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

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   EUROPEAN COMMISSION  Brussels, 24.5.2023  COM(2023) 609 final  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 {SWD(2023) 609 final}  
 
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 

THE COUNCIL OF THE EUROPEAN UNION, 

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

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

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

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

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

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investments,  entailing  a  fiscal  impulse 
financed  by  the  EU.  In  line  with  the  European  Semester  priorities,  it  contributes  to 
economic  and  social  recovery  and  to  the  implementation  of  sustainable  reforms  and 
investments,  in  particular  to  promote  the  green  and  digital  transition  and  make  the 
Member States’ economies more resilient. It also helps strengthen public finances and 
boost  growth  and  job  creation  in  the  medium  and  long  term,  improve  territorial 
cohesion  within  the  EU  and  support  the  continued  implementation  of  the  European 
Pillar of Social Rights. The maximum financial contribution per Member State under 
the Recovery and Resilience Facility was updated on 30 June 2022, in accordance with 
Article 11(2) of Regulation (EU) 2021/241. 

1 
2 
3 

OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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(2) 

On 22 November 2022, the Commission adopted the 2023 Annual Sustainable Growth 
Survey4,  marking  the  start  of  the  2023  European  Semester  for  economic  policy 
coordination. The European Council endorsed the priorities of the  survey  around the 
four  dimensions  of  competitive  sustainability  on  23  March  2023.  On  22  November 
2022,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted 
the 2023 Alert Mechanism Report, in which it identified Spain as one of the Member 
States that may be affected or may be at risk of being affected by imbalances, and for 
which an in-depth  review would be needed. On  the same date, the Commission also 
adopted  an  opinion  on  Spain’s  2023  draft  budgetary  plan.  The  Commission  also 
adopted a recommendation for a Council recommendation on the economic policy of 
the euro area, which the Council adopted on 16 May 2023, as well as the proposal for 
the 2023 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  the 
Council adopted on 13 March 2023. 

(3)  While the EU economies are showing remarkable resilience, the  geopolitical  context 
continues  to  have  a  negative  impact.  As  the  EU  stands  firmly  with  Ukraine,  the  EU 
economic  and  social  policy  agenda  is  focused  on  reducing  the  negative  impact  of 
energy shocks on both vulnerable households and companies in the short term, and on 
keeping  up  efforts  to  deliver  on  the  green  and  digital  transition,  support  sustainable 
and inclusive growth, safeguard macroeconomic stability and increase resilience in the 
medium  term.  It  also  focuses  heavily  on  increasing  the  EU’s  competitiveness  and 
productivity. 

(4) 

On  1  February  2023,  the  Commission  issued  the  Communication  A  Green  Deal 
Industrial  Plan  for  the  Net-Zero  Age5  to  boost  the  competitiveness  of  the  EU’s  net-
zero  industry  and  support  the  fast  transition  to  climate  neutrality.  The  plan 
complements  ongoing  efforts  under  the  European  Green  Deal  and  REPowerEU.  It 
aims to provide a more supportive environment for scaling up the EU’s manufacturing 
capacity  for  the  net-zero  technologies  and  products  required  to  meet  the  EU’s 
ambitious climate targets as well as ensuring access to relevant critical raw materials, 
including  by  diversifying  sourcing,  by  properly  exploiting  geological  resources  in 
Member  States  and  by  maximising  the  recycling  raw  material.  The  plan  is  based  on 
four pillars:  a predictable and simplified regulatory  environment,  speeding up access 
to finance, enhancing skills, and open trade for resilient supply chains.  On 16 March 
2023,  the  Commission  also  issued  the  Communication  Long-term  competitiveness  of 
the EU: looking beyond 20306, structured along nine mutually reinforcing drivers with 
the objective to work towards a growth enhancing regulatory framework. It sets policy 
improvements,  well  focused 
priorities  aimed  at  actively  ensuring  structural 
investments and regulatory measures for the long-term competitiveness of the EU and 
its Member States. The recommendations below help address those priorities. 

(5) 

In 2023, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  Fully 
implementing  the  recovery  and  resilience  plans  remains  essential  for  delivering  the 
policy priorities under the European Semester, as the plans address all or a significant 
subset  of  the  relevant  country-specific  recommendations  issued  in  recent  years.  The 
2019, 2020 and 2022 country-specific recommendations remain equally relevant also 

4 
5 
6 

COM(2022) 780 final. 
COM(2023) 62 final. 
COM(2023) 168 final. 

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(6) 

(7) 

for  recovery  and  resilience  plans  revised,  updated  or  amended  in  accordance  with 
Articles 14, 18 and 21 of Regulation (EU) 2021/241. 
The REPowerEU Regulation7 adopted on 27 February 2023 aims to rapidly phase out 
the  EU’s  dependence  on  Russian  fossil  fuel  imports.  This  will  contribute  towards 
energy security and the diversification of the EU’s energy supply, while increasing the 
uptake of renewables, energy storage capacities and energy efficiency. The Regulation 
enables  Member  States  to  add  a  new  REPowerEU  chapter  to  their  national  recovery 
and  resilience  plans  in  order  to  finance  key  reforms  and  investments  that  will  help 
achieve the REPowerEU objectives. They will also help boost the competitiveness of 
the EU’s net-zero industry as outlined in the Green Deal  Industrial Plan for the Net-
Zero Age and address the energy-related country-specific recommendations issued to 
the  Member  States  in  2022  and,  where  applicable,  in  2023.  The  REPowerEU 
Regulation  introduces  a  new  category  of  non-repayable  financial  support,  made 
available  to  Member  States  to  finance  new  energy-related  reforms  and  investments 
under their recovery and resilience plans. 

On 8 March 2023, the Commission adopted a communication providing fiscal policy 
guidance for 2024. It aims to support the preparation of Member States’ stability and 
thereby  strengthen  policy  coordination8.  The 
convergence  programmes  and 
Commission recalled that the general escape clause of the Stability and Growth Pact 
will be deactivated at  the end of 2023.  It  called  for fiscal  policies in  2023-2024 that 
ensure  medium-term  debt  sustainability  as  well  as  raise  potential  growth  in  a 
sustainable manner. Member States were invited to set out in their 2023 stability and 
convergence programmes how their fiscal plans will ensure that the 3% of GDP deficit 
reference value is adhered to as well as plausible and continuous debt reduction, or for 
debt  to  be  kept  at  prudent  levels  in  the  medium  term.  The  Commission  invited 
Member States to phase out national fiscal measures introduced to protect households 
and  firms  from  the  energy  price  shock,  starting  with  the  least  targeted  ones.  It 
indicated that, if support measures needed to be extended because of renewed energy 
price  pressures,  Member  States  should  target  such  measures  much  better  than  in  the 
past  towards  vulnerable  households  and  firms.  The  Commission  proposed  that  the 
fiscal  recommendations would be  quantified and differentiated  and be  formulated on 
the basis of net primary expenditure, as proposed in its Communication on orientations 
for  a  reform  of  the  EU  economic  governance  framework9.  It  recommended  that  all 
Member States should  continue to  protect  nationally  financed investment and ensure 
the  effective  use  of  the  Recovery  and  Resilience  Facility  and  other  EU  funds,  in 
particular  in  light  of  the  green  and  digital  transition  and  resilience  objectives.  The 
Commission  indicated  that  it  will  propose  to  the  Council  to  open  deficit-based 
excessive deficit procedures in spring 2024 on the basis of the outturn data for 2023, in 
line with existing legal provisions. 

(8) 

On  26  April  2023,  the  Commission  presented  legislative  proposals  to  implement  a 
comprehensive reform of the EU’s economic governance rules. The central objective 
of the proposals is to strengthen public debt sustainability and promote sustainable and 

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8 
9 

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1). 
COM(2023) 141 final. 
COM(2022) 583 final. 

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(9) 

inclusive growth in all Member States through reforms and investments. The proposals 
aim at providing Member States with more control over the design of their medium-
term plans, while putting in place a more stringent enforcement regime to ensure that 
Member  States  deliver  on  the  commitments  undertaken  in  their  medium-term  fiscal-
structural plans. The objective is to conclude the legislative work in 2023. 

On  30  April  2021,  Spain  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery and resilience plan for Spain10. The release of instalments is conditional on a 
decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of  Regulation 
(EU)  2021/241,  that  Spain  has  satisfactorily  fulfilled  the  relevant  milestones  and 
targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory  fulfilment 
presupposes  that  the  achievement  of  preceding  milestones  and  targets  has  not  been 
reversed. 

(10)  On 28 April 2023, Spain submitted its 2023 National Reform Programme and, on 28 
April 2023, its 2023 Stability Programme, in line with Article 4(1) of Regulation (EC) 
No  1466/97.  To  take  account  of  their  interlinkages,  the  two  programmes  have  been 
assessed  together.  In  accordance  with  Article  27  of  Regulation  (EU)  2021/241,  the 
2023  National  Reform  Programme  also  reflects  Spain’s  biannual  reporting  on  the 
progress made in achieving its recovery and resilience plan. 

in 

progress 

(11)  The  Commission  published  the  2023  country  report  for  Spain11  on  24  May  2023.  It 
assessed  Spain’s 
country-specific 
addressing 
recommendations  adopted by  the Council  between 2019  and  2022 and  took stock of 
Spain’s implementation of the recovery and resilience plan. Based on this analysis, the 
country report identified gaps with respect to those challenges that are not addressed or 
only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as  new  and 
emerging challenges. It also assessed Spain’s progress on implementing the European 
Pillar of Social Rights and on achieving the EU headline targets on employment, skills 
and  poverty  reduction,  as  well  as  progress  in  achieving  the  UN’s  Sustainable 
Development Goals. 

relevant 

the 

(12)  The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No 1176/2011 for Spain and published its results on 24 May 202312. It concluded that 
Spain is experiencing macroeconomic imbalances. In particular, vulnerabilities related 
to high private, government and external debt, which have cross-border relevance, are 
receding but remain present. External debt and especially private debt ratios declined 
over the 2010s’ and, after a temporary interruption in 2020, resumed their decline in 
2021 and are expected to continue declining favoured by economic growth. However, 
they remain at still elevated levels. The external position has benefited from a current 
account  that  has  been  in  surplus  for  a  decade  even  if  it  has  narrowed  more  recently 
reflecting  the  impact  of  the  pandemic  on  tourism  exports  and  of  the  higher  energy 

10 

11 
12 

Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and 
resilience  plan  for  Spain  (ST  10150/21;  ST  10150/21  ADD  1;  ST  10150/21  ADD  1  REV  1;  ST 
10150/21 ADD 1 REV 2; ST 10150/21 COR 1). 
SWD(2023) 609 final. 
SWD(2023) 632 final. 

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prices  in  2022.  The  government  debt  remains  high.  In  2022,  it  has  resumed  the 
downward  trajectory  that  delivered  improvements  before  the  pandemic  driven  by 
strong  nominal  GDP  growth,  but  remains  above  pre-pandemic  levels.  At  a  more 
moderate  pace,  prospects  are  for  a  continuation  of  this  reduction  in  2023  and  2024, 
underpinned by policy measures in the RRP. The financial system showed resilience 
in  face  of  the  recent  shocks  induced  by  the  pandemic  and  the  energy  crisis. 
Unemployment  has  been  decreasing  again,  but  it  still  stands  high  and  pockets  of 
vulnerability  remain,  including  very  high  long-term  and  youth  unemployment. 
Potential  risks  affecting  the  further  narrowing  of  vulnerabilities  relate  mainly  to  the 
impact  of  the  tightening  of  financial  conditions  on  households  and  firms’  financial 
positions as well as on the medium to long-term sustainability of government debt in 
face of the current market conditions and population ageing. Policy progress has been 
further 
favourable  and  continuing 
improvements. 

the  RRP  should  deliver 

implementing 

(13)  Based  on  data  validated  by  Eurostat,13  Spain’s  general  government  deficit  decreased 
from 6.9% of GDP in 2021 to 4.8% in 2022, while general government debt fell from 
118.3% of GDP at the end of 2021 to 113.2% at the end of 2022. On 24 May 2023, the 
Commission published a report under Article 126(3) TFEU;14 the report discussed the 
budgetary  situation  of  Spain,  as  its  general  government  deficit  in  2022  exceeded  the 
3% of GDP Treaty reference value. The report concluded that the deficit criterion was 
not fulfilled. In line with the Communication of 8 March 2023,15 the Commission did 
not  propose  to  open  new  excessive  deficit  procedures  in  spring  2023;  in  turn,  the 
Commission  stated  that  it  would  propose  to  the  Council  to  open  deficit-based 
excessive deficit procedures in spring 2024, on the basis of the outturn data for 2023. 
Spain should take account of this in the execution of its 2023 budget and in preparing 
the Draft Budgetary Plan for 2024. 

(14)  The  general  government  balance  has  been  impacted  by  the  fiscal  policy  measures 
adopted to mitigate the economic and social impact of the increase in energy prices. In 
2022, such revenue-decreasing measures included the reduction of VAT on electricity 
and gas, the reduction of the special tax on electricity and the suspension of the tax on 
the  value  of  electricity  production;  while  such  expenditure-increasing  measures 
included  the  generalised  vehicle  fuel  rebate  of  20  cents  per  litre,  income  support  to 
households and energy-intensive industries, higher benefits through the energy social 
voucher and price discounts for using public transport. The Commission estimates the 
net budgetary cost of these measures at 1.6% of GDP in 2022.  At the same time, the 
estimated cost of COVID-19 temporary emergency measures dropped to 0.5% of GDP 
in 2022, from 3.1% in 2021. 

(15)  On  18  June  2021,  the  Council  recommended  that  in  2022  Spain16  use  the  Recovery 
and  Resilience  Facility  to  finance  additional  investment  in  support  of  the  recovery, 
while  pursuing  a  prudent  fiscal  policy.  Moreover,  Spain  should  preserve  nationally 
financed  investment.  The  Council  also  recommended  Spain  to  limit  the  growth  of 
nationally financed current expenditure. 

13 

14 

15 

16 

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Eurostat-Euro Indicators, 47/2023, 21.4.2023. 

COM(2023) 631 final, 24.5.2023. 

COM(2023) 141 final, 8.3.2023. 

Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Spain, OJ C 304, 29.07.2021, p. 38 

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therefore  preserved  nationally  financed 

(16)  According  to  the  Commission  estimates,  the  fiscal  stance17  in  2022  was  supportive, 
at  -2.5%  of  GDP.  As  recommended  by  the  Council,  Spain  continued  to  support  the 
recovery  with  investments  to  be  financed  by  the  Recovery  and  Resilience  Facility. 
Expenditure financed by Recovery and Resilience Facility grants and other EU funds 
amounted  to  1.1%  of  GDP  in  2022  (1.2%  of  GDP  in  2021).  Nationally  financed 
investment  provided  an  expansionary  contribution  of  0.3  percentage  points  to  the 
fiscal  stance.18  Spain 
investment,  as 
recommended  by  the  Council.  At  the  same  time,  the  growth  in  nationally  financed 
primary current expenditure (net of new revenue measures) provided an expansionary 
contribution of 2.7 percentage points to the fiscal stance. This significant expansionary 
contribution included the additional impact of measures to mitigate the economic and 
social impact of the increase in energy prices (additional net budgetary cost of 1.5% of 
GDP).  At  the  same  time,  higher  spending  on  intermediate  consumption  and  social 
transfers in kind also contributed to the growth in net primary current expenditure. The 
significant  expansionary  contribution  of  nationally  financed  current  expenditure  was 
only  partially  due  to  the  measures  to  address  the  economic  and  social  impact  of  the 
increase  in  energy  prices.  Spain  therefore  did  not  sufficiently  limit  the  growth  in 
nationally financed current expenditure. 

(17)  The macroeconomic scenario underpinning the budgetary projections in  the Stability 
Programme  is  realistic  for  2023,  and  optimistic  thereafter.  The  government  projects 
real  GDP  to  grow  by  2.1%  in  2023  and  2.4%  in  2024.  By  comparison,  the 
Commission 2023 spring forecast projects slightly lower real GDP growth of 1.9% in 
2023  and  2.0%  in  2024,  mainly  due  to  a  lower  expected  contribution  from  private 
consumption in both 2023 and 2024, as well as more moderate investment growth in 
2024. 

(18) 

In its 2023 Stability Programme, the government expects that the general government 
deficit will decrease to 3.9% of GDP in 2023. The decrease in 2023 mainly reflects the 
lower cost of measures taken in response to the increase in energy prices compared to 
2022.  According  to  the  programme,  the  general  government  debt-to-GDP  ratio  is 
expected to decrease from 113.2% at the end of 2022  to 111.9% at the end of 2023. 
The Commission 2023 spring forecast projects a government deficit of 4.1% of GDP 
for  2023.  This  is  in  line  with  the  deficit  projected  in  the  Stability  Programme.  The 
Commission  2023  spring  forecast  projects  a  lower  general  government  debt-to-GDP 
ratio, of 110.6% at the end of 2023, due to a lower stock-flow adjustment. 

(19)  The  government  balance  in  2023  is  expected  to  continue  to  be  impacted  by  the 
measures adopted to mitigate the economic and social impact of the increase in energy 
prices.  They  consist  of  measures  extended from 2022 (in particular: the  reduction of 
VAT  on  electricity  and  gas,  the  reduction  of  the  special  tax  on  electricity,  the 
suspension  of  the  tax  on  the  value  of  electricity  production  income  support  to 
households and energy-intensive industries, higher benefits through the energy social 
voucher and price discounts for using public transport) and new measures such as the 

17 

18 

The  fiscal  stance  is  measured  as  the  change  in  primary  expenditure  (net  of  discretionary  revenue 
measures), excluding Covid-19 crisis-related temporary emergency measures but including expenditure 
financed  by  non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds, 
in 
the Fiscal Statistical Tables.   
Other nationally financed capital expenditure provided a contractionary contribution of 0.3 percentage 
points of GDP, due to the gradual adjustment to the pre-pandemic levels  

growth. For  more 

to  medium-term 

see  Box 1 

potential 

relative 

details 

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vehicle  fuel  rebate  of  20  cents  per  litre  now  targeted  to  road  and  maritime  transport 
and to the agriculture and fishing sectors and a lump sum subsidy of EUR 200 for low-
income  households.  The  cost  of  these  measures  is  partly  offset  by  a  tax  on  windfall 
profits of large energy suppliers. Taking these revenues into account, the net budgetary 
cost  of  the  support  measures  is  projected  in  the  Commission  2023  spring  forecast  at 
0.6%  of  GDP  in  202319.  Most  measures  in  2023  do  not  appear  targeted  to  the  most 
vulnerable  households  or  firms,  and  many  of  them  do  not  fully  preserve  the  price 
signal  to  reduce  energy  demand  and  increase  energy  efficiency.  As  a  result,  the 
amount  of  targeted  support  measures,  to  be  taken  into  account  in  the  assessment  of 
compliance with the recommendation for 2023, is estimated in the Commission 2023 
spring forecast at 0.2% of GDP in 2023 (compared to 0.5% of GDP in 2022). Finally, 
the 2023 government balance is expected to benefit from the phasing out of COVID-
19 temporary emergency measures of 0.5% of GDP. 

(20)  On  12  July  2022,  the  Council  recommended20  that  Spain  ensure  in  2023  a  prudent 
fiscal  policy,  in  particular  by  limiting  the  growth  of  nationally  financed  primary 
current expenditure below medium-term potential output growth21, taking into account 
continued temporary and targeted support to households and firms most vulnerable to 
energy price hikes and to people fleeing Ukraine. At the same time, Spain should stand 
ready  to  adjust  current  spending  to  the  evolving  situation.  Spain  was  also 
recommended  to  expand  public  investment  for  the  green  and  digital  transitions,  and 
for  energy  security  taking  into  account  the  REPowerEU  initiative,  including  by 
making use of the Recovery and Resilience Facility and other Union funds. 

(21) 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2023  spring  forecast  to  be 
expansionary (- 0.3% of GDP). This follows an expansionary fiscal stance in 2022 (-
 2.5% of GDP). The growth in nationally financed primary current expenditure (net of 
discretionary  revenue  measures)  in  2023  is  projected  to  provide  a  broadly  neutral 
contribution of 0.2 % of GDP to the fiscal stance. Therefore, the projected growth of 
nationally financed primary current expenditure is in line with the recommendation of 
the Council. The projected broadly neutral contribution of nationally financed primary 
current  expenditure  is  due,  in  substance,  to  the  reduced  net  costs  of  the  support 
measures (targeted and untargeted) to households and firms most vulnerable to energy 
price  hikes  (by  1.0%  of  GDP).  The  main  drivers  of  growth  in  nationally  financed 
primary current expenditure (net of new revenue measures) are the increase in social 
transfers, driven by the relinking of pensions to past inflation, and higher spending on 
intermediate consumption. Expenditure financed by Recovery and Resilience Facility 
grants  and  other  EU  funds  is  projected  to  amount  to  1.6%  of  GDP  in  2023,  while 
nationally financed investment is projected to provide an expansionary contribution to 
the  fiscal  stance  of  0.1  percentage  points22.  Therefore,  Spain  plans  to  finance 
additional  investment  through  the  Recovery  and  Resilience  Facility  and  other  EU 

19 

20 

21 

22 

The  figure represents  the level of annual budgetary cost of those  measures, including current revenue 
and expenditure as well as – where relevant – capital expenditure measures. 
Council Recommendation of 12 July 2022 on the National Reform Programme of Spain and delivering 
a Council opinion on the 2022 Stability Programme of Spain, OJ C 334, 1.9.2022, p. 70. 
Based  on  the  Commission  2023  spring  forecast,  the  medium-term  (10-year  average)  potential  output 
growth of Spain is estimated at 5.5% in nominal terms  
Other nationally financed capital expenditure is projected to provide a contractionary contribution of 0.2 
percentage points of GDP. 

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funds,  and  it  is  projected  to  preserve  nationally  financed  investment.23  It  plans  to 
finance public investment for the green and digital transitions, and for energy security, 
such  as  the  reinforced  industrial  policy  “España  2030”,  the  Plan  for  housing 
rehabilitation  and  urban  regeneration  or  the  impulse  given  to  cybersecurity  and  5G 
connectivity, which are funded by the Recovery and Resilience Facility and other EU 
funds. 

(22)  According  to  the  Stability  Programme  the  general  government  deficit  is  expected  to 
decline to 3.0% of GDP in 2024. The decrease in 2024 also reflects the phase out of 
energy measures. The programme expects the general  government debt-to-GDP ratio 
to decrease to 109.1% at the end of 2024. Based on policy measures known at the cut-
off date of the  forecast,  the Commission  2023 spring  forecast  projects  a  government 
deficit  of  3.3%  of  GDP  in  2024.  This  is  in  line  with  the  deficit  projected  in  the 
programme.  The  Commission  2023  spring  forecast  projects  a  similar  general 
government debt-to-GDP ratio, of 109.1% at the end of 2024. 

(23)  The  Stability  Programme  envisages  the  phasing  out  of  energy  support  measures  in 
2024,  except  for  the  tax  on  windfall  profits  for  energy  companies.  The  Commission 
also  assumes  the  phasing  out  of  almost  all  energy  support  measures  in  2024  (net 
revenue of 0.1% of GDP in 2024). These estimates hinge upon the assumption of no 
renewed energy price increases. 

(24)  Council Regulation (EC) No 1466/97 calls for an annual improvement in the structural 
budget balance toward the medium-term objective by 0.5% of GDP as a benchmark.24 
Taking  into  account  fiscal  sustainability  considerations25  and  the  need  to  reduce  the 
deficit  to  below  the  3%  of  GDP  reference  value,  an  improvement  in  the  structural 
balance  of  at  least  0.7%  of  GDP  for  2024  would  be  appropriate.  To  ensure  such  an 
improvement,  the  growth  in  net  nationally  financed  primary  expenditure26  in  2024 
should not exceed 2.6%, as reflected in the recommendation.  

At the same time, the remaining energy support measures (currently estimated by the 
Commission  at  0.6%  of  GDP  in  2023)  should  be  phased  out,  contingent  on  energy 
market developments and starting from the least targeted ones, and the related savings 
should be used to reduce the government deficit. 

(25)  Assuming  unchanged  policies,  the  Commission  2023  spring  forecast  projects  net 
nationally financed primary expenditure to grow at 1.4% in 2024, which is below the 
recommended growth rate. 

23 

24 

25 

26 

Expenditure financed by Recovery and Resilience Facility grants and other EU funds amounted to 1.6% 
of  GDP  in  2023,  while  nationally  financed  investment  provided  an  expansionary  contribution  to  the 
fiscal  stance  of  0.2  percentage  points.  Other  nationally  financed  capital  expenditure  is  projected  to 
provide a contractionary contribution of 0.2 percentage points of GDP. 

Cf. Article 5 of Council Regulation (EC) No 1466/97, which also requires an adjustment of more than 
0.5%  of  GDP  for  Member  States  with  a  government  debt  exceeding  60%  of  GDP,  or  with  more 
pronounced debt sustainability risks. 
The Commission estimated that Spain would need an average annual increase in the structural primary 
balance as a share of GDP of 0.6 percentage points to achieve a plausible debt reduction or ensure that 
government  debt  is  kept  at  prudent  levels  in  the  medium  term.  This  estimate  was  based  on  the 
Commission autumn 2022 forecast. The starting point  for this estimate  was the projected government 
deficit and debt for 2024 which assumed the withdrawal of energy support measures in 2024.  
Net  primary  expenditure  is  defined  as  nationally  financed  expenditure  net  of  discretionary  revenues 
measures and excluding interest expenditure as well as cyclical unemployment expenditure. 

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(26)  According to the programme, government investment (excluding investment financed 
by the Recovery and Resilience Facility) is expected to decrease from 2.7% of GDP in 
2023 to 2.6% of GDP in 2024. The programme refers to reforms and investments that 
are expected to contribute to fiscal sustainability and sustainable and inclusive growth. 
These  include  a  permanent  framework  that  ensures  improvements  in  the  quality  of 
public spending, measures preventing and combating tax fraud and tax evasion and the 
reform of the tax system to make it more inclusive, sustainable and capable to foster 
the medium and long-term sustainability of public finances, which are also part of the 
Recovery and Resilience Plan. 

(27)  The Stability Programme outlines a medium-term fiscal path until 2026. According to 
the  programme,  the  general  government  deficit  is  expected  to  gradually  decline  to 
2.7%  of  GDP  in  2025  and  to  2.5%  by  2026.  The  general  government  deficit  is 
therefore  planned  to  decrease  below  3%  of  GDP  in  2025.  According  to  the 
programme,  the  general  government  debt-to-GDP  ratio  is  expected  to  decrease  from 
109.1% at the end of 2024 to 106.8% by the end of 2026. 

(28) 

In accordance with Article 19(3), point (b) and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. The implementation 
of  Spain’s  recovery  and  resilience  plan  has  so  far  been  well  underway.  Spain  has 
submitted 3 payment requests, corresponding to 121 milestones and targets in the plan 
and  resulting  in  an  overall  disbursement  of  EUR  28 000 000 000.  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 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  loans  and  will  benefit  from  a  higher 
Recovery and Resilience Facility grant allocation. The revised plan will also include a 
REPowerEU  chapter,  to  be  funded,  at  least  partially,  by  the  additional  REPowerEU 
grants.  The  swift  inclusion  of  the  new  REPowerEU  chapter  in  the  recovery  and 
resilience plan will allow additional reforms and investments to be financed in support 
of  Spain’s  strategic  objectives  in  the  field  of  energy  and  the  green  transition.  In 
accordance with Article 14(6) of Regulation (EU) 2021/241, on 28 March 2023, Spain 
expressed  its  intention  to  request  EUR  84 000 000 000  of  additional  loan  support 
under the Recovery and Resilience Facility. The systematic and effective involvement 
of  local  and  regional  authorities,  social  partners  and  other  relevant  stakeholders 
remains  important  for  the  successful  implementation  of  the  recovery  and  resilience 
plan,  as  well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to 
ensure broad ownership of the overall policy agenda. 

(29)  The Commission approved all of Spain’s cohesion policy programming documents in 
2022. Proceeding with the swift implementation of the cohesion policy programmes in 
complementarity  and  synergy  with  the  recovery  and  resilience  plan,  including  the 
REPowerEU  chapter,  is  key  to  achieving  the  green  and  digital  transition,  increasing 
economic and social resilience as well as achieving balanced territorial development in 
Spain. 

(30)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan,  Spain  faces  a  number  of  additional  challenges  related  to  the  green  transition, 
energy interconnections and social and affordable energy-efficient housing. 

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(31)  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. Spain is progressing in the deployment of renewables, and is one of the 
Member  States  with  the  highest  installed  capacity  of  wind  and  solar  power,  with 
approximately  49.8  GW.  However,  according  to  the  projections  in  the  ‘Fit  for  55’ 
package, Spain should aim to install 67 GW of wind power and 35 GW of solar power 
by  2030.  Some  improvements  to  the  permitting  procedures,  in  particular  for  self-
consumption,  have  helped  it  make  further  progress  in  deploying  these  technologies. 
However,  Spain  has  been  facing  a  large  backlog  of  applications  for  new  renewable 
energy plants. Network capacity constraints limit the further integration of renewables 
into the electricity grid. Spain is one of the countries with the highest share of smart 
meters,  but  additional  investments  in  network  infrastructure  and  storage  would  be 
needed  to  integrate  additional  renewable  electricity.  Measures  to  accelerate  the 
deployment  of  renewable  energy  could  include  further  streamlining  and  digitalising 
permitting  procedures,  allocating  network  capacity  to  projects  faster  and  supporting 
the  work  of  authorities  in  processing  permits  by  ensuring  appropriate  skills  and 
staffing in permitting authorities as well as improving coordination among all levels of 
government.  Furthermore,  Spain’s  cross-border  electricity  interconnection  level  in 
2022 (5.4%) is still significantly below the interconnection targets for 2020 (10%) and 
2030 (15%). 

(32)  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 
preceding  5  years,  above  its  7%  reduction  target27.  Spain  is  encouraged  to  pursue 
efforts to temporarily reduce gas demand until 31 March 202428. Further investment in 
energy-efficient housing would help alleviate affordability challenges. The significant 
loss  of  purchasing  power,  the  sustained  growth  of  rental  prices  and  higher  mortgage 
payments  have  aggravated  affordability  problems,  particularly  for  vulnerable 
households.  The  supply  of  affordable  and  social  housing  remains  constrained  and  is 
significantly  lower  than  the  EU  average.  The  current  Spanish  national  energy  and 
climate  plan  envisages  achieving  1.2  million  renovations  of  residential  buildings  by 
2030,  with  the  recovery  and  resilience  plan  covering  around  a  third  of  them. 
Deploying additional energy-efficient housing in areas with pronounced shortages and 
stressed  markets,  including  through  renovation  and  electrification,  can  help  contain 
energy  consumption  and  address  the  green  transition,  as  well  as  support  vulnerable 
households more exposed to energy poverty. Well-targeted social and affordable rental 
housing  provided  in  cooperation  with  the  private  sector  can  help  limit  the  fiscal 
impact. 

(33)  Transport remains heavily reliant on oil fuels. The sector accounts for a large share of 
greenhouse gas emissions and also contributes to air pollution, which is above the EU 
average. Insufficient infrastructure and access to public transport remains a concern in 
rural areas. Electro-mobility deployment is underdeveloped both from the supply and 
demand side. Completing the core high-speed rail network, including cross-border, by 
2030 will accelerate the transition towards climate neutrality and  make transport less 
reliant on fossil fuels. Measures included in the recovery and resilience plan have the 
potential to transform urban/metropolitan transport and strengthen the Trans-European 

27 
28 

Spain has been granted a derogation therefore their target is 7% instead of 15% 
Council Regulation (EU) 2022/1369 and Council Regulation (EU) 2023/706 

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Transport  Network,  helping  introduce  digitalisation  and  new  technologies  to  the 
sector. 

(34)  Labour  and  skills  shortages  in  sectors  and  occupations  key  for  the  green  transition, 
including  manufacturing,  deployment  and  maintenance  of  net-zero  technologies,  are 
creating  bottlenecks  in  the  transition  to  a  net-zero  economy.  High-quality  education 
and  training  systems  that  respond  to  changing  labour  market  needs  and  targeted 
upskilling and reskilling measures are key to reducing skills shortages and promoting 
labour inclusion and reallocation.  To unlock untapped labour supply,  these  measures 
need  to  be  accessible,  in  particular  for  individuals  and  in  sectors  and  regions  most 
affected by the green transition. In 2022, labour shortages were reported in Spain for 
several occupations that required specific skills or knowledge for the green transition, 
such as electronics engineering technicians. 

(35) 

(36) 

(37) 

In light of the Commission’s assessment, the Council has examined the 2023 Stability 
Programme and its opinion29 is reflected in recommendation (1) below. 

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union, the Council recommended that euro area Member States take action, including 
through  their  recovery  and  resilience  plans,  to  (i)  preserve  debt  sustainability  and 
refrain  from  broad-based  support  to  aggregate  demand  in  2023,  better  target  fiscal 
measures taken to mitigate the impact of high energy prices and reflect on appropriate 
ways to wind down support as energy price pressures diminish; (ii) sustain high public 
investment and promote private investment to support the green and digital transition; 
(iii)  support  wage  developments  that  mitigate  the  loss  in  purchasing  power  while 
limiting  second-round  effects  on  inflation,  further  improve  active  labour  market 
policies  and  address  skills  shortages;  (iv)  improve  the  business  environment  and 
ensure that energy support to companies is cost-effective, temporary, targeted to viable 
firms  and  that  it  maintains  incentives  for  the  green  transition;  and  (v)  preserve 
macro-financial  stability  and  monitor  risks  while  continuing  to  work  on  completing 
the  Banking  Union.  For  Spain,  recommendations  (1),  (2)  and  (3)  contribute  to  the 
implementation of the first, second and third euro area recommendations. 

In  light  of  the  Commission’s  in-depth  review  and  this  assessment,  the  Council  has 
examined  the  2023  National  Reform  Programme  and  the  2023  Stability  Programme. 
Its recommendations under Article 6 of Regulation (EU)  No 1176/2011  are reflected 
in recommendation (1) below. Policies referred to in recommendation (1) help address 
vulnerabilities  linked  to  high  government  debt.  Recommendation  (2)  contributes  to 
addressing recommendation (1). Policies referred to in recommendation (1) contribute 
to  both  addressing  imbalances  and  implementing  the  recommendations  for  the  euro 
area, in line with recital 36. 

HEREBY RECOMMENDS that Spain take action in 2023 and 2024 to:  

1. 

Wind  down  the  energy  support  measures  in  force  by  the  end  of  2023  using  the 
related  savings  to  reduce  the  government  deficit.  Should  renewed  energy  price 
increases  necessitate  support  measures,  ensure  that  these  are  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable  and  preserve  incentives  for 
energy savings. 

29 

Under Articles 5(2) and 9(2) of Council Regulation (EC) No 1466/97. 

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Ensure  prudent  fiscal  policy,  in  particular  by  limiting  the  nominal  increase  in 
nationally financed net primary expenditure in 2024 to not more than 2.6%. 

Preserve nationally financed public investment and ensure the effective absorption of 
RRF  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  

For  the  period  beyond  2024,  continue  to  pursue  a  medium-term  fiscal  strategy  of 
gradual  and  sustainable  consolidation,  combined  with  investments  and  reforms 
conducive  to  higher  sustainable  growth,  to  achieve  a  prudent  medium-term  fiscal 
position. 

Maintain the momentum in the steady implementation of its recovery and resilience 
plan and swiftly finalise the REPowerEU chapter with a view to rapidly starting its 
implementation.  Ensure  continued  sufficient  administrative  capacity  in  view  of  the 
planned increase in the size of the plan. Proceed with the speedy implementation of 
cohesion  policy  programmes,  in  close  complementarity  and  synergy  with  the 
recovery and resilience plan. 

Reduce  reliance  on  fossil  fuels.  Accelerate  the  deployment  of  renewable  energy, 
including by further streamlining and digitalising permitting procedures, supporting 
the  work  of  permitting  authorities,  improving  access  to  the  grid  and  investing  in 
energy storage, electricity transmission and distribution, and cross-border electricity 
interconnections.  Increase  the  availability  of  social  and  affordable  energy-efficient 
housing, including through renovation, accelerate the electrification of buildings and 
the penetration of electromobility. Step up policy efforts aimed at the provision and 
acquisition of the skills needed for the green transition. 

2. 

3. 

Done at Brussels, 

For the Council 
The President 

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