented as of 2021SDG 4, 8, 9in particular for information and communication technologies.Some ProgressRelevant RRP measures being implemented as of 2021SDG 4, 92019 CSR 3Some progressFocus investment-related economic policy on fostering innovation,Some ProgressRelevant RRP measures being implemented as of 2021SDG 9, 10, 11resource efficiencySome ProgressRelevant RRP measures being implemented as of 2021SDG 6, 10, 11, 12, 15and energy efficiency,Some ProgressRelevant RRP measures being implemented as of 2021SDG 7, 10, 11upgrading rail freight infrastructureSome ProgressRelevant RRP measures being implemented as of 2022SDG 10, 11and extending electricity interconnections with the rest of the Union, taking into account regional disparities.Limited ProgressNot applicableSDG 7, 9, 10, 11, 13Enhancetheeffectivenessofpoliciessupportingresearchandinnovation.Some ProgressRelevant RRP measures being implemented as of 2021SDG 92019 CSR 4Some progressFurthertheimplementationoftheLawonMarketUnitybyensuringthat,atalllevelsofgovernment,rulesgoverningaccesstoandexerciseofeconomicactivities,inparticularforservices,areinlinewith the principles of that LawSome ProgressRelevant RRP measures being implemented as of 2022SDG 9and by improving cooperation between administrations.Some ProgressRelevant RRP measures being implemented as of 2021SDG 92020 CSR 1Some progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableSDG 8, 16Strengthenthehealthsystem’sresilienceandcapacity,asregardshealth workers, critical medical products and infrastructure. Some ProgressRelevant RRP measures being implemented as of 2021SDG 32020 CSR 2Some progressSupport employment through arrangements to preserve jobs, Substantial ProgressRelevant RRP measures being implemented as of 2021SDG 8effective hiring incentives and Some ProgressRelevant RRP measures being implemented as of 2023SDG 8skills development. Some ProgressRelevant RRP measures being implemented as of 2021SDG 4Reinforce unemployment protection, in particular for atypical workers.Some ProgressRelevant RRP measures being implemented as of 2022SDG 1, 2, 10Improve coverage and adequacy of minimum income schemes and Some ProgressRelevant RRP measures being implemented as of 2021SDG 1, 2, 10family support, as well as Some ProgressRelevant RRP measures being implemented as of 2021SDG 1, 2, 10access to digital learning. Some ProgressRelevant RRP measures being implemented as of 2021SDG 4 
 
 
 
  
 
Table (continued) 

Note: 
* See footnote (16). 
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP are necessary to fully implement CSRs and address their underlying challenges. Measures indicated as ‘being implemented’ 
are only those included in the RRF payment requests assessed by the European Commission.   
Source: European Commission 

28 

2020 CSR 3Some progressEnsuretheeffectiveimplementationofmeasurestoprovideliquidityto SMEs and the selfemployed, including by avoiding late payments. Substantial ProgressRelevant RRP measures being implemented as of 2021SDG 8, 9Front-load mature public investment projects and Some ProgressRelevant RRP measures being implemented as of 2021SDG 8, 16promote private investment to foster the economic recovery. Some ProgressRelevant RRP measures being implemented as of 2021SDG 8, 9Focus investment on the green and digital transition, in particular on fostering research and innovation, Some ProgressRelevant RRP measures being implemented as of 2021SDG 9cleanandefficientproductionanduseofenergy,energyinfrastructure, Some ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 13water and waste management and Some ProgressRelevant RRP measures being implemented as of 2021SDG 6, 12, 15sustainable transport.Some ProgressRelevant RRP measures being implemented as of 2021SDG 112020 CSR 4Limited progressImprove coordination between different levels of government and Limited ProgressRelevant RRP measures being implemented as of 2021SDG 16strengthen the public procurement framework to support recovery in an efficient manner.Limited ProgressRelevant RRP measures being implemented as of 2022SDG 92021 CSR 1Some progressIn2022,usetheRecoveryandResilienceFacilitytofinanceadditionalinvestmentinsupportoftherecoverywhilepursuingaprudent fiscal policy. Preserve nationally financed investment. Full ImplementationNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Some ProgressNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Substantial ProgressNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited ProgressNot applicableSDG 8, 162022 CSR 1Some ProgressIn2023,ensureprudentfiscalpolicy,inparticularbylimitingthegrowthofnationallyfinancedprimarycurrentexpenditurebelowmedium-termpotentialoutputgrowth,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Stand ready to adjust current spending to the evolving situation.Some ProgressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Substantial ProgressNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringcredibleandgradualdebtreductionandfiscalsustainabilityinthemediumtermthroughgradualconsolidation,investmentandreforms.Some ProgressNot applicableSDG 8, 162022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 13 July 2021.Submit the 2021-2027 cohesion policy programming documents with a view to finalising the negotiations with the Commission and subsequently starting their implementation.2022 CSR 3Some ProgressIncreaserecyclingratestomeetUniontargetsandpromotethecirculareconomybyenhancingcoordinationamongalllevelsofgovernmentandundertakingfurtherinvestmenttomeetseparatecollection of waste and recycling obligations,Limited ProgressRelevant RRP measures being implemented as of 2022SDG 6, 10, 11, 12, 15as well as to enhance water reuse.Some ProgressRelevant RRP measures being implemented as of 2021SDG 6, 12, 152022 CSR 4Limited progressReduce overall reliance on fossil fuels.Limited ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 13Acceleratethedeploymentofrenewableenergy,withafocusondecentralisedinstallationsandself-consumption,includingbyfurtherstreamlining permitting procedures and improving access to the grid.Some ProgressRelevant RRP measures being implemented as of 2021SDG 7, 8, 9, 13Supportcomplementaryinvestmentinstorage,networkinfrastructure,Limited ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 13electrification of buildingsLimited ProgressNot applicableSDG 7and transport,Some ProgressRelevant RRP measures being implemented as of 2021SDG 11and renewable hydrogen.Substantial ProgressRelevant RRP measures being implemented as of 2022SDG 7, 9, 13Expand energy interconnection capacity.Limited ProgressRelevant RRP measures being implemented as of 2021SDG 7, 9, 13Increase the availability of energy-efficient social and affordable housing, including through renovation.Limited ProgressRelevant RRP measures planned as of 2022SDG 1, 2, 7, 10RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN - OVERVIEW 

Scoreboard (11).  The  Scoreboard  also  gives  an 
overview  of  the  progress  made  in  implementing 
the RRF as a whole, in a transparent manner. The 
graphs in this Annex show the current state of play 
of  the  milestones  and  targets  to  be  reached  by 
Spain and subsequently assessed as satisfactorily 
fulfilled by the Commission. 

EUR  37  billion  has  so  far  been  disbursed  to 
Spain under the RRF. The Commission disbursed 
EUR 9  billion  to  Spain  in  pre-financing  on  17 
August  2021,  equivalent  to  13%  of  the  financial 
allocation.  Spain’s  first  payment  request  was 
positively assessed by the Commission, taking into 
account the opinion of the Economic and Financial 
leading  to  EUR  10  billion  being 
Committee, 
(net  of  pre-
disbursed 
financing)  on  27 December 2021.  The  related  52 
milestones  cover  reforms  in  sustainable  mobility, 
energy  efficiency,  decarbonisation,  connectivity, 
skills,  education,  social  protection,  labour  market, 
taxation and public administration. 

in  financial  support 

Graph A3.1: Total grants disbursed under the RRF 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the centrepiece of the EU’s efforts to help it 
recover  from  the  COVID-19  pandemic,  speed 
up  the  twin  transition  and  strengthen 
resilience  against  future  shocks.  The  RRF 
also  contributes  to  implementation  of  the 
SDGs  and  helps  to  address  the  Country 
Specific  Recommendations 
(see  Annex 2). 
Spain submitted its current 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 EUR 69.5 billion in grants under the 
RRF over the 2021-2026 period.   

Since  the  entry 
into  force  of  the  RRF 
Regulation  and  the  assessment  of  the 
national  recovery  and  resilience  plans, 
geopolitical  and  economic  developments 
have caused major disruptions across the EU. 
In  order  to  effectively  address  these  disruptions, 
the  (adjusted)  RRF  Regulation  allows  Member 
States to amend their recovery and resilience plan 
for  a  variety  of  reasons.  In  line  with  article  11(2) 
of the RRF, the maximum financial contribution for 
Spain was moreover updated on 30 June 2022 to 
an  amount  of  EUR  77.2  billion  in  grants.  No 
revision  was  submitted  at  the  time  of  publication 
of this country report yet. 

Table A3.1: Key elements of the Spanish RRP 

Source: RRF Scoreboard 

Source: RRF Scoreboard 

Spain’s  progress  in  implementing  its  plan  is 
published  in  the  Recovery  and  Resilience 

In  April  2022,  Spain  submitted  its  second 
payment  request  for  EUR  12  billion.  On  27 
June  2022  the  Commission  published  its  positive 
preliminary  assessment  which  after  the  positive 
discussion 
the 
the  committees 
disbursement of the money on 29 July 2022. The 
related  40  milestones  and  targets  cover  several 
reforms  in  the  areas  of  the  green  and  just 
transition,  the  labour  market,  pensions,  regulated 
professions,  digital  connectivity  and  R&D.  Other 

led 

to 

in 

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

resilience-scoreboard/country_overview.html 

29 

Current RRPScope Initial planCID adoption date 13 Juy 2021Total allocation EUR 69.5 billion in grants (5.8% of 2021 GDP)Investments and reforms 110 investments and 102 reforms Total number of milestones and targets416€ 37.04billion 
 
 
 
   
 
   
 
                                                 
 
Graph A3.2: Disbursements per pillar 

Note: Each disbursement reflects progress in the implementation of the RRF, across the six policy pillars. This graph displays how 
disbursements under the RRF (excluding pre-financing) relate to the pillars. The amounts were calculated by linking the milestones 
and targets covered by a given disbursement to the pillar tagging (primary and secondary) of their respective measures. 
Source: RRF Scoreboard 

areas  covered  are  health,  education,  support  for 
vulnerable  groups,  entrepreneurship  and  micro-
enterprises,  prevention  of  tax  evasion  and  green 
taxation,  as  well  as  efficient  and  sustainable 
public expenditure. 

In November 2022, Spain submitted its third 
payment  request  for  EUR  6  billion.  On  17 
February  2023  the  Commission  published  its 
positive  preliminary  assessment  which  after  the 
positive  discussion  in  the  committees  led  to  the 
disbursement  of  the  money  on  31  March  2023. 
The  related  29  milestones  and  targets  cover 
several  reforms  and  investments  in  the areas  of 
the green  and  digital 
transitions,  pensions, 
research,  development  and  innovation,  education 
and  vocational  training.  Other  areas  covered 
include  healthcare,  support  to  vulnerable  groups, 
insolvency  procedures,  public  expenditure  quality 
and the prevention of tax evasion and fraud. 

Graph A3.3: Fulfilment status of milestones and 
targets 

Note: This graph displays the share of satisfactorily fulfilled 
milestones and targets. A milestone or target is satisfactorily 
fulfilled once a Member State has provided evidence to the 
Commission that it has reached the milestone or target and 
the Commission has assessed it positively in an implementing 
decision. 
Source: RRF Scoreboard 

30 

Satisfactorily fulfilledNot fulfilled0 bn2 bn4 bn6 bn8 bnGreen transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic, socialand institutionalresiliencePolicies for thenext generation 
   
   
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The  EU  budget  of  over  EUR  1.2  trillion  for 
2021-2027  is  geared  towards  implementing 
the  EU’s  main  priorities.  Cohesion  policy 
investment amounts to EUR 392 billion across the 
EU and represents almost a third of the overall EU 
budget, including around EUR 48 billion invested in 
line with REPowerEU objectives. 

Graph A4.1: Cohesion policy funds 2021-2027 in 
Spain : budget by fund 

The  European  Social  Fund  Plus  (ESF+)  is  key  to 
supporting  investment  in  people  and  reforms  in 
the  areas  of  employment,  education,  and  social 
inclusion.  Spain  allocated  more than  EUR  3  billion 
to education and skills, of which more than EUR 1 
billion  was  dedicated  to  developing  digital  skills. 
Benefits  of  this  funding  include:  strengthening 
green  and  digital  skills  by  aligning  vocational 
education  and  training  (VET)  with  labour  market 
demand;  and  supporting  self-employment  and 
upskilling in the green and digital economy, with a 
focus on vulnerable groups.   

Graph A4.2: Synergies between cohesion policy 
funds and the RRF with its six pillars in Spain 

(1) billion EUR in current prices, EU share, % of total (total 
amount including EU and national co-financing) 
Source: European Commission, Cohesion Open Data 

(ERDF) will  boost  R&D, 

In  2021-2027,  in  Spain,  cohesion  policy 
funds (12)  will  invest  EUR  16.7  billion  in  the 
green  transition  and  EUR  5.1  billion  in  the 
digital  transformation  as  part  of  the 
country’s total allocation of EUR 52.6 billion. 
In  particular,  the  European  Regional  Development 
Fund 
innovation  and 
digitalisation  by  supporting  more  than  96 000 
companies. SMEs lie at the heart of ERDF support 
to  companies,  and  selective  approaches  are 
promoted  in  line  with  regional  smart  strategies. 
75% of ERDF energy efficiency investments will be 
allocated  to  projects  that  will  lead  to  a  minimum 
of  30%  of  primary  energy  savings.  Particular 
attention  should  be  paid  to  monitoring  the 
decrease in energy consumption, which is a priority 
in 2021-2027. The Just Transition Fund will enable 
further  economic  diversification  and  foster  job 
creation  in  areas  most  affected  by  the  energy 
transition  while  promoting  up-  and  reskilling  of 
workers. This will help Spain fulfil its commitment 
to phase out the use of coal by 2030.  

(1) billion EUR in current prices (total amount, including EU 
and national co-financing)   
Source: European Commission  

Of  the  investments  mentioned  above,  EUR 
7.3  billion  will  be  invested  in  line  with  the 
REPowerEU objectives. This is on top of the EUR 
2.7  billion  dedicated  to  REPowerEU  under  the 
2014-2020  budget.  EUR  2.6  billion  (2021-2027) 
and  EUR  1.8  billion  (2014-2020)  is  for  improving 
energy efficiency; EUR 4.6 billion (2021-2027) and 
EUR  0.9  billion  (2014-2020)  is  for  renewable 
energy  and  low-carbon  R&I;  and  EUR  nearly  200 
million (2021-2027) is for smart energy systems. 

In  2014-2020,  cohesion  policy  funds  made 
EUR  42.4  billion  available  to  Spain (13). 
Including  national  financing,  the  total  investment 
amounts to EUR 54.9 billion - around 0.5% of GDP 
for 2014-2020.  

Spain  continues  to  benefit  from  cohesion 
policy 
support  economic 
to 
recovery,  step  up  convergence  and  provide 
vital support to regions following the COVID-

flexibility 

(12)  European Regional Development Fund (ERDF), Cohesion Fund 
(CF), European Social Fund+ (ESF+), Just Transition Fund 
(JTF) excluding Interreg programmes. Total amount includes 
national and EU contributions. Data source: Cohesion Open 
Data. 

(13)  Cohesion policy funds include the ERDF, CF, ESF and the 
Youth Employment Initiative (YEI) and excludes ETC 
programmes. According to the ‘N+3 rule’, the funds 
committed for 2014-2020 must be spent by 2023. REACT-
EU is included in all figures. Data source: Cohesion Open 
Data. 

31 

34.866%16.531%1.3, 3%ERDFESF+JTF10.73.29.52.29.10.816.75.19.81.71.10.5051015202530Green transitionDigitaltransformationSmart, sustainableand inclusive growthSocial and territorialcohesionHealth, economic,social andinstitutionalresiliencePolicies for the nextgenerationEU CP 2014-2020 (billions EUR)EU CP 2021-2027 (billions EUR) 
 
  
                                                 
   
                                                 
 
 
for 

Fund 

Agricultural 

31.5  billion  in  2023-2027.  The  two  CAP  Funds 
(European  Agricultural  Guarantee  Fund  and 
European 
Rural 
Development),  contribute  to  the  European  Green 
Deal while ensuring long-term food security. They 
promote  social,  environmental  and  economic 
sustainability  and  innovation  in  agriculture  and 
rural  areas,  in  coordination  with  other  EU  funds. 
The  European  Maritime  and  Fisheries  Fund  made 
EUR  1.1  billion  available  to  Spain  in  2014-2020 
and 
the  European  Maritime,  Fisheries  and 
Aquaculture  Fund  will  make  EUR  1.1  billion 
available in 2021-2027.  

Spain  also  benefits 
from  other  EU 
programmes  such  as  the  Connecting  Europe 
Facility (CEF), which under CEF 2 (2021-2027) has 
so far allocated EU funding of EUR 235 million to 
12  specific  projects  on  strategic 
transport 
networks.  Similarly,  Horizon  Europe  has  so  far 
allocated  nearly  EUR  1.7  billion  to  Spanish  R&I 
actors,  while  in  the  previous  programming  period, 
Horizon  2020  earmarked  EUR  6.36  billion.  The 
Public  Sector  Loan  Facility  under 
the  Just 
Transition  Mechanism  makes  EUR  65.9  million  of 
grant  support  available  in  2021-2027,  which  will 
be  combined  with  loans  from  the  EIB  to  support 
investments  by  public  sector  entities 
just 
transition regions. 

in 

for 

risks 

temporary 

unemployment 

support 
in 

Spain  received  support  under  the  European 
to 
instrument 
mitigate 
an 
emergency  (SURE)  to  finance  short-time  work 
schemes  and  similar  measures  to  mitigate  the 
impact of COVID-19. The Council granted financial 
assistance to Spain of EUR 21.324 billion in loans, 
which supported around 30% of workers and 36% 
of firms in 2020. 

in 

Spain 

Instrument 
designing 

(TSI) 
The  Technical  Support 
and 
supports 
implementing  growth-enhancing 
reforms, 
including  the  implementation  of  its  recovery 
and  resilience  plan  (RRP).  Spain  has  received 
significant  support  since  2018,  including  for:  (i) 
setting up a strategic reserve  of critical  resources 
to  prevent 
industrial  capabilities 
based  on 
disruptions in supply chains; and (ii) implementing 
the  European  Child  Guarantee.  The  TSI  is  also 
helping  Spain  implement  specific  reforms  and 
investments  included  in  its  RRP,  e.g.  a  new 

19  pandemic.  The  Recovery  Assistance  for 
Cohesion and the Territories of Europe instrument 
(REACT-EU) (14)  under  NextGenerationEU  provides 
EUR  14.5  billion  on  top  of  the  2014-2020 
cohesion  policy  allocation  for  Spain.  REACT-EU 
financed  over  89  million  COVID-19  vaccines  and 
over  21 000  ventilators  for  Spain’s  medical 
centres. Funding was also provided for short-term 
work  schemes  for  over  125  000  people.  In 
addition, Cohesion’s Action for Refugees in Europe 
(CARE) supports Spain and its regions in providing 
emergency  assistance  to  people  fleeing  from 
Russia’s invasion of Ukraine with a total budget of 
EUR 260 million. With SAFE (Supporting Affordable 
Energy),  the  2014-2020  cohesion  policy  funds 
may  also  be  mobilised  by  Spain  to  support 
jobs  and  companies 
vulnerable  households, 
particularly affected by high energy prices. 

Graph A4.3: Cohesion policy funds contribution to 
the SDGs in 2014-2020 and 2021-2027 in Spain 

(1) 5 largest contributions to SDGs in billion (EUR) current 
prices 
Source: European Commission  

In both 2014-2020 and 2021-2027, cohesion 
policy  funds  have  contributed  substantially 
the  Sustainable  Development  Goals 
to 
(SDGs).  These  funds  support  11  of  the  17  SDGs, 
notably  SDG  9 
innovation  and 
‘industry, 
infrastructure’  and  SDG  8 
‘decent  work  and 
economic growth’ (15).  

Other  EU  funds  make  significant  resources 
available  for  Spain.  The  common  agricultural 
policy  (CAP)  made  available  EUR  59.9  billion  in 
2014-2022. It will keep supporting Spain with EUR 

(14)  REACT-EU allocation on Cohesion Open Data. 

(15)  Other EU funds contribute to the implementation of the 
SDGs. In 2014-2022, this includes both the European 
Agricultural Fund for Rural Development (EARDF) and the 
European Maritime and Fisheries Fund (EMFF). 

32 

10.12   3.59   5.53   1.34   9.08   12.21   8.47   3.46   2.03   1.59   02468101214SDG 9 Industry,innovation,infrastructureSDG 7 Affordableand clean energySDG 8 Decent workand economicgrowthSDG 6 Clean waterand sanitationSDG 3 Good healthand well beingEU CP 2014-2020 (Billions EUR)EU CP 2021-2027 (Billions EUR) 
   
                                                 
governance  model  for 
information and communication technologies (16). 

its  new  strategy  on 

(16)  Country factsheets on reform support are available here. 

33 

 
                                                 
medium-high  capacities  in  the  green  dimension, 
and medium capacities in the social and economic 
and  the  geopolitical  dimensions.  Spain  shows 
above-average  capacities 
the  areas  of 
digitalisation of the personal and public space, but 
has  significant  room  for  improving  capacities  in 
‘economic 
and 
financial 
sustainability’,  ‘raw  material  and  energy  supply’ 
and ‘financial globalisation’, among others. 

stability 

and 

in 

Table A5.1: Resilience indices summarising the 
situation across RDB dimensions and areas 

(1) Data are for 2021, and EU-27 refers to the value for the 
EU as a whole. Data underlying EU-27 vulnerabilities in the 
area ‘value chains and trade’ are not available as they 
comprise partner concentration measures that are not 
comparable with Member States’ level values. 
Source: JRC Resilience Dashboards - European Commission 

ANNEX 5: RESILIENCE 

illustrates  Spain’s 

This  Annex 
relative 
resilience capacities and vulnerabilities using 
the  Commission’s 
resilience  dashboards 
(RDB) (17).  Comprising  a  set  of  124  quantitative 
indicators,  the  RDB  provide  broad  indications  of 
Member  States’  ability  to  make  progress  across 
four interrelated dimensions: social and economic, 
green, digital, and geopolitical. The indicators show 
vulnerabilities (18)  and  capacities (19)  that  can 
become  increasingly  relevant,  both  to  navigate 
ongoing  transitions  and  to  cope  with  potential 
future shocks. To this end, the RDB help to identify 
areas  that  need  further  efforts  to  build  stronger 
and  more  resilient  economies  and  societies.  They 
in  Table  A5.1  as  synthetic 
are  summarised 
resilience 
illustrate  the  overall 
relative  situation  for  each  of  the  four  dimensions 
and  their  underlying  areas  for  Spain  and  the 
EU-27 (20). 

indices,  which 

the 

RDB, 

level 

Spain’s 

According  to  the  set  of  resilience  indicators 
under 
of 
vulnerabilities  is  generally  similar  to  the  EU 
average. Spain shows medium-low vulnerabilities 
in  the  green  and  digital  dimensions  of  the 
resilience  dashboards,  medium  vulnerabilities  in 
the  geopolitical  dimension,  and  medium-high 
the  social  and  economic 
vulnerabilities 
dimension.  Compared  to  the  EU  average,  Spain 
shows  higher  vulnerabilities  in  all  areas  of  the 
social  and  economic  dimension.  It  has  lower 
vulnerabilities than the EU average in the areas of 
‘climate  change  mitigation  and  adaptation’, 
digitalisation  of  the  public  space,  ‘cybersecurity’ 
and most areas in the geopolitical dimension. 

in 

Compared  to the  EU  average,  Spain  shows a 
similar  yet  slightly  lower  level  of  capacities 
across  all  RDB  indicators.  It  exhibits  high 
resilience  capacities  in  the  digital  dimension, 

(17)  For details see https://ec.europa.eu/info/strategy/strategic-
planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en; see also 2020 Strategic 
Foresight Report (COM(2020) 493). 

(18)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals. 

(19)  Capacities refer to enablers or abilities to cope with crises 
and structural changes and to manage the transitions. 

(20)  This annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 on 
the European pillar of social rights. 

34 

ESEU-27ESEU-27Vulnerabilities IndexHighMedium-highMediumMedium-lowLowNot availableCapacities IndexHighMedium-highMediumMedium-lowLowNot availableDimension/AreaVulnerabilitiesCapacitiesSocial and economicHealth, education and workInequalities and social impact of the transitionsGreenEconomic & financial stability and sustainabilitySustainable use of resourcesClimate change mitigation & adaptationDigitalEcosystems, biodiversity, sustainable agricultureDigital for industryDigital for personal spaceCybersecurityDigital for public spaceRaw material and energy supplyGeopoliticalValue chains and tradeFinancial globalisationSecurity and demography 
 
                                                 
 
  
 
 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

Spain’s  green  transition  requires  continued 
action on several aspects including improving 
energy efficiency, climate adaptation and the 
protection  of  biodiversity.  Implementation  of 
the European Green Deal is underway in Spain; this 
Annex  provides  a  snapshot  of  the  key  areas 
involved (21).  

reforms  and  investments  to  attain  the  climate 
objectives (25).  Spain’s  climate  law  aims to  reduce 
economy-wide greenhouse gas emissions in 2030 
by  -23%  compared  to  1990.  This  translates  into 
emission  reductions  of  -39%  for  effort  sharing 
sectors and -61% for ETS sectors, both compared 
to 2005 (26). 

its 

less 

than 

annual 

Spain  has  not  yet  implemented  all  the 
planned  climate  policy  measures  it  needs  to 
reach  its  2030  climate  target  for  the  effort 
sharing  sectors (22).  Data 
for  2021  on 
greenhouse  gas  emissions  in  these  sectors  are 
expected  to  show  that  the  country  generated 
emission 
slightly 
allocations (23).  Current  policies  are  projected  to 
reduce these emissions by  -18% relative to 2005 
levels  in  2030.  This  is  not  sufficient  to  reach  the 
effort  sharing  target  even  before  the  target  was 
raised  to  meet  the  EU’s  55%  objective,  let  alone 
Spain’s  new  target  to  reduce  emissions  by  -
37.6% (24).  Spain’s  additional  measures  tabled 
would  bring  a  reduction  in  emissions  of  38%, 
exceeding  the  new  target.  In  its  recovery  and 
resilience  plan  (RRP),  Spain  has  allocated  40%  of 
its  Recovery  and  Resilience  Facility  grants  to  key 

(21)  The overview in this Annex is complemented by the 

information provided in Annex 7 on energy security and 
affordability, Annex 8 on the fair transition to climate 
neutrality and environmental sustainability, Annex 9 on 
resource productivity, efficiency and circularity, Annex 11 on 
innovation, and Annex 19 on taxation. 

(22)  Member States’ greenhouse gas emission targets for 2030 
(‘effort sharing targets’) were increased by Regulation (EU) 
2023/857 (the Effort Sharing Regulation) amending 
Regulation (EU) 2018/842, aligning the action in the 
concerned sectors with the objective to reach EU-level, 
economy-wide greenhouse gas emission reductions of at 
least 55% relative to 1990 levels. The Regulation sets 
national targets for sectors outside the current EU Emissions 
Trading System, notably: buildings (heating and cooling), road 
transport, agriculture, waste, and small industry. Emissions 
covered by the EU ETS and the Effort Sharing Regulation are 
complemented by net removals in the land use sector, 
regulated by Regulation (EU) 2018/841 (the Land Use, Land 
Use Change and Forestry (LULUCF) Regulation) amended by 
Regulation (EU) 2023/839. 

(23)  Spain's annual emission allocations for 2021 were some 

197.5 Mt CO2eq, and its approximated 2021 emissions were 
at 194.8 Mt (see European Commission, Accelerating the 
transition to climate neutrality for Europe’s security and 
prosperity: EU Climate Action Progress Report 2022, 
SWD(2022)343). 

(24)  See the information on the distance to the 2030 climate 

policy target in Table A6.1. Existing and additional measures 
as of 15 March 2021.  

35 

Graph A6.1: Thematic – greenhouse gas emissions 
from the effort sharing sectors in Mt CO2eq, 
2005-2021 

Source: European Environmental Agency. 

Spain needs to boost the capacity of its land 
use sector to achieve its net carbon removal 
target.  Net  removals  have  been  static  over  the 
past  years  with  forests  contributing  the  biggest 
share  of  net  carbon  removals.  For  2030,  Spain’s 
land  use,  land  use  change  and  forestry  (LULUCF) 
implies  the  removal  of 
net  removals  target 
43 635 kt CO2eq (see Table A6.1) (27).  

Fossil fuels still make up a substantial share 
of Spain’s energy mix, but renewable energy 
is  set  to  grow  fast.  In  2021,  oil  provided  for  a 
quarter of Spain’s energy mix, and natural gas for 
25%,  while  18%  came  from  renewable  sources, 
(see Graph A6.2). Spain’s electricity mix is already 
highly  decarbonised,  with  48%  coming  from 
renewable sources in 2021. Spain’s target of 42% 
of  share  of  energy  from  renewable  sources  in 

(25)  For example, investments in sustainable, secure and 

connected mobility and hydrological planning to address 
water scarcity. Many measures planned for 2021 and 2022 
have been completed, including reforms on agriculture, 
biodiversity, and renewable capacity, and investments on 
sustainable mobility.  

(26)  Under Spain’s national energy and climate plan (NECP). An 

update of the plan, mandated by Regulation (EU) 2018/1999 
(the Governance Regulation), is underway. 

(27)  This value is indicative and will be updated in 2025 (as 

mandated by Regulation (EU) 2023/839). 

05010015020025030020052021Domestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
                                                 
     
                                                 
 
 
considered 

the  NECP  was 

gross  final  energy  consumption  by  2030  included 
sufficiently 
in 
ambitious (28).  Spain  will  need  to  increase  its 
renewable  energy  target  in  the  updated  NECP  to 
reflect the more ambitious EU climate and energy 
targets  in  the  Fit  for  55  Package  and  in  the 
REPowerEU  Plan.  The  plan  envisages  phasing  out 
coal  and  decommissioning  the  coal  power  plants 
by  2030.  A  tripartite  agreement  in  2020  makes 
Spain  a  pioneer 
implementing  a  socially 
responsible transition (29). 

in 

in 

includes  actions  on 

Renewable  energy  is  expected  to  play  a 
central  role  to  decarbonise  Spain’s  energy 
system.  Five  storage  projects 
its  RRP, 
accounting  for  at  least  600  MW  overall,  aim  to 
address grid stability and capacity challenges. The 
plan 
renewable  energy 
generation and making the electricity system more 
flexible,  decentralised  and  dynamic,  including  by 
establishing  energy  communities.  It  focuses  on 
developing  renewable  energy  (including  offshore 
wind  and  self-consumption)  and  on  renewable 
energy  and  solar  technologies  for  thermal  needs 
of buildings, services, and industry. 

tourism, 

irrigation, 

to  promote  urban 

Swift  implementation  of  actions  to  improve 
energy  efficiency  in  Spain’s  recovery  and 
resilience  plan  are  required  if  Spain  is  to 
achieve  the  objectives  in  its  national  energy 
and  climate  plan.  The  plan  aims  to  reduce 
primary energy consumption by 39.5% in 2030. In 
turn,  its  recovery  and  resilience  plan  includes 
measures to help attain this target, such as those 
for 
industry,  mobility, 
agriculture, and livestock. It also includes an action 
rehabilitation  and 
plan 
regeneration 
the  building 
to  help  double 
renovation  rate.  In  addition,  it  also  includes  the 
entry  into  force  of  its  urban  agenda  and  a  long-
term  renovation  strategy for  energy  rehabilitation 
in  the  building  sector,  aimed  at  reducing  final 
energy  consumption  in  buildings  by  36.6%  by 
2030.  Furthermore,  the  RRP  also  includes  a 
programme on energy-efficient social housing with 
an associated cost of EUR 1 billion. In the context 
of  implementing the  RRP, Spain  has  also  adopted 
a  framework  for  ‘one-stop  shops’  to  accompany 
to 
households  and  communities  of  owners 

(28)  In line with the Regulation (EU) 2018/1999 (the Governance 
Regulation), the reference quantity used in the NECP for the 
share of renewable energy in EU Member States’ energy 
consumption is gross final energy consumption. 

(29)  On further aspects of the just transition, see Annex 8. 

36 

renovate  residential  buildings,  and  has  plans  for 
energy  efficiency  in  public  buildings,  with  an 
additional  EUR  1  billion  allocated  to  achieve  this 
objective. 

Graph A6.2: Energy mix (top) and Electricity mix 
(bottom), 2021 

Source: 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 

Significant  policy  action  will  make  transport 
cleaner,  while  air  pollution  in  urban  centres 
requires  further  attention.  Spain’s  strategy  for 
safe,  sustainable,  and  connected  mobility  (from 
2021)  will  continue  to  guide  how  transport  policy 
is  implemented  in  the  coming  years.  Actions 
included  in  its  RRP  will  transform  urban  and 
metropolitan  transport  and  complete  the  Trans-
European  Transport  Network.  But  in  rural  public 
transport,  insufficient  infrastructure  and  access 
remain  a  concern  (see  Annex  8).  Spain  will 

2%26%4%47%21%Solid fossil fuels,peat and oil shaleGasOilRenewablesNuclear3%25%42%12%18%Solid fossil fuels,peat and oil shaleGasOilNuclearRenewables 
                                                 
  
promote  the  development  and  use  of  sustainable 
alternative  fuels  for  maritime  transport  and 
aviation, in line with the FuelEU maritime and the 
ReFuelEU  aviation  initiatives.  At  the  same  time, 
individual 
seasonal 
problems  with  air  pollution  and  traffic  congestion 
in  major  metropolitan  areas  in  Spain,  notably 
Madrid  and  Barcelona,  leading  to  health  and 
economic costs that need to be mitigated. 

exacerbates 

transport 

Graph A6.3: Thematic – environmental investment 
needs and current investment, p.a. 2014-2020 

Source: European Commission. 

and  2020, 

Spain  would  benefit  from  investing  more  in 
environmental  protection  and  in  measures 
combatting 
biodiversity, 
protecting 
desertification  and  addressing  pollution (30). 
Between  2014 
environmental 
investment  needs  were  estimated  to  be  at  least 
EUR 18.6 billion while investment stood at around 
EUR 7.7, leaving a gap of at least EUR 10.9 billion 
per  year  (see  Graph  A6.3) (31).  Spain  has  the 
largest  terrestrial  EU  Natura  2000  network, 
its  territory (32).  Sufficient 
covering  27.3%  of 
resources are yet to be  allocated to its protection 
and  management.  Some  marine  designations  are 

(30)  Environmental objectives include pollution prevention and 
control, desertification prevention and monitoring, water 
management and industries, circular economy and waste, 
biodiversity and ecosystems (European Commission, 2022, 
Environmental Implementation Review, country report Spain) 

(31)  When also accounting for needs estimated at EU level only 

(e.g., water protection, higher circularity, biodiversity 
strategy).  

(32)  In 2021, Spain had 28.0% terrestrial protected areas (Natura 
2000 and nationally designated areas), against the EU 
average of 26.4% (European Environment Agency, 2023, 
Natura 2000 Barometer). 

still needed. Spain would benefit from investing in 
wastewater collection and treatment, water supply 
infrastructure,  and  the  monitoring  of  its  water 
reserves (33).  It  could  also  exploit  the  potential  of 
water reuse (see also Annex 9). 

include  mobility,  energy, 

Climate  change  is  affecting  many  sectors  in 
Spain  with  adaptation  challenges  concerning 
water  management  in  particular (34).  Affected 
sectors 
the  built 
environment,  agriculture,  forestry,  and  tourism. 
They  depend  on  water,  which 
is  becoming 
increasingly scarce (35). Heat-related mortality and 
morbidity are projected to rise significantly. Spain’s 
RRP  includes  measures  to  address  the  natural 
environment  and  resources,  as  well  as  climate 
adaptation  of  coastal  natural  areas.  Climate 
adaptation 
water 
management in Spain requires restoring terrestrial, 
marine, and freshwater ecosystems. 

sustainable 

through 

Spain  provides 
fuel  and  other 
fossil 
environmentally harmful subsidies that could 
be  considered  for  reform,  while  ensuring 
food  and  energy  security  and  mitigating 
social effects. In 2021, Spain spent EUR 3 billion 
on  fossil  fuel  subsidies,  putting 
low-carbon 
alternatives  at  a  disadvantage.  Environmentally 
harmful  subsidies  have  been  identified,  via  an 
initial  assessment,  in the agriculture,  forestry  and 
fishing, electricity, gas, steam and air conditioning, 
transportation  and  storage,  mining  and  quarrying 
sectors.  Examples  of  such  subsidies  include  the 
reduced VAT rate for fertilisers and pesticides, the 
excise 
in 
agriculture,  the  reduced  energy  tax  rate  for  light 
fuel  oil  used  in  mobile  machinery,  the  excise  tax 
exemption  on  the  use  of  natural  gas,  the 
reimbursement  of  excise  duty  on  diesel  used  in 
freight  and  other  categories  of  passenger 
transport  or  the  excise  tax  exemption  and  tax 
relief for natural  gas for industrial consumers (36). 

refund  for  diesel  fuel  used 

tax 

(33)  European Commission, 2022, Environmental Implementation 

Review. 

(34)  European Environmental Agency, Advancing towards climate 

resilience in Europe, forthcoming. 

(35)  According to the 6th IPCC climate adaptation report, in 

southern Europe, more than a third of the population will be 
exposed to water scarcity at 2°C.  

(36)  Fossil fuel figures in EUR of 2021 from the 2022 State of 

the Energy Union report. Initial assessment of 
environmentally harmful subsidies done by the Commission 
in the 2022 toolbox for reforming environmentally harmful 
subsidies in Europe, using OECD definitions, and based on the 
following datasets: OECD Agriculture Policy Monitoring and 

37 

6442 5991 9342 0345073 8093 9004 2286 0146740.01000.02000.03000.04000.05000.06000.07000.0Pollutionprevention andcontrolWater (industries,excl. protection)Circular economy(incl. waste)Biodiversity andecosystemsR&I&D and otherEUR million (at current prices)Current investmentTotal need 
           
                                                 
                                                 
A  mapping  of  all  environmentally  harmful 
subsidies by Spain would help prioritise candidates 
for reform. 

Spain  has  potential  to  rely  more  on 
environmental  taxes  (see  Annex  19).  In  2022, 
Spain  reformed  the  tax  on  fluorinated  gases  to 
discourage  their  use  and  reduce  tax  avoidance. 
Further  green  taxation  measures,  e.g.  on  single-
use plastics packaging and landfilling, incineration 
and 
co-incineration  of  waste,  have  been 
implemented under the RRP. 

Evaluations; OECD Policy Instruments for the Environment 
(PINE) Database; OECD Statistical Database for Fossil Fuels 
Support; IMF country-level energy subsidy estimates. Annex 4 
of the toolbox contains detailed examples of subsidies on 
the candidates for reform. 

38 

 
                                                                              
Table A6.1: Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources: (1) Historical and projected emissions, as well as Member States’ climate policy targets and 2005 base year emissions 
under the Effort Sharing Decision (for 2020) are measured in global warming potential (GWP) values from the 4th Assessment 
Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ climate policy targets and 2005 base 
year emissions under the Effort Sharing Regulation (for 2030) are in GWP values from the 5th Assessment Report (AR5). The 
table above shows the base year emissions 2005 under the Effort Sharing Decision, using AR4 GWP values. Emissions for 2017-
2021 are expressed in percentage change from 2005 base year emissions, with AR4 GWP values. 2021 data are preliminary. The 
table shows the 2030 target under Regulation (EU) 2023/857 that aligns it with the EU’s 55% objective, in percentage change 
from 2005 base year emissions (AR5 GWP). Distance to target is the gap between Member States’ 2030 target (with AR5 GWP 
values) and projected emissions with existing measures (WEM) and with additional measures (WAM) (with AR4 GWP values), in 
percentage change from the 2005 base year emissions. Due to the difference in global warming potential values, the distance to 
target is only illustrative. The measures included reflect the state of play as of 15 March 2021.  
(2) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2023 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 
amending Regulation (EU) 2018/841 (LULUCF Regulation) – Annex IIa, kilotons of CO2 equivalent, based on 2020 submissions. 
(3) Renewable energy and energy efficiency targets and national contributions are in line with the methodology established under 
Regulation (EU) 2018/1999 (Governance Regulation).  
(4) Percentage of total revenue from taxes and social contributions (excluding imputed social contributions). Revenue from the EU 
Emissions Trading System is included in environmental tax revenue.  
(5) Expenditure on gross fixed capital formation for the production of environmental protection services (abatement and 
prevention of pollution) covering government, industry, and specialised providers.  
(6) European Commission, Study on energy subsidies and other government interventions in the European Union, 2022 edition.  
(7) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters. This 
indicator is based on modelling of the current risk from floods, wildfires and windstorms as well as earthquakes, and an 
estimation of the current insurance penetration rate. The indicator does not provide information on the split between the 
private/public costs of climate-related disasters. A score of 0 means no protection gap, while a score of 4 corresponds to a very 
high gap (EIOPA, 2022).  
(8) Sulphur oxides (SO2 equivalent), ammonia, particulates < 10 µm, nitrogen oxides in total economy (divided by GDP).  
(9) Battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV). 

39 

2030200520172018201920202021target/valueWEMWAMGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq; %; pp236.0-15%-14%-14%-22%--37.7%-19.70.3Net carbon removals from LULUCF (2)kt CO2eq-44 382-45 307-46 139-45 229-44 095-44 522-43635n/an/a200520172018201920202021Share of energy from renewable sources in gross final consumption of energy (3)%8%17%17%18%21%21%42%Energy efficiency: primary energy consumption (3)Mtoe136.0124.9124.3120.6105.0112.198.5Energy efficiency: final energy consumption (3)Mtoe98.184.786.786.573.880.373.6201620172018201920202021201920202021Environmental taxes (% of GDP)% of GDP1.91.81.81.81.81.82.42.22.2Environmental taxes (% of total taxation)(4)% of taxation 5.55.45.35.14.74.65.95.65.5Government expenditure on environmental protection% of total exp.2.02.12.12.11.82.01.71.61.6Investment in environmental protection (5) % of GDP0.20.20.20.20.2-0.40.40.4Fossil fuel subsidies (6)EUR2021bn3.94.04.24.53.03.053.050.0-Climate protection gap (7) score 1-40.91.21.5Net greenhouse gas emissions1990 = 100112.9120.9119.3113.294.0101.076.069.072.0Greenhouse gas emission intensity of the economykg/EUR'100.300.310.300.270.260.260.310.300.26Energy intensity of the economykgoe/EUR'100.110.110.110.110.10-0.110.11-Final energy consumption (FEC)2015=100102.1105.3107.7107.591.699.8102.994.6-FEC in residential building sector2015=10093.994.399.494.695.396.6101.3101.3106.8FEC in services building sector2015=100103.3106.5108.2108.8100.5106.0100.194.4100.7Smog-precursor emission intensity (to GDP) (8)tonne/EUR'101.11.11.11.01.0-0.90.9-Years of life lost due to air pollution by PM2.5per 100.000 inh.421.9465.4351.3352.6347.9-581.6544.5-Years of life lost due to air pollution by NO2per 100.000 inh.183.7208.6173.4159.798.7-309.6218.8-Nitrates in ground watermg NO3/litre------21.020.8-Land protected areas% of total27.527.9-27.528.028.026.226.426.4Marine protected areas% of total7.9--12.0-12.010.7-12.1Organic farming% of total utilised agricultural area8.58.79.39.710.010.88.59.1-201720182019202020212022202020212022Share of zero-emission vehicles (9)% in new registrations0.30.50.82.12.83.75.48.910.7Number of AC/DC recharging points (AFIR categorisation)---88261199624960188626330028432518Share of electrified railways%63.763.863.764.3n/a64.356.6n/a56.6Hours of congestion per commuting driver per year25.624.822.122.2n/an/a28.7n/an/aMobility'Fit for 55'DistanceProgress to policy targetsNational contribution to 2030 EU targetSPAINEUFiscal and financialindicatorsEnergyPollutionBiodiversityClimate 
 
     
 
ANNEX 7: ENERGY SECURITY AND AFFORDABILITY 

Spain’s  high  exposure  to  fossil  fuel  price 
developments, provides a strong incentive to 
accelerate the clean energy transition. Before 
Russia 
limited 
invaded  Ukraine,  Spain  had 
exposure to Russian gas and oil, well below the EU 
average.  However,  it  is  highly  dependent  on 
imported  fossil  fuels  in  general.  This  makes  its 
economy  particularly  sensitive  to  global  price 
developments, requiring it to step up efforts on the 
energy  transition.  This  Annex (37)  sets  out  actions 
carried  out  by  Spain  to  achieve  the  REPowerEU 
objectives,  including  through  the  implementation 
of  its  recovery  and  resilience  plan,  in  order  to 
improve  energy  security  and  affordability,  while 
accelerating  the  clean  energy  transition,  and 
contributing to enhancing the EU’s competitiveness 
in the clean energy sector (38). 

of  the  Medgaz  pipeline  up  to  11bcm  from  the 
previous 8 bcm. However, given Spain´s diversified 
gas supplies, the decrease of supplies via the GME 
pipeline  did  not  pose  significant  risks.  Spain  has 
the  largest  fleet  of  liquefied  natural  gas  (LNG) 
terminals in the EU, with seven in total. As a result, 
Spain was the EU’s second biggest LNG importer in 
2022,  importing  32.6  bcm .  Full  disruption  of 
impact  the 
Russian  gas  would  not  severely 
Spanish  gas  system,  as  12.1%  of  Spain’s  gas 
imports  (5.1  bcm)  came  from  Russia  in  2022 
supplied via LNG. 

Graph A7.1: Underground gas storage levels in 
Spain 

in 

its  gas 

challenging 

infrastructure 

Security  of  gas  supply  has  been  ensured  in 
Spain 
circumstances; 
can 
moreover, 
contribute to the overall security of supply in 
Europe. Spain fulfilled its gas storage obligations 
last winter, reaching 94.8% by 1 November 2022  
(well  above  the  EU  legal  obligation  of  80%),  and 
ended  the  heating  season  with  a  filling  gas 
storage  at  85.8% by  15  April  2023 (39) (40).  Spain 
operates  four  underground  storage  facilities (41) 
with  a  total  capacity  of  about  3.4  billion  cubic 
metres (bcm), representing 10% of its total yearly 
demand.  Algeria,  the  main  supplier,  stopped 
providing  gas  to  the  Iberian  Peninsula  via  the 
Gazoduc  Maghreb-Europe 
in 
November  2021,  while  increasing  export  capacity 

(GME)  pipeline 

(37)  It is complemented by Annex 6 as the European Green Deal 

focuses on the clean energy transition, by Annex 8 on actions 
taken to mitigate energy poverty and tprotect he most 
vulnerable ones, and by Annex 9 as the transition to a 
circular economy will unlock significant energy and resource 
savings, further strengthening energy security and 
affordability, and by Annex 12 on industry and single market 
complementing ongoing efforts under the European Green 
Deal and REPowerEU. 

(38)  in line with the Green Deal Industrial Plan COM(2023) 62 
final, and the proposed Net-Zero Industry Act COM(2023) 
161 final 

(39)  Regulation of the European Parliament and of the Council 
amending Regulations (EU) 2017/1938 and (EC) No 
715/2009 with regard to gas storage . 

(40)  Spain can count the stocks of LNG in its LNG facilities for its 
filling target. If taken into account, Spain’s storage level goes 
up to 146.7% (Article 6(a).5 of the Gas Storage Regulation). 

(41)  Spain has four underground storage facilities: Gaviota 

(offshore), Serrablo, Yela (these are managed by Enagas), 
and Marismas (managed by Naturgy Almacenamientos 
Andalucia). 

40 

Source: Gas Infrastructure Europe (Last update 2 May 2023) 

for 

the 

fall 

to  compensate 

The  security  of  supply  of  the  gas  and 
electricity  systems  are  closely  interlinked, 
and Spain has adopted a comprehensive plan 
with  demand  response  measures.  Electricity 
security  in  Spain  still  relies  heavily  on  gas-fired 
combined  cycle  power  plants  (Annex  6).  Seasonal 
weather  conditions  (droughts)  contributed  to  an 
for  gas-fired 
increase  of  gas  consumption 
generation, 
in 
hydropower generation in 2022. Spain adopted the 
‘Plan  Más  Seguridad  Energética 
that 
includes 73 energy security measures covering six 
areas:  i)  savings  and  energy  efficiency;  ii)  energy 
system transformation; iii) expansion of protection 
for  people,  particularly  the  most  vulnerable;  iv) 
transformation 
fiscal  measures; 
through 
and 
vi) solidarity  with  other  Member  States.  This 
comes  on  top  of  existing  measures  adopted  such 
as  fuel  switching  for  coal-fired  power  plants, 
biomethane  production,  limits  on  heating  and  air 
conditioning,  and  the  energy  efficiency  inspection 
campaign.  Over  the  period  August  2022  –  March 
2023, 11% of gas consumption has been saved in 
Spain compared to the previous 5-years average. 

v) industry 
and 

renewables 

hydrogen; 

(+SE)’ 

 
 
                                                 
 
 
 
Graph A7.2: Share of gas consumption per sector, 
2021 

Graph A7.3: Gas consumption per industrial sector, 
2021 (% of total gas consumption in industry) 

Source: Eurostat 

Source: Eurostat 

systems.  However, 

Spain is upgrading its grid infrastructure, but 
further  investments  can  accommodate  a 
higher  share of  renewable  electricity.  As  part 
of its recovery and resilience plan, Spain will invest 
to digitalise its grid and improve energy storage to 
ease the integration of renewable energy sources. 
It  also  aims  to  speed  up  permitting  procedures 
(Annex  12).  With  a  deployment  rate  of  around 
90%,  Spain  is  an  EU  front  runner  in  rolling  out 
intelligent  metering 
its 
electricity  cross-border  interconnection  level  of 
5.35%  in  2022  is  still  significantly  below  the 
interconnection target of 10% for 2020 and 15% 
for 2030. Progress on Projects of Common Interest 
with Portugal and France is expected to contribute 
to 
levels,  with 
interconnection 
commissioning  of  all  ongoing  electricity  priority 
projects by 2030, namely the Biscay Bay electricity 
interconnection,  the  two  Pyrenean  crossings  and 
the  electricity  interconnection  between  Portugal 
and  Spain.  In  October  2022,  the  French  and 
Portuguese  heads  of  state  and  the  Spanish  head 
of government issued a joint statement proposing 
the  creation  of  a  Green  Energy  Corridor  with  a 
focus on hydrogen. 

increasing 

Graph A7.4: Spain´s retail energy prices for 
industry (top) and households (bottom) 

On electricity: the band consumption is DD for households and 
ID for industry 
(2) On gas, the band consumption is D2 for households and I4 
for industry 

Source: Eurostat 

in 

energy 

soaring 

particular 

Despite the mechanisms introduced by Spain 
prices; 
to  mitigate 
households, 
low-income 
families,  and  industries  are  being  severely 
impacted.  In  Spain,  the  share  of  gas  used  in 
dwellings is almost 12.4% of the gas consumption 
in the country, putting households and their ability 
to cover basic needs such as heating or transport 

41 

47.8%31.2%1.0%7.0%12.4%0.6%EnergyIndustryTransportServices and public sectorHouseholdsAgriculture, forestry andfishery0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%Iron and steelChemical and petrochemicalNon-ferrous metalsNon-metallic mineralsTransport equipmentMachineryMining and quarryingFood, beverages and tobaccoPaper, pulp and printingWood and wood productsConstructionTextile and leather050100150200250300€/MWhGas SpainGas EUElectricity SpainElectricity EU050100150200250300350400€/MWhGas SpainGas EUElectricity SpainElectricity EU 
       
      
 
  
 
at risk (42). Similarly, the surge in energy prices has 
had  a  considerable  impact  on  Spanish  industry, 
which accounts for 31.2% of the gas consumption 
in  the  country  (Graph  A7.2).  Sectors  such  as  the 
metallurgical, chemical, wood and paper industries 
are  highly  exposed  to  energy  shocks  and  are 
experiencing growing pressure to either raise their 
prices  to  safeguard  margins  or  reduce  production 
due to the high share of energy consumption. 

Spain  has  high  ambitions  to  transform  its 
energy  system,  and  further  policy  support 
could  harness  its  potential  to  decarbonise 
the  economy.  Spain’s  deployment  of  renewable 
energy  reached  a  total  of  67.9  GW  in  2022, 
increasing by 5.9 GW compared  to 2021. Most of 
this  growth  was  in  solar  photovoltaic  (+28.1%  in 
2022),  reaching  20.5  GW  and  wind  (+5.0%  in 
2022), reaching 29.3 GW (43). This growth was built 
on an improved regulatory framework, in particular 
Royal Decree Laws 244/2019 and 18/2022. Spain 
has also taken measures on permitting procedures 
for  renewable  energy  sources,  by  shortening  the 
consultation  periods  and  creating  accelerated 
procedures for well-defined cases. Moreover, Spain 
has taken measures to facilitate self-consumption 
of  renewable  energy,  by  increasing  the  maximum 
distance  between  the  installation  and  consumers, 
as well as promoting energy communities. There is 
still  potential  to  further  explore  key  sectors  to 
meet  the  country´s  renewables  penetration  and 
decarbonisation  targets.  This  would  include  in 
particular  a  further  upscaling  of  its  biomethane 
production. Starting from a production of 0.36bcm 
in  2021,  Spain  has  high  additional  potential 
capacity to produce biomethane by 2030 (approx. 
4.1  bcm/year).  This  would  allow  Spain  to  replace 
approximately  13%  of  its  current  natural  gas 
consumption  with  biomethane.  Spain  will  need  to 
in  the 
its  renewable  energy  target 
increase 
updated  National  Energy  and  Climate  Plan  to 
reflect the more ambitious EU climate and energy 
targets  in  the  Fit  for  55  Package  and  in  the 
REPowerEU Plan 

Spain  has  a  strong  manufacturing  base  of 
low-carbon  technologies  and  components 
(wind, solar thermal and solar photovoltaics), 
which  the  government  aims  to  strengthen 
due  to  decarbonisation  objectives.  Spain  is 

(42)  Annex 8 looks at the impact of soaring energy prices on the 

most vulnerable households. 

(43)  IRENA, Renewable capacity statistics 2023. 

among  the  top  10  countries  in  the  world  in  the 
production  of  wind  energy  components  and  is 
among  the  top  European countries  exporting  heat 
pumps worldwide. The transition to clean energy is 
mineral-intensive  and  will  require  a  substantial 
supply  of  many  critical  minerals  (see  Annex  5). 
Apart from wind turbines and heat pumps, Spanish 
companies  are  also  among  the  biggest  European 
manufacturers  of  electrolysers  and  smart  meters, 
and  there  are  major  Spanish  players  in  the 
batteries  research  and  innovation  (R&I)  field. 
Regarding  clean  energy  jobs (44),  these  are  more 
evenly  spread  along  the  value  chain  and  a 
significant  share  comes  also  from  the  scientific 
and technical activities. One third of the jobs (45) is 
related  to  bioenergy  (mainly  solid  biomass),  solar 
PV  is  responsible  for  over  30  thousand  jobs,  and 
wind  energy  for  almost  24  thousand.  The  figures 
for  hydropower  and  concentrated  solar  power  are 
also  remarkable,  almost  10  and  over  5  thousand 
respectively. 

importantly  public 

investment 
(R&I). 

Spain is in a position to support private, but 
most 
in 
Public 
Innovation 
Research  and 
investment in R&I, an EU Energy Union priority (46), 
has  decreased  considerably:  from  above  0.015% 
before  2013  (peaking  at  0.028%  in  2012)  to  a 
range  below  0.01%  since 2016  (between  0.007% 
-  0.009%)  remaining  at  minimum  levels  also  in 
2020  (as  a  share  of  GDP).  As  for  private  R&I 
spending  in  Energy  Union  topics,  there  has  been 
also  a  decreasing  trend:  from  0.05%  of  GDP 
between  2010-2013  to  0.03-0.04%  since  2014, 
remaining  at  the  lower  end  over  the  last  years. 
Renewable  energy  R&I  funding  constituting  the 
major  share  over  time  (see  Graph  A7.5.  There  is 
also a downward trend in venture capital invested 
in  climate  tech  start-ups  and  scale-ups  (2.6%  in 
2021  versus  8.7%  in  2020,  as  a  percentage  of 
total  venture  capital  invested) (47)  and  a  strong 

(44)  Clean Energy Technology Observatory (CETO) Overall 
Strategic Analysis of Clean Energy Technology in the 
European Union (2022) and JRC based on Business Survey 
data from DG ECFIN and Skills-OVATE database by Cedefop 
and Eurostat. 

(45)  Data from IRENA and ILO (2022), Renewable energy and 

jobs: Annual review 2022, International Renewable Energy 
Agency, Abu Dhabi and International Labour Organization, 
Geneva. 
https://www.irena.org/publications/2022/Sep/Renewable-
Energy-and-Jobs-Annual-Review-2022  

(46)  Renewables, smart systems, efficient systems, sustainable 

transport, carbon capture, utilisation and storage, and nuclear 
safety, COM(2015) 80 final (Energy Union Package).  

(47)  JRC elaboration based on PitchBook data (06/2022) 

42 

 
                                                 
                                                 
innovative  solutions 

shift of these investments from energy generation 
and grid to transport and mobility. More public and 
private  investment  in  clean  energy  R&I,  scale-up 
and  affordable  deployment 
is  of  pivotal 
importance.  It  is  also  important  for  bridging  the 
gap  between  R&I  and  market  uptake,  helping 
boost EU competitiveness. In order to facilitate the 
introduction  of 
into  the 
electricity  market,  a  framework  was  put  in  place 
for  regulatory  sandboxes  in  2022 (48).    Spain  is 
carrying  out  a  number  of  checks  on  products 
covered  by  ecodesign  and  energy  labelling,  that 
may  be  too  low.  This  generates  concerns  with 
respect to the level playing field among economic 
operators    and  uncertainty  as  to  the  compliance 
levels  of  the  concerned  products,  and  therefore 
possible  missed  energy  and  CO2  savings. (49) 
Implementing 
investments 
planned  in  the  Spanish  recovery  and  resilience 
plan will speed up the decarbonisation of industry 
(Annex 12). 

reforms  and 

the 

Graph A7.5: Public (top) and Private (bottom) R&I 
investment in Energy Union R&I priorities 

Source: JRC SETIS (2022) 

(48)  Royal Decree 568/2022. 

(49)  The internet-supported information and communication 
system for the pan-European market surveillance 

43 

40%48%48%18%15%17%18%18%6%25%15%20%2%9%2%201020142020[% per priority]CCUSNuclear safetySustainable transportEfficient systemsSmart systemRenewables15810485Total [mn Euro]55%50%46%12%14%13%15%15%23%19%13%18%6%201020142019[% per priority]CCUSNuclear safetySustainable transportEfficient systemsSmart systemRenewables514356330Total [mn Euro] 
   
 
                                                 
Table A7.1: Key Energy Indicators 

(1) The ranking of the main supliers is based on the latest available figures (for 2021) 
(2) FSRU included 
(3) Venture Capital investments include Venture Capital deals (all stages) and Private Equity Growth/Expansion deals (for 
companies that have previously been part of the portfolio of a VC investment firm). 
Source: Eurostat, Gas Infrastructure Europe (Storage and LNG Transparency Platform), JRC SETIS (2022), JRC elaboration based 
on PitchBook data (06/2022) 

44 

EU20182019202020212018201920202021Import Dependency [%] 74%75%68%69%58%61%57%56%of Solid fossil fuels 80%89%55%106%44%44%36%37%of Oil and petroleum products 99%102%99%96%95%97%97%92%of Natural Gas 101%101%97%100%83%90%84%83%Dependency from Russian Fossil Fuels [%]of Solid fossil fuels 23%33%55%30%40%44%49%47%of Oil and petroleum products 2%2%2%5%30%27%26%25%of Natural Gas 2%9%10%9%40%40%38%41%20152016201720182019202020212022Gross Electricity Production (GWh)280,911274,772275,726274,452273,257263,373--Combustible Fuels128,947113,618133,002118,149117,12593,778--Nuclear57,19658,63358,03955,76658,34958,299--Hydro31,36839,86521,07036,80326,87433,998--Wind49,32548,90549,12750,89655,64756,444--Solar 13,85913,64314,39712,74415,10320,667--Geothermal 000000--Other Sources00002027--Net Imports of Electricity (GWh)-133766791691110268623280852-   As a % of electricity available for final consumption 0%3%4%5%3%1%0% -Electricity Interconnection (%)--5.80%6.71%6.5%6.5%5.0%5.4%20152016201720182019202020212022Gas Consumption (in bcm)28.228.831.331.135.532.133.832.5Gas Imports - by type (in bcm)45.946.051.049.758.652.857.1-Gas imports - pipeline32.432.434.634.837.232.537.0-Gas imports - LNG13.513.616.414.921.420.420.2-Gas Imports - by main source supplier (in bcm) (1)Algeria23.121.419.119.413.49.917.9-United States0.00.21.50.68.210.210.8-Nigeria7.79.48.88.28.57.98.5-Russia0.00.00.01.76.36.86.4-Others15.115.121.519.822.218.113.5-2019202020212022LNG TerminalsNumber of LNG Terminals (2)6667LNG Storage capacity (m3 LNG)3,308,6703,308,6703,316,5003,316,500Underground StorageNumber of storage facilities4444Operational Storage Capacity (bcm)3.393.53.53.52019202020212022VC investments in climate tech start-ups and scale-ups (EUR Mln) (3)94.5153.2107.2n.a.as a % of total VC investments in Spain7.3%9.5%2.7%n.a.Research & Innovation spending in Energy Union R&i priorites (2)Public R&I (EUR mln)102.184.9n.a.n.a.Public R&I (% GDP)0.008%0.007%n.a.n.a.Private R&I (EUR mln)329.8n.a.n.a.n.a.Private R&I (% GDP)0.03%n.a.n.a.n.a.CLEAN ENERGYDIVERSIFICATION OF GAS SUPPLIESELECTRICITYSPAINENERGY DEPENDENCE 
 
   
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

This  Annex  monitors  Spain’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
notably  for  workers  and  households 
in 
vulnerable situations. The number of jobs in the 
green economy has quickly risen in recent years in 
Spain.  Upskilling  and  reskilling  of  workers  in 
declining  and  transforming  sectors  has  increased 
to  some  extent,  contributing  to  a  fair  green 
transition 
Council 
Recommendation (50).  Yet  further  development  of 
green skills remains key to a fair transition and the 
implementation  of  REPowerEU.  Spain’s  recovery 
and  resilience  plan  (RRP)  outlines  crucial  reforms 
and  investments  for  a  fair  green  transition (51), 
complementing  the  territorial  just  transition  plans 
and  actions  supported  by  the  European  Social 
Fund Plus (ESF+). 

with 

line 

the 

in 

industries 

energy-intensive 

in  2021  employment 

Employment in Spain’s sectors most affected 
by  the  green  transition  remains  overall 
stable while the green economy is expanding, 
in  declining  activities  need 
but  workers 
(GHG) 
active  support.  The  greenhouse  gas 
emissions  intensity  of  Spain’s  workforce  declined 
from  14.9  to  11.4  tonnes  per  worker  between 
2015  and  2021,  and  in  2021  was  below  the  EU 
average  of  13.7  tonnes  (see  Graph A8.1  and 
in 
Table A8.1).  Overall, 
Spain’s 
(EII) 
represented  a  stable  share  of  2.2%  of  total 
employment  (in  2020:  2.1%  vs  3.0%  in  the  EU). 
Employment in mining and quarrying has fallen by 
13.5%  since  2015  (to  around  19 000  workers), 
along  with  the  decline  of  coal  and  lignite  mining 
especially  in  the  regions  of  Asturias,  Aragón  and 
Castilla  y  León.  Total  jobs  in  the  environmental 
goods  and  services  sector  grew  by  22.4%  (to 
438 333)  during  2015-20  (EU:  +8.3%),  reaching 
2.2%  of  total  employment,  equal  to  the  EU 
average (see Annex 9 for circular jobs specifically). 
The job vacancy rate in construction, which is a key 
sector  for  the  green  transition,  is  relatively  low 
(0.5%  vs  4.0%  in  EU  in  2022) (52),  which  is  in 
contrast  with  the  perception  in  almost  half  of 
companies  in  the  sector  (49%  -  Q4  2022)  of 

(50)  The Council Recommendation of 16 June 2022 on ensuring a 
fair transition towards climate neutrality (2022/C 243/04) 
covers employment, skills, tax-benefit and social protection 
systems, essential services and housing. 

(51)  See also 2022 Country Report (Annex 6) and Annex 3 for an 

overview. 

(52)  Eurostat (JVS_A_RATE_R2) 

45 

labour  shortages  as  negatively  affecting  their 
economic activity. At least 25% of ESF+ subsidies 
for self-employment of young people under 30 are 
planned  to  be  earmarked  for  entrepreneurial 
projects in the green economy. 

industries,  workers’  participation 

Upskilling  and  reskilling  in  declining  and 
transforming sectors slightly increased. Skills 
are  key  for  smooth labour  market transitions  and 
preserving jobs in transforming sectors. In energy-
intensive 
in 
education and training has increased from 9.3% in 
2015  to  12.5%  in  2022  and  is  above  the  EU 
average (10.4%). In Spain, 31% of citizens believe 
they do not have the necessary skills to contribute 
to  the  green  transition  (EU:  38%) (53)  (cf.  Annex 
15). To address this challenge, specific investment 
under the RRF and the Just Transition Mechanism 
provides  training  for  reskilling  workers  in  regions 
affected by the transition, together with a broader 
training  offer  at  national  level  and  flexibility 
mechanisms to encourage in-company training. In 
Spain,  approximately  6%  of  ESF+ 
funding 
contributes  to  green  skills  and  jobs.  For  instance, 
the ‘Empleaverde’ programme, co-financed by the 
ESF, provides training and professional guidance to 
step up the creation of green and related jobs. 

Graph A8.1: Fair transition challenges in Spain 

Source: Eurostat, EMPL-JRC GD-AMEDI/AMEDI+ projects and 
World Inequality Database (see Table A8.1). 

Energy  poverty  indicators  have  worsened 
significantly in recent years and the spike in 
energy  prices  can  be  expected  to  aggravate 
the situation. The share of the population unable 
to  keep  their  homes  adequately  warm  increased 
from 10.6% in 2015 to 14.2% in 2021 (well above 

(53)  Special Eurobarometer 527. Fairness perceptions of the 

green transition (May – June 2022). 

00.511.522.5GHG per workerEmployment EIIEducation &training EIIEnergy povertyTransportpoverty(proxy)CarboninequalityEU LatestES Latest (vs EU Latest)ES 2015 (vs EU Latest) 
 
                                                 
  
                                                 
 
the EU average of 6.9% in 2021) (54). In particular, 
27.7% of the population at risk of poverty (AROP) 
in  2021  (EU:  16.4%  in  2021)  and  16%  of  lower 
middle-income  households  (in  deciles  4-5)  were 
affected  in  2021  (EU:  8.2%  in  2021).  Before  the 
energy  price  hikes,  an  estimated  10.4%  of  the 
total  population  and  28.0%  of  the  (expenditure-
based) 
residential 
population 
expenditure  budget  shares  on  electricity,  gas,  and 
other  fuels (55)  above  10%  of  their  household 
budget  (still  below  the  estimated  EU  average  of 
26.9% and 48.2%, respectively).  

AROP 

had 

Graph A8.2: Distributional impacts of energy prices 
due to rising energy expenditure (2021-2023) 

Mean change of energy expenditure as a percentage (%) of 
total expenditure per income decile (D) due to observed price 
changes (August 2021 – January 2023 relative to the 18 
months prior), excl. policy support and behavioural responses. 
Source: EMPL-JRC GD-AMEDI/AMEDI+ projects, based on 
Household Budget Survey 2015 and Eurostat inflation data 
for CP0451 and CP0452. 

The  increased  energy  prices  in  2021-2023 
negatively  affect  household  budgets, 
in 
particular  for  low-income  groups.  As  a  result 
of energy price changes during the August 2021 to 
January  2023  period  relative  to  the  18  months 
prior (cf. Annex 7), in the absence of policy support 
and  behavioural 
fraction  of 
responses, 
individuals living in households which spend more 
than  10%  of  their  budget  on  energy  would  have 
increased  by  13.0  pps  for  the  whole  population 
and  by  23.4  pps  among  the  (expenditure-based) 
AROP population (16.4 pps and 19.1 pps in the EU, 
respectively) (56).  Expenditure  shares  of  low  and 

the 

(54)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

(55)  Products defined according to the European Classification of 
Individual Consumption according to Purpose (ECOICOP): 
CP045. 

(56)  EMPL-JRC GD-AMEDI/AMEDI+ ; see details in the related 

technical brief.   

AROP 

(expenditure-based) 

lower-middle income groups would have increased 
the  most  for  electricity,  while  gas  price  impacts 
are  low  and  similar  across  the  various  income 
groups  in  Spain,  as  shown  in  Graph A8.2.  Among 
the 
population, 
individuals living in households with budget shares 
for  private  transport  fuels (57)  above  6%  would 
have  increased  by  4.8 pps  (EU  average  increase:  
5.3 pps)  to  34.4%  in  January  2023  due  to  the 
increase  in  transport  fuel  prices  (EU  average: 
37.1%). In that regard, the RRP includes measures 
to promote the renovation of residential dwellings. 
These  are  expected  to  achieve  significant  energy 
savings,  generate  employment  and  support  low-
income households (58). 

Access to public transport displays an urban-
rural divide. Citizens perceive public transport to 
be  relatively  available  (63%  vs  55%  in  the  EU), 
affordable  (66%  vs  54%  in  the  EU)  and  of  good 
quality (72% vs 60% in the EU). As regards these 
perceptions,  rural  areas  in  Spain  perform  worse 
than  urban  areas,  yet  still  better  when  compared 
to  rural  areas  in  the  EU  overall (59).  The  average 
carbon  footprint  of  the  top  10%  of  emitters 
among the  population in Spain is about 4.5 times 
higher  than  that  of  the  bottom  50%  (see  Graph 
A8.1),  i.e.  slightly  less  pronounced  than  the  EU 
average (5.0 times). In Spain, the average levels of 
air pollution in 2020 stood above the EU average 
(10  vs  11.2  µg/m  PM2.5),  with  59%  of  the 
population  living  in  regions  exposed  to  critical 
levels  of  air  pollution (60),  leading  to  significant 
health impacts, in particular on vulnerable groups, 
and 16 980 premature deaths annually (61).  

(57)  ECOICOP: CP0722. 

(58)  See 2022 Country Report Annex 6 and 3. 

(59)  EU (rural): 46%, 48%, 56% respectively. Special 

Eurobarometer 527. 

(60)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3) 

(61)  EEA- Air Quality Health Risk Assessment 

46 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%ElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasD1D2D3D4D5D6D7D8D9D10ES GasES ElectricityEU GasEU Electricity 
   
                                                 
 
 
 
                                                 
Table A8.1: Key indicators for a fair transition in Spain 

Source: Eurostat (env_ac_ainah_r2, nama_10_a64_e, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-
JRC GD-AMEDI/AMEDI+ projects and World Inequality Database (WID). 

47 

IndicatorDescriptionES 2015ES LatestEU LatestGHG per workerGreenhouse gas emissions per worker - CO2 equivalent tonnes14.911.4 (2021)13.7 (2021)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24), automotive (C29) - %2.22.1 (2020)3 (2020)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries - %9.312.5 (2022)10.4 (2022)Energy povertyShare of the total population living in a household unable to keep its home adequately warm - %10.614.2 (2021)6.9 (2021)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport - %29.634.4 (2023)37.1 (2023)Carbon inequalityAverage emissions per capita of top 10% of emitters vs bottom 50% of emitters4.54.4 (2020)5 (2020) 
 
  
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The  recycling  performance  has  modestly 
improved  over  recent  years.  With  a  municipal 
waste recycling rate of 36.7% in 2021, Spain has 
missed  the  EU target  for recycling  50%  by  2020. 
Spain  is  at  risk  of  missing  the  EU’s  municipal 
waste  recycling  target  for  2025  and  has  a  long 
way to go to reach the landfill reduction target for 
2035.  52%  of  Spain’s  municipal  waste  was  still 
landfilled  in  2021,  more  than  double  the  EU 
average (23%), and illegal landfilling has not been 
eradicated,  diverting  materials  and  resources  that 
could  be  reused,  remanufactured  or  recycled. 
Spain  will  need  to  make  further  efforts  to  meet 
the more ambitious recycling targets for the period 
up  to  2035  through  improvements  in  separate 
collection  and  treatment  of  waste  with  a  view  to 
recycling, in particular for biowaste. 

Graph A9.1: Trend in material use 

 Source: Eurosta 
Source:  

industry, 

The industrial system is increasingly circular. 
is  more 
The  economy,  particularly 
efficient  at  using  materials  than  the  EU  average, 
with  a  resource  productivity  of  3.0  purchasing 
power standard per kilogramme vs 2.3 for the EU 
in  2021,  further  increasing  Spain’s  resilience  (see 
Annex  5).  However,  resource  productivity  has 
decreased  since  2016, 
indicating  significant 
potential  to  boost  repair,  reuse  and  the  use  of 
secondary  raw  materials.  There  remains  scope  to 
Improve water management, including completing 
the urban wastewater treatment infrastructure. 

The  circular  economy  transition  is  key  to 
climate  and 
delivering  on 
the  EU’s 
environmental  goals  and  provides 
large 
socio-economic  benefits.  It  spurs  job  growth, 
innovation  and  competitiveness  and 
fosters 
resilience  and  resource  security.  The  circularity 
transition  of  industry,  the  built  environment  and 
agri-food  can  generate  significant  environmental 
improvements (see Annex 6), as they rank among 
the most resource-intensive systems. 

transition 

Spain’s  circular  economy 
is 
insufficient  to  meet  the  EU’s  circular 
economy  goals.  The  EU’s  new  circular  economy 
action  plan  (CEAP)  aims  at  doubling  circular 
material  use  by  2030.  Spain’s  circular  use  of 
material  fluctuated  from  8.2%  in  2016  to  8%  in 
2021.  It  remains  below  the  EU  average  of  11.7% 
in  2021.  The  CEAP  also  aims  to  significantly 
decrease  the  EU’s  material  footprint.  Spain’s 
material  footprint  is  below  the  EU  average  (13.7 
tonnes  per  head  in  2020)  and  the  country  has 
already met its target to reduce its consumption of 
resources  by  30%  between  2030  and  2010, 
having  achieved  a  29.5%  reduction  since  2010. 
The 
labour  market  benefits  of  the  circular 
transition  remain  limited,  with  minor  growth  in 
direct  circular  jobs  since  2016.  As  regards  health 
and safety in circular jobs, fatal accidents in waste 
management  and  materials  recovery  are  above 
the  average  of  all  economic  sectors  in  Spain  but 
below the EU average for this sector (62). 

Spain  recently  adopted  new  policies  to 
address  circular  economy  challenges,  but 
more measures are needed. In June 2020 Spain 
adopted  a  comprehensive  circular  economy 
strategy: ‘España Circular 2030’. It aims to update, 
among  others,  the  norms  on  construction  and 
demolition  waste.  Spain  has  also  approved  the 
new Law 7/2022 on waste and contaminated soils 
for  a  circular  economy,  which  includes  measures 
on single-use packaging and creates new taxes on 
waste  management,  among  other  measures. 
However, the 2016-2022 national framework plan 
for  waste  management  (PEMAR),  the  national 
prevention  programme  and  many  regional  waste 
management plans still need revising. 

(62)  Eurostat [HSW_N2_02] for NACE Rev. 2 sector E38; 4.67 

fatal accidents p. 100 000 employed in 2018-2020 vs 1.93 
for all sectors in HU; 6.33 in the EU-27 for sector E38 

48 

0.020.040.060.080.0100.0120.0140.00.02.04.06.08.010.012.014.016.0201620172018201920202021kg/capitatonnes/capitaMaterial footprint Spain (tonnes/capita)Material footprint EU-27 (tonnes/capita)Trade in recyclable raw materials Spain (imports extra EU, kg/capita)Trade in recyclable raw materials EU-27 (imports extra EU, kg/capita) 
 
 
                                                 
        
 
Graph A9.2: Treatment of municipal waste 

buildings  and  improving  their  use  instead  of 
building new ones, as well as increasing the share 
of  secondary  raw  materials  used  in  construction. 
The  Basque  Country’s  ‘Ley  de  administración 
ambiental y circularidad en la construcción’ sets a 
promising  example,  as  it  mandates  that  40%  of 
materials used in public construction projects must 
be recycled or reused. 

The  agri-food  system  has  yet  to  efficiently 
manage  water  resources.  Spain’s  composting 
and  anaerobic  digestion  per  head  has  fluctuated 
since 2016 but remained below the EU average in 
2021 at 83 kg per head vs 100 kg, which was not 
in  line  with  best  practice.  Increasing  anaerobic 
digestion 
strategic 
autonomy  by  generating  biomethane  and/or 
producing organic fertilisers. Spain’s warm climate 
and  low  rainfall  partially  explain  high  water 
abstraction figures, but there remains scope to use 
more efficient farming techniques. 

enhance  Spain’s 

could 

There remains a financing gap in the circular 
economy, 
including  waste  management. 
Additional  investments  will  be  required  to 
address  growing  needs.  The  financing  gap  was 
estimated  at  EUR  2.3  billion  per  year  between 
2014  and  2020.  Over  this  period,  investment 
needs were estimated to be at least EUR 4.2 billion 
per year while investment baselines were EUR 1.9 

Total incineration (including energy recovery) data missing in 
2020 and 2021. 
Source: Eurostat 

The  built  environment  system  continues  to 
exacerbate  the  depletion  of  resources, 
despite  recent  improvements.  The  recovery 
rate  of  construction  and  demolition  waste  has 
decreased  since  2016  and  remains  below  the  EU 
average  (73%  vs  89%).  Soil  sealing  progressed 
between 2015 and 2018 at a faster rate than the 
EU average. There is scope for renovating existing 

Table A9.1: Overall and systemic indicators on circularity 

(1) Persons employed in the circular economy only tracks direct jobs in selected sub-sectors of NACE codes E, C, G and S; (2) the 
circular material use rate measures the share of material recovered and fed back into the economy in overall material use, 
including composting and digestion; (3) the recovery rate of construction and demolition waste includes waste which is prepared 
for reuse, recycled or subject to material recovery, including through backfilling operations; (4) soil sealing: 2016 column refers to 
2015 data; (5) food waste includes primary production, processing and manufacturing, retail and distribution, restaurants and 
food services, and households.  
Source: Eurostat, European Environment Agency. 

49 

4634734754724644720100200300400500600201620172018201920202021Kg per capita Waste treatment to be determinedLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27AREA201620172018201920202021EU-27 Latest year EU-27Overall state of the circular economyMaterial footprint (tonnes/capita)9.69.911.010.39.9-13.72020YoY growth in persons employed in the circular economy (%)12.00.0-1.52.5--2.92019Water exploitation index plus (WEI+) (%)6.613.56.78.1--3.62019IndustryResource productivity (purchasing power standard (PPS) per kilogram)3.03.12.93.12.83.02.32021Circular material use rate (%)28.28.89.09.69.38.011.72021Recycling rate (% of municipal waste)33.936.134.838.040.536.749.62021Built environmentRecovery rate from construction and demolition waste (%)379.0-75.0-73.0-89.02020Soil sealing index (base year = 2006)4107.2-110.7---108.32018Agri-foodFood waste (kg per capita)5----90.0-131.02020Composting and digestion (kg per capita)72.084.080.086.093.083.0100.02021 
     
 
        
 
billion per year (see Annex 6). 

50 

 
ANNEX 10: DIGITAL TRANSFORMATION 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
this  Annex 
digital 
describes  Spain’s  performance  on  digital  skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
Where relevant, it makes reference to progress on 
implementing  the  Recovery  and  Resilience  Plan 
(RRP). Spain allocates 28% of its total RRP budget 
to digital (EUR 19.6 billion) (63). 

infrastructure/connectivity 

and 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for Europe’s successful digital 
transformation  by  2030.  The  Programme 
provides  a  framework  for  assessing  the  EU’s  and 
Member States’ digital transformation, notably via 
the  Digital  Economy  and  Society  Index  (DESI).  It 
also  provides  a  way  for  the  EU  and  its  Member 
States  to  work  together,  including  via  multi-
country  projects,  to  accelerate  progress  towards 
the  Digital  Decade  digital  targets  and  general 
objectives (64).  More  generally,  several  aspects  of 
digital  transformation  are  particularly  relevant  in 
the current context. In 2023, the European Year of 
Skills, building the appropriate skillset to make full 
use of the opportunities that digital transformation 
offers  is  a  priority.  A  digitally  skilled  population 
increases the development and adoption of digital 
technologies  and  leads  to  productivity  gains (65). 
Digital  technologies,  infrastructure  and  tools  all 
play  a  role  in  the  fundamental  transformation 
needed to adapt the energy system to the current 
structural challenges (66). 

Spain's main challenge in relation to the DESI 
dimension  of  human  capital  is  a  lack  of  ICT 
specialists.  However,  Spain  performs  well  on  at 
least  basic  digital  skills  and  above  basic  digital 

(63)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII of the RRF 
Regulation. 

(64)  The Digital Decade targets as measured by DESI indicators 
and complementary data sources are integrated to the 
extent currently available and/or considered particularly 
relevant in the MS-specific context.  

(65)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org). 

implemented 

skills  (38%  versus  26%).  On  advanced  digital 
skills,  the  country  scores  in  line  with  the  EU 
average  for  ICT  graduates  (4.0%  vs  3.9%)  and 
female ICT specialists (both at 19%) but performs 
below  the  EU  average  on  the  ICT  specialists 
indicator.  The  shortage  of  ICT  specialists  is  a 
productivity-constraining  factor  that  particularly 
affects  small  and  medium-sized  enterprises 
(SMEs)  and  micro-enterprises,  which 
is  a 
significant  challenge  for  Spain.  The  country  has 
already 
some  RRP  measures 
focusing on improving digital skills for citizens and 
SMEs, and increasing the number of ICT specialists 
(e.g. the National Digital Competences Plan). Under 
this  plan,  some  initiatives  have  been  launched  to 
promote  digital  skills  for  citizens  (e.g.  the  public-
private initiative Generation D programme) and to 
help  SMEs  hire  digital  transition  experts  (i.e.  the 
Agents  of  Change  programme).  Improvements  in 
digital  education  are  being  made  by  programmes 
aimed to improve teachers’ digital skills and equip 
schools  with  digital  devices  and  tools.  However, 
there  is  still  room  for  additional,  complementary 
measures 
ICT 
specialists.  

the  number  of 

increase 

to 

Spain  is  one  of  the  EU’s  best  performers  on 
digital  connectivity.  The  country  performs 
particularly  well  on  fixed  very  high  capacity 
network  (VHCN)  and  fibre  to  the  premises  (FTTP) 
coverage but has been only a mid-level performer 
on  overall  5G  coverage  so  far.  This  is  mainly  due 
to  delays  in  auctioning  all  5G  pioneer  bands.  As 
part  of  its  RRP,  Spain  assigned  the  700MHz band 
in  October  2021,  and  the  26GHz  band  was 
auctioned  in  December  2022.  This  is  expected  to 
accelerate 5G coverage in the country. In addition, 
as part of its RRP, in 2022 Spain approved a new 
general  telecommunications  law  that  promotes 
and  facilitates  investment  in  very  high  capacity 
networks.  It  also  adopted  targeted  measures  to 
accelerate  5G  deployment 
(e.g.  a  temporary 
reduction  in  5G  spectrum  taxation  for  2022  and 
2023). 

The  low  level  of  advanced  digitalisation  of 
SMEs is also a major challenge for Spain.  The 
rate  of  SMEs  with  at  least  a basic  level  of  digital 
intensity (67)  is  slightly  below  the  EU  average  and 
Spanish  SMEs  lag  behind  in  the  integration  of 

(66)  The need and possible actions for a digitalisation of the 
energy system are laid out in the Communication 
‘Digitalisation the energy system – EU action plan’ 
(COM(2022)552. 

(67)  The digital intensity score is based on counting how many 
out of 12 selected technologies (e.g. use an ERP or a CRM 
software) are used by enterprises. A basic level requires 
usage of at least 4 technologies.   

51 

 
 
  
                                                 
                                                 
 
advanced  technologies,  such  as  the  cloud  or  big 
data.  This  gap,  combined  with  a  lack  of  ICT 
specialists,  makes  it  difficult  for  SMEs  –  micro-
enterprises  in  particular  –  to  attract  talent  and 
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  boost  the  adoption  of  advanced  digital 
technologies.  Examples  of  RRP  measures  already 
implemented include the adoption of the National 
Strategy  for  Artificial  Intelligence,  which  aims  to 
improve the productivity of Spanish firms by using 
artificial  intelligence.  The  Digitalisation  of  SMEs 
2021-2025  plan  provides  voucher  programmes 
(i.e. Digital Kit programme) to help digitalise SMEs 
and set up Digital Innovation Hubs. However, there 
is still a low level of R&D intensity in the ICT sector 
in  Spain,  and  its  R&D  expenditure  by  business 
enterprises  is  far  below  the  EU  average (68).  This 
constrains the productivity and competitiveness of 
Spanish firms, especially SMEs. 

performs 

to  update 

satisfactorily 

Spain 
on 
digitalisation of public services. The country is 
at the forefront of digital public services in the EU 
and  continues 
its  services  and 
infrastructure, 
including  through  the  RRP,  to 
respond  to  rapid  development  of  technology  and 
individual  needs.  One  example  is  the  Plan  for  the 
Digitalisation  of  Spain’s  Public  Administration 
2021-2025, which includes a measure to increase 
interoperability  between  central  and  regional 
government  IT  platforms.  In  addition,  the  ‘My 
Citizen Folder’ app allows citizens to easily access 
certain  digital  public  services  and  information. 
Spain  has  one  eID  means,  the  Spanish  ID  card 
(DNIe),  notified  at  level  of  assurance  ‘high’  under 
the  eIDAS  regulation.    On  access  to  electronic 
health  records  Spain  scores  well  above  the  EU 
average with a score of 83 out of 100.  

(68)  2022 PREDICT Dataset: The EU ICT sector and its R&D 

performance. JRC Digital Economy. July 2022. 

52 

 
                                                 
Table A10.1: Key Digital Decade targets monitored by DESI indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The Fibre to the Premises coverage indicator is included separately as its evaluation will also be monitored separately and 
taken into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75 % of Union enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.   

Source: Digital Economy and Society Index 

53 

EUDigital Decade target by 2030 DESI 2021DESI 2022DESI 2023DESI 2023(EU)Digital skillsAt least basic digital skillsNA64%64%54%80%% individuals2021202120212030ICT specialists (1)3.9%4.1%4.1%4.5%20 million% individuals in employment aged 15-7420202021202120212030Digital infrastructure/connectivityFixed Very High Capacity Network (VHCN) coverage92%94%93%73%100%% households20202021202220222030Fibre to the Premises (FTTP) coverage (2)85%89%91%56%-% households20202021202220222030Overall 5G coverage13%59%82%81%100%% populated areas202020212022202220305G coverage on the 3.4-3.8 GHz spectrum bandNANA39%41%-% populated areas202220222030Digitalisation of businessesSMEs with at least a basic level of digital intensityNANA68%69%90%% SMEs202220222030Big data (3)9%9%9%14%75%% enterprises20202020202020202030Cloud (3)NA27%27%34%75%% enterprises2021202120212030Artificial Intelligence (3)NA8%8%8%75%% enterprises2021202120212030Digitalisation of public servicesDigital public services for citizensNA878677100Score (0 to 100)2021202220222030Digital public services for businessesNA949184100Score (0 to 100)2021202220222030Access to e-health recordsNANA8371100Score (0 to 100)202320232030Spain 
 
  
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of  the 
performance  of  Spain’s  research  and  innovation 
system,  which  is  essential  for  delivering  the  twin 
green and digital transition. 

Spain  is  a  ‘moderate  innovation  performer’ 
and  the  gap  between  its  performance  and 
the  overall  performance  of  the  EU 
is 
widening.  According  to  the  2022  edition  of  the 
European  Innovation  Scoreboard (69),  while  the 
country’s  overall  performance  is  slightly  better 
than  in  2021,  it  is  still  just  88.8%  of  the  EU 
average for 2022 (Graph A11.1). 

Graph A11.1: Innovation performance 2015-2022 

Source: European Innovation Scoreboard, 2022 

R&D intensity (70)  was 1.43% in 2021, below 
the  European  average  and  far  from  the 
national  target  for  2020  (2%) (71).  While  this 
indicator  has  now  regained  the  levels  achieved  in 
2010, research and innovation (R&I) investment is 
still  subdued,  with  low  expenditure  both  by  the 
public  and  the  private  sectors.  Public  expenditure 
on  R&D (72)  was  0.62%  of  GDP  in  2021,  rising 
from  0.58%  in  2015,  but  still  below  the  EU 
average  (0.76%).  Private  R&D  expenditure  also 
remains low, at 0.80% of GDP in 2021, half the EU 
average (73). 

The  Spanish  recovery  and  resilience  plan 
(RRP),  with  estimated  investments  of  over 

(69)  2022 European Innovation Scoreboard (EIS), Country profile: 
Spain https://ec.europa.eu/assets/rtd/eis/2022/ec_rtd_eis-
country-profile-es.pdf. The EIS provides a comparative 
analysis of innovation performance in EU countries, including 
the relative strengths and weaknesses of their national 
innovation systems (also compared to the EU average). 

(70)  Defined as gross domestic expenditure on R&D as a 

percentage of GDP. 

(71)  European benchmark target for R&D intensity: 3%. 

(72)  Source: Eurostat. 

will 

address 

EUR 11 billion  in  R&I  over  the  2022-2024 
this 
help 
period, 
underinvestment. 
in 
General 
boosting  the  system’s  R&I  capacity  and  targeted 
industrial 
measures 
development (74),  with  significant  R&I-related 
investment, will be a quantitative step forward and 
help deliver the long-term EU objectives. 

investment 

energy, 

health, 

in 

to 

the  Spanish 

The  full  potential  of  the  private  sector  in 
contributing 
innovation 
system  remains  untapped.  Business-science 
linkages are weak and research commercialisation 
is limited (75). The European Innovation Scoreboard 
2022 shows the limited extent to which small and 
medium-sized 
in 
enterprises  are 
cooperation in innovation and, despite some recent 
progress,  their  R&I  capacity  is  still  low,  both  on 
product  and  process  innovation.  Even  though 
venture  capital  expenditure  improved  between 
2015  and  2022 (76),  investment  in  innovative 
companies  per  head  remains  below  EU  levels (77). 
In addition, the share of researchers working in the 
business sector is below the EU average (78). 

involved 

and 

improve 

strengthen 

While the  reforms and targeted  investments 
in  the  Spanish  RRP  aim  to  support  private 
knowledge 
innovation 
transfer (79),  additional  action  would  help 
further 
innovation 
performance. The RRP will provide incentives and 
will  improve  the  framework  conditions  as  well  as 
the  mechanisms  and  resources  for  steering  risk 
capital towards technological start-ups. However, a 
recent study by the Commission and the OECD (80) 
has provided further recommendations to improve 
science-business linkages. These  

Spain’s 

(74)  These measures are complemented by R&I-related 

investments in other sectors, such as agri-food and fisheries. 

(75)  OECD Report on Knowledge Transfer (December 2021). 

(76)  Source: EIS 2022. 

(77)  Source: venture capital funding per head from European VC 
Pulse Check H1 2022 (dealroom.co – Silicon Valley Bank, 
August 2022): European Pulse Check H1 2022 (dealroom.co). 

(78)  Source: elaboration on Eurostat data (2021), researchers 

working in the business sector. EU average: 56% / ES: 39%. 

(79)  ‘Investment 5 (C17.I5): Knowledge transfer’ – which is linked 

to the reform of the Science Law. 

(73)  1.49% in 2021 (source: Eurostat). 

(80)  OECD Report on Knowledge Transfer (December 2021). 

54 

88939810310820152016201720182019202020212022EUES 
 
     
                                                 
                                                 
 
Table A11.1: Key innovation indicators 

(1) EU average for the latest available year or the year with the highest number of country data. 
Source:  Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

improving 

recommendations 
the 
include 
governance  of  public  research  organisations  to 
them  more  performance-based  and 
make 
increasing  the 
level  of  professionalisation  of 
knowledge  intermediation  services.  The  Spanish 
Government  approved  a  follow-up  plan  based  on 
these  recommendations  in  December  2022,  but 
some  measures 
fully 
implemented (81). 

still  need 

to  be 

The  governance  of  R&I  policies  in  Spain,  a 
shared 
responsibility  between  national 
authorities  and  the  regions,  remains  weak. 
The  coordination  in  designing,  implementing  and 
evaluating R&I policies has not improved. Although 
the  Spanish  R&I  system  has  historically  been 
characterised by this dual governance, with policy 
responsibilities  and  roles  for  both  the  central 

government  and  the  regions,  the  fragmentation 
and overlaps of R&I initiatives persist, with higher 
information and administrative costs for potential 
beneficiaries (82).  Coordination  in  this  multilayer 
governance  arrangement  has  been  limited  to 
aspects  linked  to  the  managing  of  structural  and 
investment R&I funds (83). 

The  RRP  aims  to  improve  the  coordination 
between  the  central  government  and  the 
regions,  but  the  structural  impact  needs  to 
be  assessed.  The  new  Spanish  strategy  for 
science, technology and innovation, the investment 
in  the  supplementary  R&I  plans,  co-financed  by 
the  autonomous 
the  Cervera 
Network  Programme,  and the  approved  reform  of 
Science  and  Innovation  Law  are  expected  to 
improve  the  R&I  system’s  governance.  It  will  be 

communities, 

(81)  The ‘Plan de transferencia y colaboración’ includes measures 

(82)  OECD Report on Knowledge Transfer (December 2021). 

that will be implemented between 2023 and 2025. 

(83)  Europeanisation of Public Policies in Spain (2022). 

55 

EUaverage (1)R&D intensity (GERD as % of GDP)1.361.221.251.411.432.26Public expenditure on R&D as % of GDP0.660.580.540.620.620.76Business enterprise expenditure on R&D (BERD) as % of GDP0.700.640.700.780.801.49Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 9.39.29.1::9.8Patent Cooperation Treaty patent applications per billion GDP (in PPS)1.71.51.4::3.3Public-private scientific co-publications as % of total publications5.05.76.36.16.37.1Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0500.0340.035::0.054New graduates in science & engineering per thousand pop. aged 25-3411.115.915.315.6:16.0Total public sector support for BERD as % of GDP0.1560.116:::0.194R&D tax incentives: foregone revenues as % of GDP0.0270.029:::0.100Share of environment-related patents in total patent applications filed under the Patent Cooperation Treaty (%)16.213.812.9::13.3Venture capital (market statistics) as % of GDP0.0210.0280.0460.0530.0750.074Employment in fast-growing enterprises in 50% most innovative sectors3.24.86.1::5.52021Spain2010201520192020Finance 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  
                                                 
                                                 
 
  
 
important 
implementation, 
undertaking complementary actions where needed.  

to  assess 

their 

56 

 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

Moderate  productivity  growth  is  an  endemic 
problem  for  the  Spanish  economy.  In  recent 
years, Spanish productivity (GDP per hour worked) 
has grown albeit at a decreasing growth rate and 
more slowly than peer EU economies. Productivity 
growth  kept  up  with  the  EU  average  growth  rate 
until 2014 but since then it has declined to 90% of 
the  EU  average  in  2022 (84).  The  contribution  of 
total  factor  productivity (85)  to  productivity  growth 
also  slightly  decreased  up  to  2019 (86).  The  slow-
down in productivity in the years before COVID-19 
was  mainly  due  to  low  productivity  growth  in 
industry (see  Graph  A12.1).  Spain  has  not  yet 
established the National Productivity Board, which 
would contribute to foster productivity policies. 

Productivity  performance  across  sectors  has 
varied  significantly  in  the  last  two  decades. 
While  mining,  textiles,  energy,  information,  and 
communications  show  levels  of  average  annual 
growth  in  labour  productivity  above  3%,  other 
sectors  like  water  supply,  construction,  transport 
and  accommodation  and  food  services  are 
experiencing  negative  average  annual  growth  in 
labour  productivity  (see  Graph  A12.1).  The  poor 
performance of transport and accommodation and 
food  services 
(whose  productivity  has  been 
decreasing  by  more  than  2%  over  the  last  two 
decades)  is  worrying  because  of  the  large  weight 
of  these  sectors  in  the  economy,  in  particular 
tourism (estimated to account for 8% of GDP and 
11.4% of employment in 2021) (87). 

and 

resilience 

Strengthening  the 
integration  of  Spain’s 
economy  into  the  EU  single  market  will 
increase 
improve 
competitiveness.  Spain  is  a  big  economy  whose 
trade  integration  in  the  single  market  for  goods 
and services is below the EU average (ES 22.1% vs 
45.8%  EU  in  2022) (88).  In  this  new  geopolitical 
scenario,  a  stronger  single  market  is  needed  to 
ensure long-term sustainable competitiveness. The 
effective  implementation  of  RRP  measures  in 
regulatory  environment, 
Spain 
effective  implementation  of  market  unity  within 

(e.g.,  better 

Spain,  reduction  of  late  payments,  reduction  of 
barriers  in  some  business  services  including  civil 
engineers and tourist guides (89), improve access to 
credit,  public  procurement  mechanisms,  upskilling 
and reskilling) enhance the single market in Spain. 

Graph A12.1: Labour productivity by sector, 
average annual growth 2000-19 

Sectoral codes: A Agriculture; B Mining; C Manufacturing; D 
Energy; E Water supply; F Construction; G Wholesale and retail 
trade; H Transport; I Accommodation and food services; J 
Information and communication; K Financial; L Real estate; M 
Professional and scientific services; N Administrative and 
support services; O Public administration; P Education; Q 
Health; R Arts and entertainment; S Other services 
Source: EUKLEMS & INTANProd database, 2021 edition 

Market 
Spain, 
fragmentation,  within 
continues  to  be  a  major  obstacle  to  raising 
productivity. The Spanish recovery and resilience 
plan  (RRP)  includes  reforms  to  strengthen  the 
functioning  of  the  single  market  i.a.  law  ‘on 
Business  Creation  and  Growth’ (90),  and  reforms 
under  the  public  procurement  law  aiming  to 
improve  the  functioning  of  public  procurement 
system. 

The  share  of  firms  reporting  business  regulation 
as a major obstacle for their long-term investment 
is significantly higher in Spain than the EU average 
(60.5%  vs  29.6%  in  2022). (91)  Moreover,  57%  of 
very 
surveyed 

investors (92)  are 

fairly  or 

(84)  Eurostat. Hourly productivity in PPS (EU=1), percentage of the 

EU. 

(85)  TFP is typically related to technological advancement. 

(86)  AMECO total factor productivity. EC calculations. Hourly 
productivity in PPS (EU=1), percentage of the EU. 

(87)  INE : https://www.ine.es/en/prensa/cst_2021_en.pdf  

(89)  Communication on updating the reform recommendations 
for regulation in professional services, COM(2021)385 

(90)  Create and Growth Law, in particular Chapter III “Better 
Regulation”. Milestone 191 of Spanish Recovery and 
Resilience Plan (RRP). Entered into force 28/09/2022 

(88)  https://single-market-

scoreboard.ec.europa.eu/competitiveness/integration_en 

(91)  EIB survey: Impact of regulation on long-term investment, % 
of firms reporting business regulation as major obstacle. 

57 

-4-3-2-101234567A (3.0)B (0.2)C (12.2)D (2.5)E (1.1)F (5.9)G (12.8)H (4.5)I (6.4)J (3.7)J61 (1.3)J62-J63 (1.7)K (4.1)L (11.6)M (4.8)N (4.1)O (6.1)P (5.3)Q (6.7)R (2.2)S (1.9)TOT (100.0)% change, annual averageLabour compositionTangible non-ICT capitalTangible ICT capitalIntangible capitalTFPLabour productivity 
 
                                                 
     
                                                 
 
unconfident  that  their  investments  are  protected 
by the law and the courts in Spain.  

barriers 

certain  Autonomous  Communities, 

retail 
In 
regulatory 
hamper 
competition.  Spain  is  among  the  most  restrictive 
Member  States  as  regards  retail  regulatory 
frameworks, in particular for retail operations. (93)  

continue 

to 

Low  productivity  in  Spain  might  be  partially 
explained by the difficulties SMEs experience 
in  scaling  up,  which  reduces  their  ability  to 
innovate,  export,  adopt  IT,  hire  a  more 
educated  workforce  (including  people  with 
managerial  skills)  and  achieve  economies  of 
scale.  Small  companies  tend  to  experience  lower 
productivity  than  large  ones.  The  average  of  EU 
companies  is  24%  larger  than  in  Spain.  Spain  is 
among  the  MS  with  the  greatest  weight  of  small 
companies in the business park (94). 

thresholds (95), 

A  better  regulation,  with  less  size-dependent 
regulatory 
less  administrative 
burden  would  help  increase  the  size  of  SMEs. 
Finally diversifying financial instruments (96), would 
help  SMEs  scale-up,  in  particular  in  the  current 
financial situation of increasing interest rates. 

transformation  of 

SMEs have an essential role in the green and 
digital 
the  Spanish 
economy 
(they  comprise  99.9%  of  all 
companies,  68.2%  of  people  employed  and 
56.1%  of  value  added) (97).  According  to  the 
business confidence indicator, 27.3% of SMEs are 
pessimistic  about 
their 
business (98).  Registrations  of  new  companies  are 
below  the  EU  average 
in 
2022) while  bankruptcies are  higher  than  the  EU 

the  performance  of 

(106.2  vs  121.2 

(92)  81% of them answered that ‘Frequent changes in legislation 
or concerns about quality of the law-making process’ was 
the reason for the distrust. For more information, please see 
EU Justice Scoreboard. 

(93)  European Commission, Retail Restrictiveness Indicator (2022 

update),  

(94)  CEPYME Spanish Confederation of SMEs 

https://cepyme.es/crecimiento-empresarial-diciembre-2022/ 

(95)  IMF Art IV published in January 2023 

(96)  Spain is relying more on loans than on equity, according to 

the EIF Access finance - Loan, Composite - Equity, Composite 

(97)  SME Performance Review 2021/2022 - Spain country sheet 

https://ec.europa.eu/docsroom/documents/50704. 

average  (221.6  vs  86.8  in  2022),  a  figure  that 
increased  significantly  after  temporary  COVID-19 
support measures were withdrawn (Table A12.1).  

The  share  of  SMEs  experiencing  late  payments 
(Table  A12.1)  in  the  past  6  months  is  below  EU 
average (36.4 % vs 43 % in 2022). Nonetheless in 
2021 SMEs still waited to receive payments longer 
than  legally  required,  both  from  other  firms  (70 
days  vs  the  60  days  by  law  15/2010)  and  from 
public  administrations,  particularly  those  at  local 
level (61 days vs the 30 days by law 15/2010) (99). 
With  Law  “Create  and  Grow”  in  RRP,  there  has 
been  some  progress  in  the  fight  against  late 
payments,  but  more  needs  to  be  done.  It  is 
necessary  to  establish  a  regime  to  ensure  proper 
enforcement of these rules. 

Graph A12.2: Business environment and 
productivity drivers 

Source: 1) % of GDP, 2021 Eurostat;  
2) composite indicator, 2021 European Investment Fund 
access to finance index;  
3) average payment delay in number of days, 2022 Intrum;  
4) % of firms in manufacturing facing constraints, 2022 
European Commission business consumer survey;  
5) proportion of contracts awarded with a single bidder, 2022 
Single Market Scoreboard. 

Implementing the reforms and investment planned 
in 
the  Spanish  RRP represents  a  historic 
opportunity for a successful twin transition of the 
industry  and 
Spanish  economy.  Support  for 
businesses  in  their  recovery  from  multiple  crises 
including , high energy prices and in their transition 
to  climate  neutrality  and  sustainability  requires  a 
focus  on:  scaling  up  companies, 
dedicated 

(98)  INE - Spanish National Statistics Institute; BCI – Business 

Confidence Indicator. 

(99)  Report on Late payments: Plataforma Multisectorial contra la 
Morosidad. https://pmcm.es/informe-morosidad-2021/. 

58 

1) Businessinvestments2) EIF access tofinance index3) Payment gap- G2B3) Payment gap- B2B4) Materialshortage4) Labourshortage5) Single bidsEuropean UnionSpain 
                                                                              
   
                                                 
Table A12.1: Industry and the single market 

(1) last available year 
Source: (1) AMECO, (2) Eurostat, (3) ECFIN BCS, (4) Eurostat, (5) COMEXT and Commission calculations, (6) Eurostat, (7) Eurostat, 
(8) OECD, (9) Single Market Scoreboard, (10) EIB survey, (11) Eurostat: (12) Intrum, (13) SAFE Survey, (14) EIF SME Access to 
Finance Index 

digitalisation  of  SMEs 
(Annex10),  R&D  and 
innovation  (Annex  10),  skills  mismatches  (Annex 
4),  supply  chain  disruptions,  access  to  critical  raw 
materials 
(Annex  5),  speed  up  permitting 
procedures,  to  scale  up  manufacturing  of  clean 
technologies  to  make  sure  that  Spain  is  well-
equipped  for  the  clean-energy  transition (100)  ( 
Annex 7 and 9). 

(100) Net Zero Industry Act (NZIA) 

59 

POLICY AREAINDICATOR NAME20182019202020212022EU27 average (*)Net private investment, level of private capital stock, net of depreciation, % GDP (1)4.552.92.533.7Net public investment, level of public capital stock, net of depreciation, % GDP (1)-0.3-0.200.20.40.4Real labour productivity per person in industry (% yoy)(2)-2.1-1.3-9.78.91.11.4Cost competitive-nessNominal unit labour cost in industry (% yoy)(2)3.11.510-3.70.62.9Material shortage (industry), firms facing constraints, % (3)357172647Labour shortage using survey data (industry), firms facing constraints, % (3)6345828Vacancy rate (business economy)(4)0.60.50.40.60.73.1Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials (5)0.160.150.140.160.170.18Installed renewables electricity capacity, % of total electricity produced (6)51.554.657.760.5n.a.50.9Single Market integrationEU trade integration, % (7)18.518.317.019.522.145.8RestrictionsEEA Services Trade Restrictiveness Index (8)0.040.040.040.040.040.05Public procurement Single bids, % of total contractors (9)222728272829Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle (10)55.458.863.664.160.529.6Bankruptcies, Index (2015=100)(11)83.89184.4135.4221.686.8Business registrations, Index (2015=100) (11)100.999.783.8107.6106.2121.2Payment gap - corporates B2B, difference in days between offered and actual payment (12)n.a211216n.a.13Payment gap - public sector, difference in days between offered and actual payment (12)n.a241122n.a.15Share of SMEs experiencing late payments in past 6 months, % (13)n.a40.340.633.936.443EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1 (14)0.780.820.910.85n.a.0.46EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 1 (14)0.150.110.110.18n.a.0.23BUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeHEADLINE INDICATORSEconomic StructureRESILIENCEShortagesStrategic dependenciesSINGLE MARKET 
                                                 
 
   
 
ANNEX 13: PUBLIC ADMINISTRATION 

the  COVID-19 

reforms.  After 

This  Annex  outlines  the  performance  of 
is 
Spain’s  public  administration,  which 
essential for providing services and carrying 
out 
crisis, 
perceptions  of  government  effectiveness  in  Spain 
fell  further  below  the  EU  average,  reaching  its 
lowest  point  since  2011 (101).  Spain  has  launched 
several  reforms  under  its  recovery  and  resilience 
long-standing 
plan 
challenges  in  policymaking,  coordination  between 
levels  of  government,  public  sector  employment, 
financial management and service delivery. Digital 
transformation  of  the  public  administration  is 
higher than the EU average (see Annex 10).  

resolve  some 

(RRP) 

to 

Spain’s  core  civil  service  is  ageing  fast.  The 
indicators  show  an  older  workforce  among  public 
administration,  defence  and  social  security 
workers (Graph A13.1), compared to the education 
and  healthcare  sectors,  the  whole  economy  and 
the EU-27 average. Competitions to enter the civil 
service  test  knowledge,  with  little  attention  to 
skills.  Following  the  recruitment  freezes  in  the 
public sector over the last decade, employment on 
Recent 
temporary 
amendments  to  the  employment  laws,  required 
under  the  RRP,  aim  to  reverse  this  trend. 
Modernisation  of 
the  selection  process  by 
introducing competency frameworks, also planned 
under  the  RRP,  has  been  launched,  but  with  a 
delay.  At  territorial  level,  the  programme  “First 
Professional  Experience  in  Public  Administration” 
focuses  on  attracting  young  unemployed  persons 
in areas related to public services.  

contracts 

spiked. 

has 

faces 

justice 

system 

efficiency 
The 
challenges. In  particular,  the  time  it  takes  to 
resolve civil and commercial cases in the Supreme 
Court  remains  very  long  (888  days  in  2020,  the 
second  highest  in  the  EU  after  Italy).  Against  this 
backdrop,  the  government  has  tabled  several 
legislative  proposals  in  parliament  to  make  the 
justice system more efficient (102). 

Spain’s  implementation  of  single  market 
rules  requires  attention. 
in  most 
indicators that measure the performance of single 
market governance tools (Graph A13.2). 

lags 

It 

(101) Worldwide Governance Indicators, 2021.  

(102) For a more detailed analysis of the performance of the 

Graph A13.1: Spain. Ratio of 25-49- to 50–64-
year-olds by sector and occupation 

(1) A lower ratio denotes a more aged civil service. 
Source: European Commission, based on the 2022 Labour 
Force Survey 

Graph A13.2: Spain. Performance on the single 
market scoreboard governance tools 

Red denotes a poor performance; green, a good performance. 
TRIS: Technical Regulation Information System; IMI: Internal 
Market Information System  
Source: Single market scoreboard 

public 

Spain’s 

administrations 

Regulatory  fragmentation,  limited  ex-post 
evaluation  of  policies  and  frequent  use  of 
emergency procedures to adopt laws weaken 
the  quality  of  Spain’s  legislation.  First,  over 
time 
have 
noticeably 
increased  their  capacity  to  adopt 
legislation, especially regional governments (Graph 
A13.3a).  The  available  literature (103)  connects 
rates  of  company  creation,  company 
lower 
productivity  and 
judicial  effectiveness  to  the 
increasing  volume  and  complexity  of  Spain’s 
fragmentation. 
legislation  and 
Second,  ex  post  evaluation  of  legislation,  which 
help ensure that it remains up to date and fit for 
purpose, is less advanced compared to the EU-27 

regulatory 

to 

justice system in Spain, see the 2023 EU Justice Scoreboard 
(forthcoming) and the country chapter for Spain in the 2023 
Rule of Law Report (forthcoming). 

(103) See De Lucio, J., Mora-Sanguinetti, J.S. 2022. Drafting “better 
regulation”: The economic cost of regulatory complexity. 
Journal of Policy Modelling, volume 44, 2022 

60 

0.00.51.01.52.02.5Publicadministration,defence and socialsecurityEducationHealthcareTotal economyESHigh-skilledMedium-skilledLow-skilledEU-27 
 
                                                 
   
 
 
                                                 
 
Table A13.1: Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2022 value. If not available, the 2021 value is shown. 
(3) Measures the user centricity  and transparency of digital public services as well as the existence of key enablers for the 
provision of those services. (4) Defined as the absolute value of the difference between the percentage of men and women in 
senior civil service positions. Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Labour Force 
Survey, Eurostat (# 4, 5, 7), European Institute for Gender Equality (# 6); Fiscal Governance Database (# 8, 9); OECD Indicators of 
Regulatory Policy and Governance (# 10). 

average  (Graph  A13.3b).  Third,  Spain  adopts 
legislation  in  parliament  rapidly  due  to  the  very 
frequent  use  of  emergency  procedures.  Unlike  in 
other EU countries, the COVID-19 pandemic led to 
no  increase  in  the  use  of  such  procedures  (Graph 
A13.3c).  Reforms  under  Spain’s  RRP  seek  to 
improve  the  evaluation  of  public  policies  by 
creating  a  national  evaluation  agency  and 

strengthening the policy evaluation planning. Other 
measures aim to increase the transparency of and 
engagement  in  ‘sectoral  conferences’,  where  the 
central  and  regional  governments  coordinate 
policies.  

Graph A13.3: Spain. a) Number of new primary laws adopted; b) Performance in ex post evaluation of 
legislation; c) Median time to adopt laws and share of laws adopted within 30 days or less 

Source: European Commission based on Boletín Oficial del Estado (a) and national parliament’s websites (c). OECD Indicators of 
Regulatory Policy and Governance (iREg) indicators (b). 

61 

ES201720182019202020212022EU-27(2)161.565.463.367.372.7n/a64.82n/an/an/a77.878.879.572.93n/a0.90.90.91.00.90.8455.054.857.257.858.2 (b)60.752.0514.015.115.014.120.2 (b)22.516.9642.621.617.614.213.83.011.071.31.31.21.11.0 (bd)1.1 (d)1.580.80.80.80.90.9n/a0.791.81.91.91.92.0n/a1.5101.61n/an/an/a1.76n/a1.7Medium term budgetary framework indexIndicator (1)E-government and open government dataShare of individuals who used the internet within the last year to interact with public authorities (%)E-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance05001 0001 5002 0002 5003 0003 5004 0001978-19881989-20002001-20112012-2022a) New laws adopted over 1978-2022Central governmentRegional governments00.10.20.30.40.50.60.70.801020304050607080ESEUESEUMedian time for law adoption(days, rhs)Share of laws adopted in 30of less days (lhs)c) Median time for law adoption and share of laws adopted within 30 days or less2016_212016_192020_210.000.501.001.502.002.503.0000.511.522.53ES2017ES2021ES2017ES2021Primary lawsSecondary lawsb) Ex-postevaluation of legislationMethodologyOversightSystematic adoptionTransparencyEU-27 
 
 
  
 
     
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU.  This  Annex  provides  an  overview  of  Spain’s 
progress in implementing the Pillar’s 20 principles 
and EU headline and national targets for 2030 on 
employment, skills and poverty reduction. 

labour  market 

(pps)  year-on-year 

The  Spanish  labour  market  made  a  robust 
recovery  in  2021  and  2022,  but  several 
challenges  persist,  including  risks  stemming 
from  Russia’s  war  of  aggression  against 
Ukraine.  The  employment  rate  recovered  from 
the COVID-19 crisis, in line with economic activity, 
reaching  a  peak  of  69.9%  in  Q2-2022  and 
stabilising  at  69.3%  in  Q4-2022.  However,  it 
remains well below the EU average of 74.9%. The 
unemployment  rate  decreased  in  Q4-2022  by 
0.5 percentage  points 
to 
12.9%,  but  it  is  still  double  the  EU  average  of 
6.1%. The youth unemployment rate is also double 
the  EU  average 
(29.4%  vs  14.5%),  despite 
decreasing  1.8  pps  in  the  same  period.  The 
Spanish 
faces  a  persistent 
challenge  with  a  high  share  of  precarious 
employment  relationships.  As  part  of  its  recovery 
and 
(RRP),  Spain  passed  a 
comprehensive reform of the legislation on fixed-
term  contracts  in  December  2021  and  one  on 
hiring  incentives  in  January  2023,  which  are 
expected  to 
increase  permanent  and  quality 
employment. Following these reforms, the share of 
the  private  sector 
temporary  employees 
decreased  rapidly  (from  23.6%  in  2021 to  18.5% 
in  2022).  However,  the  share  of  fixed-term 
contracts in the public sector remains high (31.4% 
in  2022).  Overall,  the  share  of  people  with 
temporary contracts (20.8% vs 12.9% in 2022), as 
well  as  that  of  those  younger  than  30  (45.7%  vs 
35.6% in 2022) is still higher than the EU average, 
although with a decreasing tendency in both cases. 

resilience  plan 

in 

Following  an  increase  during  the  COVID-19 
crisis, long-term unemployment declined, but 
remains  a  major  challenge.  The  long-term 
unemployment  rate  improved  in  2022  (falling  1 
pps  from  Q4-2021  to  Q4-2022),  but  it  is  still 
double the EU average (4.8% vs 2.2%). Moreover, 
22.7%  of  unemployed  people  were  in  very  long-
term unemployment (i.e. for 24 months or more) in 
Q4 2022.  To  address  these  issues,  under  its  RRP, 

Spain  has  passed  a  new  employment  law  to 
increase  the  participation  of  private  and  local 
entities  in  active  labour  market  policies.  The 
European  Social  Fund  Plus  (ESF+)  will  continue  to 
support 
the  more  vulnerable  with  specific 
measures  such  as  integrated  paths  for  labour 
market  insertion  (EUR 950 million).  At  the  same 
the  effectiveness  of  public 
time, 
employment 
continued 
evaluation,  remains  a  priority.  Addressing  these 
challenges  would  support  progress  towards  the 
2030 national employment rate target of 76%. 

improving 

services, 

also 

via 

Table A14.1: Social Scoreboard for Spain 

(1) Update of 27 April 2023. 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 2023. 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 

The  rates  of  early  leavers  from  education 
and  training  and  of  young  people  not  in 
education,  employment  or  training  (NEETs) 
have  declined,  but  challenges  persist, 
including  the  participation  of  low-qualified 
adults  in  learning.  The  youth  NEET  rate  is  still 

62 

64.297.727.833.430.5Critical situationTo watchWeak but improvingGood but to monitorOn averageEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24, 2021)13.9Share of individuals who have basic or above basic overall digital skills (% of population aged 16-74, 2021)Youth NEET rate(% of population aged 15-29, 2021)12.7Gender employment gap(percentage points, 2021)10.9Income quintile ratio(S80/S20, 2021)6.2Dynamic labour markets and fair working conditionsEmployment rate(% of population aged 20-64, 2021)69.5Unemployment rateGDHI per capita growth                                                              (2008=100, 2021)(% of active population aged 15-74, 2021)12.9Long term unemployment(% of active population aged 15-74, 2021)5Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP, 2021)Disability employment gap(percentage points, 2021)Self-reported unmet need for medical care(% of population 16+, 2021)1.1Better than averageBest performersPolicy areaHeadline indicator15.9Housing cost overburden(% of total population, 2021)9.9Children aged less than 3 years in formal childcare(% of population under 3-years-old, 2021)55.3Social protection and inclusionAt risk of poverty or social exclusion rate                                            (% of total population, 2021)At risk of poverty or social exclusion rate for children                       (% of population aged 0-17, 2021) 
 
 
 
  
 
 
high  (12.7%  in  2022  vs  11.7%  in  the  EU)  but  is 
improving,  down  from  17.3%  in  2020.  Initiatives 
such  as  the  Programme  for  orientation,  progress 
and  educational  enrichment,  PROA+  (Programa 
para  la  orientación,  avance  y  enriquecimiento 
the  Recovery  and 
educativo),  supported  by 
Resilience  Facility  (RRF)  and  the  European  Social 
Fund  (ESF+),  have  helped  strengthen  individual 
student  support  and  reduce  the  number  of  early 
school  leavers  (see  also  Annex  15).  The  share  of 
adults  (aged  25-64)  participating 
learning 
activities over the past 4 weeks stood at 14.4% in 
2021  (higher  than  10.8%  in  the  EU)  but  is  three 
times  lower  among  low-qualified  people  (5.2%). 
The  RRF  and  ESF+  also  support  training  activities 
to  strengthen  the  digital  and  green  transitions. 
This  is  expected  to  contribute  to  achieving  the 
ambitious  national  target  of  at  least  60%  of 
adults participating in training every year by 2030 
(starting from 30.4% in 2016). 

in 

is 

limited 

Skills  mismatches  are  high,  in  a  context  of 
limited  but  increasing  labour  shortages.  A 
large  share  of  tertiary  educated  workers  (36%  in 
2020 vs an EU average of 24.2%) are employed in 
low-skilled  occupations.  Although 
in 
comparison  with  other  EU  countries,  in  Q4-2022, 
businesses’  perception  of  labour  shortages  as 
negatively  affecting  their  economic  activity  was 
notably  high  in  sectors  like  hospitality  (62%)  and 
construction  (49%),  which  is  in  contrast  with  the 
relatively  high  unemployment  rate  and  relatively 
low job vacancy rate (0.9% vs 2.8% EU average in 
Q4-2022).  To  tackle  skills  mismatches,  under  the 
RRP,  Spain  passed  a  new  VET  law  that  should 
contribute  to  increase  the  enrolment  in  VET 
programs  more  in  line  with  labour  market  needs, 
and 
in  upskilling  and  reskilling 
activities,  including  of  employees  on  short-time 
work  schemes,  notably  under  the  new  RED 
mechanism  (a  permanent  scheme  to  stabilise 
employment  against  cyclical  or  sectoral  crises). 
Spain  still  faces  challenges  in  relation  to  the 
certification  of  skills  with 46%  of  workers  lacking 
professional 
has 
streamlined 
the  certification  procedure.  The 
government  set  a  goal  to  provide  3.3  million 
workers  with  proof  of  qualifications  by  2024. 
Spain  has  introduced  initiatives  to  address  skills 
mismatches  and  provide  the  population  with 
digital skills (starting from an already good overall 
level of basic digital skills) and green skills. These 
include  ‘Digitalizate’,  funded  under  the  RRF.  The 
ESF/ESF+  supports 
training  and  certification 
efforts on a complementary basis. 

certificates, 

investing 

although 

it 

Social  indicators  worsened  in  2021,  pointing 
to  social  inclusion  challenges.  Even  though 
measures  to  protect  households  were  taken,  the 
COVID-19  crisis  significantly  increased  overall 
income  inequalities  in  2021  (income  2020)  and 
led  to  a  drop  in  gross  disposable  household 
income per capita. Although measures were taken 
to protect vulnerable households from the increase 
in  energy  prices  (see  also  Annex  8)  and  increase 
the minimum wage, the current inflationary trend, 
together  with  contained  wage  increases  and  the 
tightening  of  financial  conditions  to  address 
inflation  may  further  deteriorate  the  purchasing 
power of low- and middle-income households. The 
share  of  people  at  risk  of  poverty  or  social 
exclusion (AROPE), at 27.8%, is one of the highest 
in the EU (6.1 pps above the EU average in 2021), 
especially for children (33.4% vs 24.4% in the EU). 
Non-EU-born people are particularly vulnerable as 
the AROPE gap  between them and people born in 
Spain  is  34.2  pps  (vs  22  pps  in  the  EU).  Their  in-
work  poverty  rate  is  also  the  highest  in  the  EU 
(34.2% vs 20.8% in the EU). Housing affordability 
is a concern as the housing cost overburden rate is 
high  (9.9%  vs  7.5%  in  the  EU),  especially  among 
tenants renting at market prices (40.9% vs 21.2% 
in  the  EU).  Under  the  RRP,  Spain  is  investing 
EUR 2 billion  to  construct  at  least  20 000  energy-
efficient  social  rental  housing  units  by  2026.  The 
ESF+ will also support housing for children via the 
deinstitutionalisation 
in 
of 
institutions. 

children 

living 

Table A14.2: Situation of Spain on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, adults in learning in the past 12 
months. 
(2) Number of persons at risk of poverty or social exclusion 
(AROPE), reference year 2019. 
Source: Eurostat, DG EMPL 

transfers 

The  social  protection  system’s  effectiveness 
remains  limited  but  is  improving.  The  impact 
of  social 
(excluding  pensions)  on 
reducing poverty increased from 23.4% in 2020 to 
30.5%  in  2021,  but  it  remains  far  below  the  EU 
average  of  37.1%,  especially  for  children  (24.5% 
vs  43.1%  in  the  EU  in  2021).  Despite  substantial 

63 

IndicatorsLatest dataTrend            (2015-2022)National target by 2030EU target by 203069.5(2022)30.4(2016)+871(2021)Poverty reduction2 (thousands)-2 815-15 000Employment (%)7678Adult learning1 (%)6060 
 
   
 
is 

incomplete 

progress,  the  take-up  of  the  national  minimum 
(67%  of  the 
income  scheme 
850 000  target  claimants).  New  supplements  for 
children as well as the new employment activation 
system are expected to prevent poverty traps and 
alleviate  child  poverty (104).  Temporary  employees 
remain  much  more  vulnerable  to  material  and 
social  deprivation  than  standard  employees  (20% 
vs  6.9%).  The  share  of  registered  short-term 
unemployed  people 
receiving  unemployment 
benefits/assistance  was  45%  (EU:  57%).  Overall, 
there  is  scope  for  greater  social  policy  action  to 
achieve  Spain’s  national  target  of  2.815  million 
fewer people at risk of poverty or social exclusion 
by  2030  (compared  to  2019),  including  713 000 
children. 

(104) The minimum income reform is expected to increase labour 
market participation of people in the first quartile, especially 
women, and decrease poverty, particularly extreme poverty, 
at a very small budget cost. Results by the Joint Research 
Centre, based on the EUROMOD model, and the EUROLAB 
model for labour supply reactions (for details of the latter, 
see Narazani, E., Colombino, U. and Bianey P., “EUROLAB: A 
Multidimensional Labour Supply-Demand Model for EU 
Countries”, European Commission, 2021) 

64 

 
                                                 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  for 
Spain’s  education  and  training  system  in  light  of 
the  EU-level 
targets  and  other  contextual 
indicators  under  the  European  Education  Area 
strategic framework, based on the 2022 Education 
and Training Monitor. 

Teacher  shortages  are  becoming  a  major 
challenge.  The  teacher  population  is  ageing  and 
23%  of  teachers  have  temporary  contracts. 
Teacher  shortages  are  already  pronounced  in 
certain  subjects  (STEM  in  particular).  To  address 
the  challenges,  the  government  approved  Royal 
Decree 270/2022 (105) aiming to reduce the rate of 
interim  teachers  to  below  8%.  The  government 
also  aims 
teaching  careers  more 
attractive; a thorough reform is under preparation. 

to  make 

to  at 

skills  also  differs  significantly  by  region,  with  a 
least  one  year  of 
gap  equivalent 
schooling (107). Initiatives such as the 'Programa de 
orientación,  avance  y  enriquecimiento  educativo' 
(PROA+), supported by the Recovery and Resilience 
Facility  and  the  European  Social  Fund  (ESF),  have 
helped  strengthen  students’  individual  support, 
contributing to reducing early school leaving. 

Graph A15.1: Early leavers from education and 
training,  2010 and 2022 

Spain  aims  to  improve  access  to  early 
childhood  education  and  care  (ECEC)  in  all 
regions. The participation rate of children in ECEC 
is one of the highest in the EU. For children older 
than  3,  it  was  97.2%  in  2020  (EU:  93.0%)  and 
41.1% for children under 3 (EU: 18.5%). However, 
access  for  the  younger  age  group  varies  greatly 
across  regions  due  to  the  scarcity  of  free  places 
and  lack  of  common  criteria  at  national  level  to 
guarantee access for the most vulnerable (106). The 
(RRP) 
national 
includes  the  creation  of  60 000  affordable  public 
ECEC  places  for  children  below  the  age  of  3  by 
Q4/2024, notably in areas of higher risk of poverty 
or social; exclusion and rural areas. 

resilience  plan 

recovery  and 

reflect 

outcomes 

regional 
Educational 
leavers  from 
disparities.  The  rate  of  early 
education  and  training  (ELET)  stood  at  13.9%  in 
2022  (0.6  percentage  points  (pps)  higher  than  in 
2020),  and  above  the  EU  average  (9.6%)  (see 
Graph A15.1). This increase seem to indicate a halt 
to  the  downward  trend  in  recent  years.  The 
evolution  of  ELET  rates  has  also  not  been 
consistent  across  all  regions,  with  some  regions 
showing  further  decreases,  while  others  face 
increases  of  over  2  pps.  Although  significant 
disparities among Spanish regions still remain, the 
regional  gap  on  ELET  rates  decreases,  ranging 
from 5.6% to 18.7%. Student performance in basic 

Source: Eurostat and INE-EDUCABASE (national data) 

Spain is promoting digital education. With the 
support  of  the  Recovery  and  Resilience  Facility, 
Spain  is  improving  school  connectivity,  providing 
to  socio-economically  disadvantaged 
laptops 
students,  creating  digital  labs  and  interactive 
digital  classrooms,  and  providing  teachers  with 
further 
digital 
included as a key competence in the new curricula. 
The 
for 
compulsory  education  and  baccalaureate  were 
approved  in  March-April  2022  as  part  of  the 
RRP (108). 

training.  Digital  education 

competence-based 

curricula 

new 

is 

(STEM) 

While  tertiary  education  attainment  is  high,  the 
in  science,  technology, 
number  of  graduates 
engineering 
is 
and  mathematics 
decreasing. In 2022, tertiary education attainment 
stood  at  50.5%  (1.8  pps  more  than  in  2021), 
above  the  EU  average  (42.0%)  and  the  EU-level 
target (45%). However, STEM subjects, in particular 
ICT, did not profit from this positive trend, leading 
to  risks  of  skills  mismatches  and  shortages.  The 
proportion  of  STEM  graduates  decreased  from 
25.4%  in  2015  to  20.8%  in  2020,  and  is  marked 

(105) https://www.boe.es/diario_boe/txt.php?id=BOE-A-2022-6048 

(106) Otero-Mayer, A.; Vélaz-de-Medrano, C.; and Expósito-Casas, 
E. (2021), Evaluation of the educational quality in cycle 0-3: 
state of question (Evaluación de la calidad educative en el 
ciclo 0-3: estado de la cuestión), in Revista de Educación 
394. DOI: 10.4438/1988-592X-RE-2021-394-506. 

(107) Ministry of Education and Vocational Training (MEFP) (2019), 

Informe PISA 2018. Informe Español. Volumen 1. 
https://www.educacionyfp.gob.es/inee/evaluaciones-
internacionales/pisa/pisa-2018/pisa-2018-informes-es.html  

(108) Royal Decrees 157/2022, 217/2022, 243/2022 

65 

051015202530354045502010201120122013201420152016201720182019202020212022%Regional gapESEU 
 
                                                 
  
                                                 
 
Table A15.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Source: (1,3,4,5,7,8,9,10,11)= Eurostat, 2= OECD (PISA); 6 = European Commission (Joint Research Centre).  Notes: Data is not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills and participation of adults in learning. The equity indicator shows the gap in the share of 
underachievement in reading, mathematics and science (combined) among 15-year-olds between the lowest and highest quarters 
of socio-economic status. 

by  a  significant  gender  gap.  While  54%  of  all 
tertiary  students  are  women,  they  only  represent 
29% of all STEM graduates. Overall participation in 
lifelong  learning  activities  remains  fairly  limited 
(see Annex 14). 

66 

96%96.8%91.9%97.2%202093.0%2020Reading< 15%16.2% 20.0%23.2%201822.5%2018Mathematics< 15%22.2% 22.3%24.7%201822.9%2018Science< 15%18.3% 21.1%21.3%201822.3%2018< 9 %20.0%11.0%13.9% 9.6%Men24.0%12.5%16.5%11.1%Women15.8%9.4%11.2%8.0%Cities17.0%9.6%11.9%8.6%Rural areas24.6%12.2%14.4%10.0%Native17.5%10.0%11.2%8.3%EU-born37.2%20.7%28.9%20.3%Non EU-born32.4%23.4%26.8%22.1%6Equity indicator (percentage points)::16.2201819.320187Exposure of VET graduates to work based learningTotal ≥ 60% (2025) : :98.4%60.1%45%41.0%36.5%50.5%42.0%Men34.9%31.2%44.1%36.5%Women47.0%41.8%57.0%47.6%Cities47.3%46.2%55.6%52.2%Rural areas31.9%26.9%42.9%30.2%Native45.7%37.7%56.7%43.0%EU-born28.0%32.7%36.4%39.5%Non EU-born20.2%27.0%31.4%35.7%35.2% 38.3%35.5%202039.2%2020Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth11Share of school teachers (ISCED 1-3) who are 50 years or over1Participation in early childhood education (age 3+)2Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)3Total3By gender4By degree of urbanisation5By country of birth20152022IndicatorTargetSpainEU27SpainEU27 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
population health and the health system in Spain. 

Life  expectancy 
is  among  the 
in  Spain 
highest in the EU and has partially rebounded 
after it fell in 2020. This reflects the significant 
decrease in COVID-19 mortality in (109). Spain fares 
comparatively  well 
in  avoiding  deaths  from 
treatable  causes.  Circulatory  systems  diseases, 
cancer  and  COVID-19  are  the  leading  causes  of 
death. 

Graph A16.1: Life expectancy at birth, years 

Source: Eurostat database 

Health spending relative to GDP in Spain was 
slightly  below  the  EU  average  in  2020. 
Spending  per  capita  on  outpatient  care  is  below 
the  EU  average,  whereas  spending  on  outpatient 
medicines is above the EU average. In 2020, total 
healthcare  spending  increased  to  10.7%  of  GDP. 
This is in line with the upward trend in all Member 
States  in  2020.  In  Spain,  this  increase  is  largely 
due  to  the  severe  GDP  contraction  (by  more  than 
11%, compared to 5.6% in the EU overall). This is 
also  corroborated  by  the  fact  that  the  share  of 
health spending in total public spending remained 
stable  at  14.5%.  The  public  share  of  health 
spending  is  comparatively  low  (73.3%  in  2020). 
Public spending on health is projected to increase 
by  1.3  percentage  points  (pps)  of  GDP  by  2070 
(compared  to  0.9  pps  for  the  EU  overall),  raising 
long-term fiscal sustainability concerns (see Annex 
21).  

(109) Based on data provided directly by Member States to ECDC 
under the European Surveillance System (data current as of 
13 April 2023) 

67 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2019-2070 

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

further  preventive  care 

Spending on prevention in Spain amounted to 
3.2%  of  total  spending  on  healthcare  in 
2020,  compared  to  3.4%  for  the  EU  overall. 
Even  if  between  2020  and  2019,  spending  on 
prevention  in  Spain  increased  by  around  56%, 
compared  to  a  26%  increase  for  the  EU  overall, 
strengthening 
is  a 
precondition  for  efficiency  gains.  Across  the  EU, 
this increase  was  primarily  driven  by  spending  on 
disease  detection,  surveillance, 
control  and 
response programmes as part of the public health 
response 
to 
safeguard  public  health  in  Spain  is  the  ongoing 
rationalisation of the use of antimicrobials, as part 
of  broader  efforts  to  foster  the  rational  use  of 
medicines.  

to  COVID-19.  Another  action 

issue,  with 

Spain  faces  shortages  and  an  uneven 
distribution  of  health workers.  The  number  of 
nurses  is  low,  and  shortages  have  a  negative 
impact on primary care. Working conditions remain 
an 
increasing  use  of  temporary 
contracts (41.9% of all health workers in 2020, up 
from 28.5% in 2012). Royal Decree Law 12/2022 
of  5th  July  modifies 
the  status  of  health 
professionals  and  includes  measures  to  reduce 
temporary  contracts.  However,  its  impact  remains 
to  be  assessed.  Since  the  start  of  the  COVID-19 
pandemic,  special  recruitment  schemes  have 
largely  responded  to  the  surge  in  demand.  The 
percentage of the workforce aged over 55 is quite 
high in Spain: 32% of doctors and 21% of nurses, 
which may exacerbate shortages if the number of 
graduates, especially of doctors, does not increase. 
Spain has a small number of hospital beds, which 
has  remained  stable  for  a  decade.  The  COVID-19 
pandemic put a strain on acute and intensive care 
beds. 

80.580.980.981.081.380.480.183.083.583.483.584.082.483.32015201620172018201920202021EUSpain6.65.70.91.302468EUSpain% of GDP20192070increase 
 
          
                                                 
          
 
 
Table A16.1: Key health indicators 

Note: The EU average is weighted for all indicators, except for (*) and (**), for which the EU simple average is used. The simple 
average for (*) uses data for 2020 or most recent year if former not available. Doctors' density data refer to practising doctors in 
all countries except EL, PT (licensed to practice) and SK (professionally active). Nurses' density data refer to practising nurses in all 
countries except FR, PT, SK (professionally active) and EL (nurses working in hospitals only). 
Source: Eurostat; except: ** ECDC 

delivery  of  primary  care,  with  a  large  variation  in 
nurse  staffing  levels  across  regions.  Measures  to 
attract  more  students  to  pursue  medical  careers 
and  to  foster  recruitment  and  retention  appear 
relevant in this context. 

Through  its  recovery  and  resilience  plan 
(RRP),  Spain  plans  to  invest  EUR  1.7  billion 
(2.5% of the RRP’s total value) in healthcare. 
A  set  of  measures  related  to  innovation  in  the 
health  sector  have  started  to  be  implemented. 
Pending  measures  include  reforms  to  expand 
health  coverage,  and  reforms  of  the  healthcare 
workforce, of the digital health infrastructure, and 
(rational  use  of 
of  pharmaceutical  policies 
medicines, 
pharmaceuticals). 
Investments  to  renew  hospital  equipment  have 
started,  and  the  government  has  adopted  an 
action  plan  for  the  modernisation  of  primary  and 
community care and a public health strategy. The 
in  2021 
Digital  Health  Strategy,  adopted 
established  a  framework  for  digitalisation  of 
healthcare,  including  related  RRP  investments.   
Training  and  health  promotion  measures  have 
started  to  be  implemented.  For  primary  care, 
investments under the RRP are limited to EUR 230 
million (digitalisation).  

innovative 

The  action  plan  for  the  modernisation  of 
primary care adopted under the RRP aims to 
expand  roles,  activities  and  resources  of 
primary  care.  Effective  implementation  of  the 
plan hence will depend on appropriate investment 
in  staff,  infrastructure  and  facilities.  According  to 
statistics (110), 
OECD 
care 
represented  only  13%  of  total  spending  on 
healthcare in Spain in 2020 and is on a downward 
trend, decreasing from 14.5% in 2002 and 14% in 
2019. Moreover, there are substantial disparities in 
investment  levels  for  primary  care  at  subnational 
level.  Nurse  shortages  in  particular  hamper  the 

primary 

health 

(110) OECD Health Statistics, 2022. 

68 

20172018201920202021EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)65.564.662.662.2NA91.7 (2020)Cancer mortality per 100 000 population226.6221.9218.3214.5NA242.2 (2020)Current expenditure on health, % GDP 9.09.09.110.7NA10.9 (2020)Public share of health expenditure, % of current health expenditure70.570.270.673.3NA81.2 (2020)Spending on prevention, % of current health expenditure 2.12.12.23.2NA3.4 (2020)Acute care beds per 100 000 population250249248251NA387.4 (2019)Doctors per 1 000 population *3.94.04.44.6NA3.9 (2020)Nurses per 1 000 population *5.75.95.96.1NA8.3 (2020)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day (total consumption for CY and CZ) **25.024.623.318.218.514.5 (2021) 
                                                 
  
 
 
 
 
 
 
     
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Most  Spanish  regions  rank  below  the  EU 
average  on  competitiveness.  The  exceptions 
are  Comunidad  de  Madrid,  País  Vasco  and 
Cataluña (see Map A17.1). 

Map A17.1:  Regional competitiveness index 2022 

This  Annex  showcases  the  economic  and 
social regional dynamics in Spain, providing an 
update on economic, social and territorial cohesion 
in and among the Spanish regions compared with 
the EU as a whole and the main regional economic 
recovery challenges. 

Regional  disparities  in  Spain  remain  high. 
Most Spanish regions registered  negative average 
growth  between  2011  and  2020,  significantly 
affecting  the  economic  and  social  development 
perspectives of the country. Disparities in GDP per 
capita  increased  after  the  2008  economic  crisis 
and  only  started  to  decline 
in  2014.  They 
nevertheless remained larger than in the pre-crisis 
period. 

(114%),  País  Vasco 

In  2020,  only  three  regions  had  a  GDP  per 
capita  above  the  EU  average:  Comunidad  de 
Madrid 
(108%)  and 
Comunidad Foral de Navarra (104%). The GDP per 
capita  in  Comunidad  de  Madrid  was  almost  twice 
that  of  Andalucía  (63%)  and  the  Canarias  (62%). 
Annual  GDP per capita growth in 2011-2020 was 
particularly  low  in  the  Canarias  (Spain’s  only  EU 
outermost 
Illes  Balears 
(both 1.9%). Extremadura (0.30%), Galicia (0.13%), 
Castilla  y  León  (0.08%)  and  Región  de  Murcia 
(0.05%) also experienced growth. 

region)  and 

the 

in 

Graph A17.1: GDP per capita (2010) and GDP 
growth (2010-2019) - Spain 

(1) Bubble size corresponds to population size in 2019  
Source: Eurostat, DG REGIO elaboration 

Regional  disparities  in  GDP  per  capita  are 
linked  to  territorial  disparities  in  labour 
in  Spain 
productivity.  Labour  productivity 
(measured  as  gross  value  added  per  person 
employed) was at 93% of the EU average of 100 
in  2021.  Productivity  was  highest  in  País  Vasco 
(103%)  and 
(106%),  Comunidad  de  Madrid 
Comunidad Foral de Navarra (101%). It was below 
85 in Andalucía (82%), Melilla (82%), Extremadura 
(81%)  Región  de  Murcia  (80%),  and  the  Canarias 
(79%), 

considerable  differences 

There  are 
in 
regional  innovation  performance.  Only  two 
regions  are  strong  innovators  (País  Vasco  and 
Comunidad  de  Madrid),  while  most  regions  in 
Spain  are  classified  as  moderate  innovators.  The 
best-performing region, País Vasco, performs twice 
as  well  as  the  worst-performing  regions,  the 
Canarias and the Illes Balears (111). As assessed by 
the  regional  innovation  scoreboard  2021,  the 
lowest  innovation  performance  was  in  the  Illes 
Balears,  Extremadura,  Castilla  La  Mancha  and 
Andalucía.  Despite  investment  efforts,  the  last 
three of these regions were lagging behind and did 
not  show  a  positive  trend;  they  are  instead  going 
backwards  in  their  development  and  growth  and 
are  categorised  as  ‘less  developed  regions’  in  the 
2021-2027 programming period. R&D expenditure 
was low in Spain in 2019 at 1.3% of GDP (the EU 
average  was  2%)  and  was  concentrated  in  the 
richest  regions,  with  País  Vasco  reaching  2.0%  of 
GDP.  Expenditure  was  particularly  low  in  Castilla-
La  Mancha  (0.6%),  the  Canarias  (0.5%)  and  the 
Illes Balears (0.4%). 

(111) Source: Regional Innovation Scoreboard (2021) 

69 

-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 A17.1:Selected indicators at regional level – Spain 

Source: Eurostat, EDGAR database 

exclusion steadily decreased in rural areas in Spain 
and  continued  to  fall  between  2019  and  2021 
(from 29.5% to 27.6%) but increased in both cities 
(from  24.3%  to  26.6%)  and  towns  and  suburbs 
(from 26.4% to 30.1%). The poverty risk is greater 
in urban areas. However, the population decline of 
inland  and  rural  areas  was  much  faster  in  2021 
and continues to greatly reduce the inhabitants in 
these  areas.  This 
long-term 
sustainable growth prospects. 

impacts 

their 

Marked disparities persist between mainland 
Spain  and  the  outermost region  of Canarias, 
and  the  autonomous  cities  of  Ceuta  and 
Melilla.  The  GDP  per  capita  of  the  Canarias  was 
62%  of  the  EU  average  in  2021  and  63%  and 
69% in the autonomous cities of Ceuta and Melilla 
respectively.  The  geographical 
situation  of 
Canarias, Ceuta and Melilla has a direct impact on 
their performance and causes them to lag behind 
other  Spanish  regions  in  many  areas,  such  as 
unemployment,  risk  of  poverty,  productivity  and 
innovation.  Continuous  and  targeted  policy  action 
is  therefore  required.  In  addition,  immigration 
poses  a  particular  challenge  in  the  Canarias  and 
the autonomous cities of Ceuta and Melilla, and is 
placing their social services under pressure. 

regional 

disparities. 

The  Spanish  labour  market  still  displays 
significant 
The 
employment rate exceeded 70% in the wealthiest 
regions,  reaching  74.2%  in  Comunidad  de  Madrid 
and also La Rioja and Aragón (both over 73%) but 
remained  below  60%  in  Andalucía,  the  Canarias 
and  Ciudad  Autónoma  de  Ceuta.  Overall,  Spain's 
average  unemployment  rate  of  14.8%  was  the 
second highest in the EU (the average EU rate was 
7.0%). Unemployment rates were lowest (10-11%) 
in  País  Vasco,  Aragón  and  Comunidad  Foral  de 
Navarra but exceeded 20% in regions such as the 
Canarias  (23%),  Andalucía  (22%)  and  Ciudad 
Autónoma  de  Ceuta  (26.6%).  High  unemployment 
rates  occur  in  regions  with  a  less  well-educated 
labour  force  and  a  high  level  of  early  school 
leavers  (e.g.  Andalucía  where  the  level  of  early 
school leavers was 17.7%). 

Regional  disparities  persist 
in  terms  of 
poverty,  with  urbanised  areas  suffering  the 
most  following  the  COVID-19  outbreak.  The 
share  of  people  at  risk  of  poverty  or  social 
exclusion varied significantly between the Spanish 
regions  in  2021.  More  than  one  third  of  the 
in  Ciudad  Autónoma  de  Ceuta, 
population 
Extremadura,  Andalucía  and  the  Canarias  were  at 
risk  of  poverty  or  social  exclusion but  below  20% 
in  Comunidad  Foral  de  Navarra  and  País  Vasco. 
The  number  of people  at risk  of  poverty  or  social 

70 

 
 
  
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

and 

have 

Spain  has  a  large  and  predominately  bank-
based  financial  sector,  with  banks  being  the 
main  financial  intermediaries.  The  banking 
sector is largely domestically owned (95% of total 
assets), with the 10 largest banking groups under 
the  Single  Supervisory 
the  supervision  of 
Mechanism  accounting  for 
roughly  90%  of 
banking-sector  assets.  Two  large  banking  groups 
(Santander 
substantial 
BBVA) 
international activities, operating in Latin America, 
the United Kingdom and Turkey. Supported by two 
large  mergers  in  2021,  the  consolidation  of  the 
banking  sector  has  led  to  a  reduction  in  the 
number  of  branches  and  employees  and  to  lower 
costs  after  the  expansion  experienced  in  previous 
years. Financing on capital markets received a new 
impetus  in  2021,  as  the  market  funding  ratio 
increased to 44.2% – the highest level since 2017 
–  while  stock  market  capitalisation  increased 
significantly  compared  to  the  previous  year. 
Meanwhile, sustainable financing also expanded in 
2021,  as  Spanish  corporates  issued  significantly 
more  green,  social  or  sustainable  bonds.  The 
volume of green-bond issuance doubled compared 
to 2020 and reached EUR 17.4 billion in 2021. The 
Spanish  treasury’s  large  issuance  of  green  bonds 
in  September  2021  contributed 
(EUR 5 billion) 
markedly  to  this  increase  in  the  volume  of 
issuances. 

The  banking  sector  remains  resilient,  while 
asset  quality  has 
improved.  The  public 
guarantee  schemes  and borrower  relief measures 
(moratoria on loan repayments) have safeguarded 
the  asset  quality  of  Spanish  banks,  which 
continued  to  improve  in  the  first  few  months  of 
2022. Due to non-performing loan (NPL) disposals 
and  write-offs,  the  NPL  ratio  decreased  further, 
and  fell  to  2.6%  at  the  end  of  Q3-2022,  the 
lowest  level  since  March  2009,  but  above  the  EU 
average  of  1.8%.  Moreover,  Stage-2  loans (112) 
also declined in the first half of 2022. The liquidity 
position of banks remains reassuring, although the 
conditions  for  retail  and wholesale market  access 
have  deteriorated  slightly 
in  recent  months. 
Meanwhile,  the  reliance  of  banks  on  European 
Central Bank (ECB) financing has declined in 2022 
due  to  the  partial  repayment  of  the  TLTRO. 
Profitability  continued  to  be  robust  in  the  third 
quarter  of  2022,  with  return  on  equity  slightly 

above  10%,  despite  the  absence  of  the  one-off 
item  (Bankia-CaixaBank  merger)  that  influenced 
the  strong  results  in  2021.  After  strengthening  in 
2020  and  2021,  banking-sector  capitalisation 
declined  by  0.9  percentage  points  in  Q3-2022 
compared  with  the  end  of  2021.  Overall,  Spanish 
banks continue to have lower capital buffers than 
their  EU  peers,  with  the  second  lowest  common 
equity tier 1 ratio in the EU (Table A18.1). 

Graph A18.1: Evolution of credit activity 

Source: ECB. 

The  second-round  effects  of  higher  inflation 
and  interest  rates  are  likely  to  put  some 
strain  on  asset  quality.  The  hike  in  interest 
rates  will  gradually  pass  through  to  borrowers’ 
average  cost  of  debt.  The  increase  in  inflation 
coupled  with  the  rise  in  interest  rates  is  likely  to 
affect  the  debt-repayment  capacity  of  borrowers, 
in  particular  those  that  are  more  vulnerable  and 
those  in  the  more  energy-intensive  sectors.  For 
households,  banks  have  increasingly  switched  to 
fixed-rate  mortgage  lending  for  new  mortgages. 
Nevertheless,  roughly  73%  of  the  stock  of 
interest  rates. 
mortgages  still  have  variable 
Moreover, loans backed by state guarantees from 
the  State-owned  development  bank  Instituto  de 
Crédito  Oficial  (ICO)  granted  to  the  corporate 
sector  after  the  onset  of the  COVID-19 pandemic 
are  an  additional  source  of  vulnerability,  as  the 
NPL  ratio  for  these  exposures  surpasses  the 
system-wide NPL ratio. (113)  

(112) According to the classification by the International Financial 

(113) The NPL ratio for the ICO-backed loans increased to 6% in 

Reporting Standards 9 (IFRS 9). 

Q3-2022, up from 3.5% at the end of 2021.  

71 

-15-10-5051015200920102011201220132014201520162017201820192020202120222023Total privateNFCHH% 
 
 
                                                 
   
                                                 
 
Table A18.1: Financial soundness indicators 

(1) Last data: Q3 2022. 
(2) Data is annualized. 
Source: ECB, Eurostat, S&P Global Capital IQ Pro. 

from 

lending 

to  benefit 

The slowdown in lending activity observed in 
2021  continued  in  2022.  In  the  first  quarter  of 
2022, 
to  non-financial  corporations 
(growth  by  4.2%  year-on-year)  outpaced  lending 
to households (up by 1.2% year-on-year). Lending 
to  non-financial  corporations  and  to  the  sectors 
most  impacted  by  the  COVID-19  pandemic  has 
the  support  of 
continued 
government  guarantees  granted  by  the 
ICO. 
Mortgage 
lending  continued  to  benefit  from 
favourable  housing-market  conditions  and  low 
interest  rates  in  the  first  months  of  2022. 
Nevertheless,  due 
the  normalisation  of 
monetary  policy,  the  cost  of  lending  has  also 
increased.  The  one-year  Euribor  rose  to  3.53%  in 
February  2023,  up  from  1.25%  in  August.  Since 
February 2022, the one-year Euribor increased by 
3.87  percentage  points.  Meanwhile,  reversing  the 
increasing  trend  from  the  previous  year,  private-
in  2021  to 
sector  debt  decreased  markedly 
roughly 139% of GDP, the lowest level since 2019.  

to 

Following a strong 2021, the housing market 
saw  continued  growth  in  house  prices  and 
sales  volumes  in  the  first  quarter  of  2022. 
After  an  increase  of  6.4%  year-on-year  in  Q4-
2021, house prices accelerated again in Q1-2022, 
rising  by  8.5%  year-on-year.  On  the  back  of  the 
improved  macroeconomic 
and 
favourable 
property 
transactions  also  increased  further  in  Q1-2022 
level.  The 
and  surpassed 

the  pre-pandemic 

environment 

conditions, 

financing 

72 

number  of  properties  purchased  in  Q1-2022  was 
22%  above  the  level  recorded  in  Q1-2019,  while 
housing supply grew at a much slower pace, as the 
construction  of  new  homes  could  not  meet  the 
growth  in  demand.  Nevertheless,  credit  standards 
remained  broadly  unchanged 
in  2021  and 
tightened  only  slightly  in  2022.  Although  the 
housing  market 
close 
monitoring,  developments  do  not  indicate  an 
overvaluation of house prices that would require a 
tightening  of  the  current  macro-prudential  policy 
stance.  The  Bank  of  Spain  has  maintained  the 
countercyclical capital buffer at zero.  

in  Spain  warrants 

201720182019202020212022EUMedianTotal assets of the banking sector (% of GDP)234.3219.7214.9258.8248.8227.9276.8207.9Share (total assets) of the five largest banks (%)63.768.567.466.469.3--68.7Share (total assets) of domestic credit institutions (%)195.595.395.295.095.095.1-60.2NFC credit growth (year-on-year % change)0.2-1.90.07.91.10.6-9.1HH credit growth (year-on-year % change)-0.50.40.2-0.60.80.6-5.4Financial soundness indicators:1        - non-performing loans (% of total loans)4.43.73.12.82.92.61.81.8- capital adequacy ratio (%)15.415.415.716.817.316.418.619.8- return on equity (%)27.08.26.7-3.510.210.16.16.6Cost-to-income ratio (%)152.653.353.450.252.148.260.651.8Loan-to-deposit ratio (%)189.390.692.685.582.883.788.678.0Central bank liquidity as % of liabilities7.97.96.110.911.55.6-2.9Private sector debt (% of GDP)139.2133.1129.3148.1139.1--120.7Long-term interest rate spread versus Bund (basis points)123.8102.591.388.672.1103.9-93.3Market funding ratio (%)40.942.143.643.144.3-50.840.0Green bonds issued to all bonds (%)0.40.61.01.32.32.93.92.31-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States. 
                                                                              
 
 
   
 
ANNEX 19: TAXATION  

This  Annex  provides  an 
indicator-based 
overview  of  Spain’s  tax  system.  It  includes 
information on the tax structure (the types of tax 
that  Spain  derives  most  of  its  revenue  from),  the 
tax  burden  on  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance. 

information  on 

Spain’s  tax  revenues  are  relatively  low  in 
relation to GDP, with the highest contribution 
coming  from  labour  taxation.  Table  A19.1 
shows  that  Spain’s  tax  revenues  as  a  percentage 
of  GDP  were  below  the  EU  aggregate  in  2021, 
even  though  they  increased  by  1.4  percentage 
points  (pps)  compared  with  2020.  The  share  of 
labour  taxes  as  a  proportion  of  both  GDP  and  of 
total  tax  revenues  was  slightly  below  the  EU 
aggregate 
in  2021,  as  were  revenues  from 
consumption  taxes  and  environmental  taxes  (see 
Table A19.1 and Graph A19.1). The performance of 
the tax system should be viewed in the context of 
a high public deficit and a high debt-to-GDP ratio. 
In order to increase tax revenues more use can be 
made  of  tax  bases  other than  labour  income  and 
there is room to apply the ‘polluter pays’ principle 
more  extensively  (see  also  Annex  6).  Revenues 
from  property  taxes  were  relatively  high  as  a 
percentage  of  both  GDP  and  total  tax  revenues, 
but revenues from recurrent property taxes, which 
are  among  the  taxes  least  detrimental  to  growth, 

Table A19.1: Taxation indicators 

were closer to the EU aggregate.  

tax 

based 

reforms 

Spain’s  Recovery  and  Resilience  Plan  (RRP) 
includes 
on 
recommendations  by  a  committee  of  experts  to 
help  bring  Spain’s  revenue-to-GDP  ratio  closer  to 
the  EU  average;  strengthen  corporate,  wealth  and 
environmental  taxation;  reduce  tax  exemptions 
and  modernise  the  tax  system.  However,  against 
the  background  of  high  inflation,  the  government 
has adopted tax cuts for 2023, mostly targeted to 
low- and medium-income households and to small 
and  medium-sized  enterprises,  while  increasing 
taxation  on the  wealthiest  (including  those  with a 
high income from capital).  

labour 

tax  burden 

is  more 
Spain’s 
progressive than the EU average. Graph A19.2 
shows that the labour tax wedge for Spain in 2022 
was  lower  than  the  EU  average  for  single  people 
at 50% of the average wage and close to the EU 
average  at  higher  wage  levels.  Second  earners  at 
a  wage  level  of  67%  of  the  average  wage are 
subject  to  a  tax  wedge  close  to  the  EU  average. 
Spain’s  RRP  includes  a  reform  to  make  the  tax 
system  even  more  progressive.  The  average 
forward-looking  effective  tax  rates  on  corporate 
income were considerably above the EU average in 
2021. 

(1) Forward-looking effective tax rate (OECD). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average 
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 of the European Union, 2021, https://data.europa.eu/doi/10.2778/843047 and the Data on 
Taxation webpage, https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
For more details on the VAT gap, see European Commission, Directorate-General for Taxation and Customs Union, VAT gap in the 
EU: report 2022, Publications Office of the European Union, 2022, https://data.europa.eu/doi/10.2778/109823.  
Source: European Commission, OECD. 

73 

2010201920202021202220102019202020212022Total taxes (including compulsory actual social contributions) (% of GDP)31.334.837.038.437.939.940.040.6Labour taxes (as % of GDP)16.617.519.919.520.020.721.320.9Consumption taxes (as % of GDP)8.19.49.29.810.811.110.711.2Capital taxes (as % of GDP)6.67.87.99.07.18.18.08.5Total property taxes (as % of GDP)2.12.62.73.01.92.22.22.2Recurrent taxes on immovable property (as % of GDP)1.01.11.31.21.11.21.21.1Environmental taxes as % of GDP1.61.81.81.82.42.42.22.2Tax wedge at 50% of average wage (Single person) (*)30.527.927.927.928.333.932.331.932.131.7Tax wedge at 100% of average wage (Single person) (*)39.739.439.039.539.541.040.139.939.639.7Corporate income tax - effective average tax rates (1) (*)23.323.323.319.519.419.1Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)7.37.26.98.58.67.78.17.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)8.39.531.640.7VAT Gap (% of VAT total tax liability, VTTL)6.14.711.09.1SpainEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Graph A19.1: Tax revenues from different tax types as % of total taxation revenue 

Note: Values for EU are GDP-weighted EU averages (EU aggregates) 
Source: European Commission 

effectiveness) decreased by 1.4 pps to 4.7% from 
2019 to 2020 and was clearly below the EU-wide 
gap  of  9.1%  in  2020.  Spain’s  RRP  includes 
measures  to  further  strengthen  both  the  tax 
system  and  the  tax  administration  (e.g. measures 
to  prevent  and  combat  tax  fraud, 
including 
approval  of  a  law  on  combating  tax  fraud; 
tax  agency; 
modernisation  of 
improving 
and 
international  cooperation  by  increased  use  of 
digital tools).  

the  national 
to 

assistance 

taxpayers 

Graph A19.2: Tax wedge for single and second 
earners as a % of total labour costs, 2022 

Note: Second earners are members of a family with the 
primary earner earning 100% of the average wage and no 
children. For the methodology of the tax wedge for second 
earners see OECD (2016) “Taxing Wages 2014-2015” 
Source: European Commission 

in 

revenues 

total  net 

relatively  well 

Spain  performs 
tax 
compliance  and  tax  administration.  Spain  is 
doing  well  on  digitalising  its  tax  administration, 
which  can  help  reduce  tax  arrears  as  well  as  cut 
compliance costs. Outstanding tax arrears stood at 
9.5%  of 
in  2020  and 
significantly  below  the  EU-27  average  of  40.7%, 
although  the  average  is  inflated  by  very  large 
values in a few Member States. The Annual Report 
on 
for 
improvement in the rate of filing personal income 
tax  returns  online (114).  The  VAT  gap  (an  indicator 
of  the  effectiveness  of  VAT  enforcement  and 
compliance,  where  a  low  gap  indicates  high 

Taxation  2022 

highlights 

scope 

(114) European Commission, Directorate-General for Taxation and 
Customs Union, Annual report on taxation 2022: review of 
taxation policies in the EU Member States, Publications 
Office of the European Union, 2022. 

74 

28.336.041.044.039.82025303540455050100150Tax wedge, % of total labour costsEarnings in % of the average wageSingle earner - ESSingle earner - EU averageSecond earner -  ESSecond earner -  EU average51.4327.5421.0150.9425.5823.48Tax revenue shares in 2021, Spain (outer ring) and the EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital3.764.320.601.000.230.193.142.644.642.750.002.004.006.008.0010.00Spain -environmentaltaxationEU -environmentaltaxationSpain - propertytaxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Spain and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
 
       
                                                 
 
 
        
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1: Key economic and financial indicators 

(1) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) Net international investment position (NIIP) excluding direct investment and portfolio equity shares. 
Source:  Eurostat and ECB as of 2 May 2023, where available; European Commission for forecast figures (Spring forecast 2023). 

75 

2004-072008-122013-1920202021202220232024Real GDP (y-o-y)3.6-1.32.0-11.35.55.51.92.0Potential growth (y-o-y)3.61.20.40.10.61.11.21.5Private consumption (y-o-y)3.9-2.01.4-12.26.04.40.92.3Public consumption (y-o-y)5.71.40.83.52.9-0.71.70.6Gross fixed capital formation (y-o-y)5.7-8.53.5-9.70.94.62.24.2Exports of goods and services (y-o-y)4.61.04.0-19.914.414.44.13.3Imports of goods and services (y-o-y) 8.3-5.23.7-14.913.97.92.84.2Contribution to GDP growth:Domestic demand (y-o-y)4.9-3.01.6-8.34.23.31.32.3Inventories (y-o-y)0.0-0.20.2-0.81.0-0.20.00.0Net exports (y-o-y)-1.31.80.2-2.20.32.40.6-0.3Contribution to potential GDP growth:Total Labour (hours) (y-o-y)1.60.1-0.10.00.30.60.70.9Capital accumulation (y-o-y)1.70.70.30.30.30.30.40.4Total factor productivity (y-o-y)0.30.40.2-0.10.00.20.20.2Output gap3.4-4.3-3.4-9.8-5.4-1.3-0.6-0.2Unemployment rate9.219.119.815.514.812.912.712.4GDP deflator (y-o-y)3.80.50.71.22.34.34.42.9Harmonised index of consumer prices (HICP, y-o-y)3.22.30.7-0.33.08.34.02.7HICP excluding energy and unprocessed food (y-o-y)2.81.60.80.60.75.24.92.5Nominal compensation per employee (y-o-y)3.22.00.90.52.73.24.94.0Labour productivity (real, hours worked, y-o-y)0.61.70.60.0-1.61.30.50.0Unit labour costs (ULC, whole economy, y-o-y)3.40.40.58.6-0.30.63.83.1Real unit labour costs (y-o-y)-0.5-0.1-0.27.3-2.5-3.6-0.60.1Real effective exchange rate (ULC, y-o-y)2.2-1.6-0.52.80.1-3.2-1.5-0.5Real effective exchange rate (HICP, y-o-y)1.5-0.10.00.10.7-1.3..Net savings rate of households (net saving as percentage of net disposable income)3.14.62.813.79.6...Private credit flow, consolidated (% of GDP)27.1-0.7-2.54.72.5...Private sector debt, consolidated (% of GDP)166.6198.3150.1148.1139.1...of which household debt, consolidated (% of GDP)73.583.265.862.758.4...of which non-financial corporate debt, consolidated (% of GDP)93.1115.184.385.480.8...Gross non-performing debt (% of total debt instruments and total loans and advances) (1).4.44.92.52.6...Corporations, net lending (+) or net borrowing (-) (% of GDP)-3.96.16.22.84.06.47.06.6Corporations, gross operating surplus (% of GDP)20.423.823.921.221.524.425.325.2Households, net lending (+) or net borrowing (-) (% of GDP)-4.5-0.21.18.44.8-0.1-0.4-0.9Deflated house price index (y-o-y)9.7-8.21.62.21.50.6..Residential investment (% of GDP)11.36.94.65.95.45.5..Current account balance (% of GDP), balance of payments-7.8-3.92.20.61.00.61.61.5Trade balance (% of GDP), balance of payments-5.0-0.93.31.51.51.4..Terms of trade of goods and services (y-o-y)0.5-0.90.02.2-0.9-6.51.00.5Capital account balance (% of GDP)0.60.40.40.50.90.9..Net international investment position (% of GDP)-70.5-91.3-85.9-85.7-71.5-60.5..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)-39.5-71.8-60.2-52.1-39.5-30.8..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)121.0155.2157.6188.2180.9164.8..Export performance vs. advanced countries (% change over 5 years)6.6-4.20.1-6.6-6.4...Export market share, goods and services (y-o-y)-2.7-3.81.0-10.52.010.21.4-0.5Net FDI flows (% of GDP)4.00.10.61.6-1.40.4..General government balance (% of GDP)1.3-9.3-4.6-10.1-6.9-4.8-4.1-3.3Structural budget balance (% of GDP)..-2.2-3.7-3.6-4.0-3.7-3.2General government gross debt (% of GDP)40.762.7101.7120.4118.3113.2110.6109.1forecast 
 
 
 
  
 
 
 
ANNEX 21: 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  European  Commission’s  2022 
Debt Sustainability Monitor, updated based on the 
Commission 2023 spring forecast. 

fiscal 

1  -  Short-term  risks  to  fiscal  sustainability 
low  overall.  The  Commission’s  early-
are 
detection  indicator  (S0)  does  not  signal  major 
(Table A21.2) (115). 
short-term 
risks 
Government gross financing needs are expected to 
remain  large  at  around  20%  of  GDP  in  the  short 
term  (i.e.  over  2023-2024),  although  declining 
compared with the recent peak in 2020 (Table 1). 
Financial  markets’  perceptions  of  sovereign  risk 
are  investment  grade,  as  confirmed  by  the  main 
rating agencies. 

2 - Medium-term risks to fiscal sustainability 
are high overall.  

The  DSA  for  Spain  shows  that,  under  the 
baseline,  the  government  debt  ratio 
is 
projected  to  remain  at  a  high  level  over  the 
medium  term  (at  106%  of  GDP  in  2033), 
despite  a  decline  until  2029  (Table 1) (116) (117). 
The assumed structural primary balance (a deficit 
of  0.8%  of  GDP) 
these 
developments. It appears plausible compared with 
the 
past  fiscal  performance, 

contributes 

indicating 

that 

to 

(115) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of macro-financial and 
fiscal variables that have proven to perform well in the past 
in detecting situations of upcoming fiscal stress.  

(116) The assumptions underlying the Commission’s ‘no-fiscal-
policy-change’ baseline notably comprise: (i) a structural 
primary deficit, before ageing costs, of 0.8% of GDP as of 
2024; (ii) inflation converging linearly towards the 10-year 
forward inflation-linked swap rate 10 years ahead (which 
refers to the 10-year inflation expectations 10 years from 
now); (iii) the nominal short- and long-term interest rates on 
new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10 (as 
for all Member States); (iv) real GDP growth rates from the 
Commission 2023 spring forecast until 2024, followed by 
EPC/OGWG ‘T+10 methodology’ projections between T+3 and 
T+10, i.e. for 2025-2033 (on average 1.0%); (v) ageing costs 
in line with the 2021 Ageing Report (European Commission, 
Institutional Paper 142, November 2020). For information on 
the methodology, see the 2022 Debt Sustainability Monitor 
(European Commission, Institutional Paper 199, April 2023). 

to 

the 

favourable 

country  has  room  for  corrective  action.  At  the 
same  time,  the  baseline  projection  benefits  until 
2031  from  a  still  favourable  (although  declining) 
nominal  interest-growth  rate  differential,  notably 
thanks 
of 
NextGenerationEU, with real GDP growth at around 
1.0%  over  2025-2033.  This  differential 
is 
projected  to  turn  slightly  unfavourable  in  2032. 
Government gross financing needs are expected to 
remain  large  over  the  projection  period,  reaching 
around  20%  of  GDP  in  2033,  close  to  the  level 
forecast for 2024. 

impact 

The  baseline  projection 
is  stress-tested 
against  four  alternative  scenarios  to  assess 
the  impact  of  changes  in  key  assumptions 
(Graph 1). For Spain, reverting to a historical fiscal 
position  under  the  ‘historical  structural  primary 
balance  (SPB)’  scenario  would  slightly  worsen  the 
government  debt  trajectory.  If  the  SPB  gradually 
converged its historical 15-year average (-1.1% of 
GDP),  the  projected  debt-to-GDP  ratio  would  be 
about 2 pps. higher than in the baseline by 2033. 
A  permanent  worsening  of  the  macro-financial 
‘adverse 
reflected  under 
conditions,  as 
interest-growth  rate  differential’  scenario  (with  a 
differential  1  pp.  higher  than  the  baseline)  would 
result in a persistently higher debt ratio, by around 
9  pps.  of  GDP  by  2033,  as  compared  with  the 
baseline.  A  temporary  worsening  of  financial 
conditions,  as  reflected  in  the  ‘financial  stress’ 
scenario  (with.  a  temporary  increase  of  interest 
rates  by  2.4  pps.),  would  also  lead  to  a  higher 
public  debt-to-GDP  ratio  (+2  pps.  by  2033) 
compared  with  the  baseline.  The  ‘lower  structural 
primary  balance’  scenario  (with  the  SPB  level 
permanently  0.4  pp.  lower  than  in  the  baseline) 
would  also  lead  to  a  higher  government  debt-to-
GDP  ratio  (+4  pps.  by  2033)  compared  with  the 
baseline.  

the 

Additionally,  stochastic  debt  projections 
point to high risk (118). These projections point to 
32%  probability  of  the  debt  ratio  in  2027  being 
greater than in 2022, entailing high risk given the 
initial  high  debt  level (Graph 2).  In  addition,  such 
shocks  point 
(as 
measured by the difference between the 10th and 
90th debt distribution percentiles) surrounding the 
baseline debt projections.  

to  significant  uncertainty 

(117) Table 1 shows the baseline debt projection and its 

(118) These projections show the impact on debt of 2000 different 

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.  

shocks affecting the government’s primary balance, 
economic growth, interest rates and exchange rates. The 
cone covers 80% of all simulated debt paths, therefore 
excluding tail events. 

76 

 
 
                                                 
                                                 
 
 
Finally,  several  additional  risk  factors  need 
to  be  considered  in  the  assessment.  On  the 
one hand, risk-increasing factors relate the recent 
increase in interest rates and the elevated level of 
external  and  private  debt,  which  may  amplify  the 
adverse  impact  of  the  tightening  of  financial 
conditions  on  households’  and  firms’  financial 
position. On the other hand, risk-mitigating factors 
include the lengthening of debt maturity in recent 
years, relatively stable financing sources featuring 
a well-diversified and large investor base, and the 
currency  denomination  of  debt.  In  addition,  the 
structural  reforms  under  the  NGEU/RRF,  if  fully 
implemented, could have a further positive impact 
on GDP growth in the coming years, and therefore 
help to mitigate debt sustainability risks. 

3  -  Long-term  risks  to  fiscal  sustainability 
for Spain are medium overall  (119). 

The S2 sustainability gap indicator (at 0.7 pp. 
of  GDP)  points  to  low  risk.  This  suggests  that 
Spain would need to improve its structural primary 
balance  only  by  a  limited  amount  to  ensure  debt 
stabilisation  over  the  long  term.  This  result  is 
underpinned  by the  projected  decrease in  ageing-
related  costs  (contribution  of  -0.6  pp.  of  GDP) 
while the initial budgetary position is unfavourable 
(contribution  of  +1.3  pps.  of  GDP) (Table 2). 
Developments in ageing costs are primarily driven 
by  the  projected  decrease 
in  public  pension 
expenditure  (contribution  of  -2.0  pps.  of  GDP). 
However,  pension  spending  will  first  increase  to 
reach  a  peak  of  13.5%  of  GDP  in  2045  before 
starting  to  decrease  (the  impact  of  the  recently 
adopted  pension  reform  under  the  RRP  is  not 
included  in  this  projection).  On  the  other  hand, 
health and long-term care spending is projected to 
increase  over 
(joint 
contribution of 1.7 pps. of GDP). As a result, while 
a  number  of  investments  and  reforms  in  the  RRP 
contribute  to  supporting  the  efficiency  of  the 
Spanish  health  system,  additional  measures  may 
be required to further improve its efficiency and its 
fiscal sustainability. 

the  projection  period 

Yet,  combined  with  debt  vulnerabilities 
highlighted by the S1 indicator, overall long-
term  risks  are  assessed  as  medium.  Indeed, 
the  S1  sustainability  gap  indicator  signals  that  a 
significant consolidation effort of  2.2 pps. of GDP 
would be needed to reduce debt to 60% of GDP by 
2070 (Table 2). This result is mainly driven by the 
high  level  of  the  Spanish  government  debt  ratio 
and deficit (contributing 1.0 pp. and 0.8 pp. of GDP, 
respectively). 

(119)The S2 fiscal sustainability indicator measures the 

permanent SPB adjustment in 2024 that would be required 
to stabilise public debt over the long term. It is 
complemented by the S1 indicator, which measures the 
fiscal gap in 2024 to bring the debt-to-GDP ratio to 60% in 
the long term. For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 pps. of 
GDP, ‘medium risk’ if it lies between 2 pps. and 6 pps. of 
GDP, and ‘low risk’ if the effort is negative or below 2 pps. of 
GDP. The overall long-term risk classification brings together 
the risk categories derived from S1 and S2. S1 may notch up 
the risk category derived from S2 when it signals a higher 
risk than S2. See the 2022 Debt Sustainability Monitor for 
further details. 

77 

 
                                                 
 
Table A21.1: Debt sustainability analysis - Spain 

Source: Commission services. 

Table A21.2: Heat map of fiscal sustainability risks - Spain 

Source: Commission services. 

78 

Table 1. Baseline debt projections20202021202220232024202520262027202820292030203120322033Gross debt ratio (% of GDP)120.4118.3113.2110.6109.1107.7106.5105.4104.8104.5104.5104.8105.5106.0Changes in the ratio22.2-2.1-5.0-2.6-1.5-1.4-1.2-1.0-0.6-0.30.00.30.70.5of whichPrimary deficit7.94.72.41.60.90.80.60.50.40.40.40.40.50.5Snowball effect13.5-6.7-8.3-4.4-2.8-2.2-1.8-1.5-1.0-0.7-0.4-0.10.20.0Stock-flow adjustments0.8-0.10.90.10.40.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)27.824.721.720.219.619.118.918.818.919.019.119.419.720.0S1S2Overall index  (pps. of GDP)2.20.7of which Initial budgetary position0.81.3Debt requirement1.0Ageing costs0.4-0.6of which    Pensions-0.5-2.0     Health care0.91.1     Long-term care0.40.6Others-0.4-0.4Table 2. Breakdown of the S1 and S2 sustainability gap indicators9510010511011512012520202021202220232024202520262027202820292030203120322033Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p9070809010011012013020202021202220232024202520262027% of GDPGraph 2. Stochastic debt projections 2023-2027MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMMEDIUMMEDIUMHIGHMEDIUMHIGHDebt level (2033), % GDP106.0108.3110.1115.0108.0Debt peak year20222022202220332022Fiscal consolidation space63%69%73%63%63%Probability of debt ratio exceeding in 2027 its 2022 level32%Difference between 90th and 10th percentiles (pps. GDP)37.4(1)Debtlevelin2033.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidtationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2027its2022level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)thedifference 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.Short termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)LOWHIGHLOWMEDIUMMEDIUM 
 
 
 
 
 
 
   
 
 
   
 
ANNEX 22: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX  

narrower  expected  general  government  deficits. 
Potential risks affecting the ongoing consolidation 
process  and  unwinding  of 
imbalances  relate 
mainly  to  the  impact  of  the  prolonged  tightening 
of  financial  conditions  on  households  and  firms’ 
financial  positions,  as  well  as  on  the  medium  to 
long-term  sustainability  of  government  debt  in 
the  current  market  conditions  and 
face  of 
population  ageing. 
In  addition,  the  resilience 
displayed  last  year  by  the  labour  market  is 
expected  to  be  tested  under  less  favourable 
macroeconomic  conditions.  However,  on  the  back 
of  the  positive  results  of  the  labour  market 
reforms  approved 
the 
unemployment  rate  is  expected  to  continue  its 
decline in 2023 and 2024. 

in  December  2021, 

restructuring  and 

Policy  progress  on  areas  affected  by 
imbalances  has  been  initiated  over  the  very 
recent  years,  largely  thanks  to  the  Spanish 
Recovery  and  Resilience  Plan.  The  measures 
implemented  so  far  and  those  planned  until  end-
2023  include  actions  improving  access  to  finance 
for  SMEs  and  measures  intended  to  facilitate 
insolvency 
preventive  debt 
situations  for  companies. The  reduction  of  energy 
dependency  and  higher  competitiveness  of  the 
business  sector  would  support  further  corrections 
in external imbalances. Important measures aimed 
at improving the efficiency of both the expenditure 
and  revenue  side  are  expected  to  contribute  to 
accelerating  the  downward  trajectory  of  public 
debt.  The  ongoing  set  of  reforms  related  to  the 
labour  market  are  set  to  contribute  reducing  the 
share  of  temporary  employees  and  boost  labour 
long-term. 
the  medium- 
productivity 
to 
Nonetheless, 
capacity  and 
innovation 
shortcomings  of  business  regulation  continue  to 
adversely  affect  firms’  growth  and  productivity, 
weighing  on  their  financial  position.  Further 
measures 
the  productivity  and 
competitiveness  of  firms,  and  to  address  skills 
mismatches and shortages, would further support 
a  deleveraging  trend  in  the  private,  public  and 
external sector. 

to  boost 

low 

in 

Based  on  this  assessment,  the  Commission 
considered  in  its  communication  European 
Semester – 2022 Spring Package (COM(2022) 
600 final) that Spain continues to experience 
imbalances. 

The  Macroeconomic 
Imbalance  Procedure 
matrix presents the main elements of the in-
depth review undertaken for Spain (120).  Spain 
was  selected  for  an  in-depth  review  in  the  2023 
Alert  Mechanism  Report.  This  in-depth  review  on 
the  prevention  and  correction  of  macroeconomic 
imbalances  presents  the  main  findings  on  the 
gravity  and  evolution  of  the  challenges  identified, 
as  well  as  policy  responses  and  potential  policy 
needs.  Findings  cover  all  areas  of  vulnerability 
assessed in the in-depth review.  

a 

in 

context 

persisting 

reducing 
Spain  has  made  progress 
vulnerabilities  related  to  high  external  and 
internal  debt,  both  government  and  private, 
in 
high 
of 
unemployment. The Spanish economy weathered 
relatively  well  the  negative  shocks  unleashed  by 
Russia’s  war  of  aggression  against  Ukraine  last 
year, also benefitting from to its limited exposure 
to  the  Russian  economy.  Domestic  and  external 
debt  ratios  resumed  their  decline  since  the 
aftermath  of  the  pandemic,  despite  remaining  at 
elevated levels. Private sector balance sheets have 
continued to strengthen in line with the recovery in 
economic activity in 2022. Asset quality has been 
preserved  and  the  private-debt-to  GDP  ratio 
the 
resumed 
aftermath  of  the  pandemic.  The  net  international 
investment  recovered  further  in  2022  reaching  -
60.5%  in  2022-Q4,  albeit  remaining  marginally 
suggested  by  economic 
above 
fundamentals  and  prudential  benchmarks.  The 
current  account  remained  in  surplus  in  recent 
years, though it narrowed  in 2021 and 2022. The 
government  debt  to  GDP  ratio,  driven  by  strong 
nominal GDP growth, decreased to 113.1% of GDP 
in 2022, which is still above 2019 levels. 

trajectory  since 

its  downward 

level 

the 

Going  forward,  external  and  internal  debt 
ratios  are  expected  to  continue  to  improve, 
but  at  a  more  moderate  pace.  The  current 
account balance is forecast to keep strengthening 
gradually  amid  further  recovery  of  international 
tourism  and  improvement  in  the  terms  of  trade 
is  expected  to  keep 
conditions.  Public  debt 
than  what 
reducing  albeit  more  gradually 
experienced  in  the  recent  years,  on  the  back  of 
lower  nominal  GDP  expansion,  but  favoured  by 

(120)  European  Commission  (2023),  In-Depth  Review  for  Spain, 
Commission staff working document (COM(2023) 632 final), 
in  accordance  with  Article  5  of  Regulation 
(EU)  No 
1176/2011  on 
correction  of 
macroeconomic imbalances.  

the  prevention  and 

79 

 
 
                                                 
 
Table A22.1: Assessment of macroeconomic imbalances matrix 

Source: European Commission 

80 

Gravity of the challengeEvolution and prospectsPolicy responseUnsustainable trends, vulnerabilities and associated risksExternal positionThe negative NIIP has displayed a steady improvement since its peak in 2009, which has only been temporarily halted in 2020 during the COVID-19 crisis. It recovered to -60.5% of GDP in 2022, attaining the strongest position since 2004 and converging to a level marginally below the prudential benchmark. The composition of Spain’s external liabilities, made up primarily of government debt and central bank debt resulting from monetary operations of the Eurosystem, contributes to mitigate some of the vulnerabilities. The current account has shown surpluses in recent years and remained in positive territory in 2022 underpinned by the strong rebound in tourism activity throughout the year. In addition, direct trade dependence of Spain from Russia is limited and has exerted a marginal impact on the evolution of the external position.The current account surplus is projected to increase to 1.6% in 2023 and 1.5%% in 2024, favoured by the gradual reduction of energy prices and the expected improvement in the terms of trade. In addition, the revenue accruing from tourism is set to lead to further current account improvements amid the complete recovery of international travel compared to pre-COVID-19 level.  Along with continued GDP expansion , this is expected to contribute to a less negative NIIP. Overall, the adjustment perspectives appear favourable.Reforms and investments under the Recovery and Resilience Plan (RRP) are underway favouring the wide-spread use and production of renewable energy. Together with investments in energy efficiency, they can further reduce dependency on energy imports and contribute to gradually improving the external debt ratio. Measures improving the business environment and skills, reforms of the educational and vocational training systems, as well as investments in strategic sectors and supporting the digitalisation of SMEs are set to strengthen the competitiveness of firms. Nonetheless, low innovation capacity and shortcomings of business regulation continue to adversely affect firms’ growth and productivity, weighing on their financial position.Public debtGeneral government debt has declined since 2020 favoured by robust GDP expansion, but its level remains elevated. It stood at 113.2% of GDP in 2022. However, high fiscal sustainability risks persist in the medium term and medium risks in the long term. Against this background, the low average interest payment on debt, the longer average maturity of public debt in recent years and the well-diversified investor base reduce vulnerabilities. In a context of an already elevated stock of liabilities, the main headwinds ahead affecting public debt developments are related to higher interest rates and the increase in costs related to health care, long-term care and pensions due to population ageing.The government deficit is forecast to continue narrowing in 2023 and 2024 (to 4.1% and 3.3% respectively), down from 4.8% in 2022. Government debt is projected to decrease further from 113.2% in 2022 to 110.6% and 109.1% in 2023 and 2024. Government revenues have shown considerable strength over the last two years, recording double-digit growth rates, but the structural nature of this recent rise is unclear and could weight on the improvement of government deficits in the next years.Some policy progress has been achieved in response to the outstanding fiscal vulnerabilities. Spain has started to adopt the recommendations on the spending reviews cycle 2022-2026 geared at improving the efficiency of public spending. The national strategy designed to make public procurement more efficient and sustainable was adopted at the end of 2022. In addition, the modernisation of the tax agency or the delivery of enhanced assistance to taxpayers have contributed to the recent rise in revenues share by tackling the impact of the shadow economy and favouring its narrowing. Whilst a holistic tax reform, following the recommendations from a committee of experts is expected to be undertaken as part of the Plan, some already adopted measures, such as the “solidarity” tax for the wealthy individuals, are contributing to reduce the government revenue gap vis-a-vis the EU average.Private debtThanks to strong GDP expansion up until the end of 2019 and in the aftermath of the pandemic period, the stock of private debt remains on a sharp declining trend since its peak of 204% of GDP in 2009. Private sector debt stood at 125% of GDP (in consolidated terms) in 2022. The debt of non-financial corporations (NFCs) accounted for 72% of GDP and household debt for 52% of GDP. Both NFC and household debt ratios however stand above prudential and fundamental-based benchmarks indicating that strong deleveraging needs persists. The NPLs ratio eased to 3.5% in December 2022, down from 4.5% at the end of 2021, despite  the expiry in June 2022 of debt moratoria and the grace period for loans granted by the Instituto de Crédito Oficial (ICO).The adverse consequences of the temporary increase in corporate indebtedness resulting from the COVID-19 crisis have been limited, also for those firms operating in sectors considerably hit by the economic fallout of the pandemic, including tourism. Further private debt deleveraging is expected going forward on the back of sustained economic growth and more moderate credit activity amidst the significant financial tightening observed since 2022. However, pockets of vulnerabilities remain, and risks related to borrowers’ repayment capacity are rising reflecting weaker growth, high inflation, and tighter financial conditions.Spain recently introduced some policy measures supporting the unwinding of private debt vulnerabilities. A law establishing a new insolvency framework entered into force in 2022, intended to facilitate preventive debt restructuring and debt relief for natural persons, with the goal of preventing insolvency situations and facilitate resource reallocation. In addition, a set of measures to provide support to small businesses in the form of financial guarantees offered by CERSA (financial entity attached to the Spanish Ministry of Industry) will be adopted by Q4-2023. This will allow businesses to access long-term financing and working capital operations. Measures improving the business environment and skills, reforms of the educational and vocational training systems, as well as investments in strategic sectors and supporting the digitalisation of SMEs are set to strengthen the competitiveness of firms.UnemploymentAfter the temporary increase in the unemployment rate during the COVID-19 pandemic, the downward trend gained traction again from 2021 onwards and reached last year the minimum level since 2008. However, at 12.9% in 2022 it remains almost double the EU average, being particularly high for young people (29.4% in 2022). High levels of labour market segmentation (permanent vs temporary employment) have prevailed over the last decade but the situation significantly improved over the course of last year. The share of temporary employees in the private sector fell to 14.8% in Q4 2022, down from 23.9% one year before.Unemployment is expected to decline over the forecast horizon to 12.7% in 2023 and further to 12.4% in 2024, below pre-pandemic levels, although still remaining as the highest in the EU. The share of temporary employees is expected to further decline, particularly in the public sector, where it remains very high (31.4% in 2022).Progress with reforms of the labour market continues. The package approved in December 2021 included stricter rules for hiring on a temporary basis and reinforcing the open-ended contract for discontinuous activities. These measures are helping to reduce temporary employment in the private sector, favouring the correction of labour market duality, which is key to boost labour productivity in the medium to long term. In the aftermath of the pandemic, another reform approved in December 2021 created the RED Mechanism to support firms and workers in transition, which became operational in April 2022 and is expected to improve the adjustment process of the economy in face of cyclical and structural shocks.