It is said that when Europe finds the solution to a crisis, it may already have passed.

It's a joke that stopped being funny during the pandemic.

Hundreds of thousands of deaths put community family disputes on hold and made northern countries, including the guardians of fiscal rules, unusually optimistic about forging a plan to help countries in the east and south of the continent recover. of covid.

The answer came in two words: Next Generation, a gigantic program, worth 723.8 billion euros (half of it in subsidies), which was born with a few new elements.

It is financed by EU debt, rather than from Member States' budgets, and is paid only when recipients demonstrate that they are adopting legislative reforms and meeting investment objectives.

Spain, with its old administrative dynamics and its peculiar institutional architecture of onion layers, got down to work.

The carrot of community money was too powerful to let the opportunity slip away, although the decree that validated the execution of the multimillion-dollar fund was almost derailed in Congress on January 28, 2021 (and which was finally saved with the unlikely support of Vox).

The plan became a kind of survival test for how the European Union could function in the future—and how to respond to the growing irrelevance of its companies in the international market.

In the process, Europe would move towards strategic autonomy on several fronts and would be greener and more inclusive.

Public management expert Paloma Baena, who has been a director of the OECD and the World Bank, perceived it as something truly extraordinary.

“A window opened, and we entered through it.

The funds opened a path that did not exist.”

The money was channeled into two programs: the so-called Recovery and Resilience Mechanism (RRM) and Recovery Aid for the Cohesion of the Territories of Europe (React-EU).

The syringe that would inject the money into Spain was called the National Recovery and Resilience Plan and was conceived by the central State, and not, like other European funds, with operational programs from the autonomous communities.

Flags on the European Commission building on January 14.

Michele Spatari (NurPhoto/Getty Images)

August 2026

About 30 months have passed and there are many more months ahead until the deadline for the execution of the 163 billion allocated to the country ends in August 2026.

The amount adds another 93,500 million to the initial 69,500 million through an addendum (10,300 in subsidies and the rest in loans) approved by Brussels last fall.

There remains a dizzying countdown.

The Ministry of Economy, in response to questions from this newspaper, highlights that the most important calls for the 12 strategic projects (Pertes) have already been launched.

The latest balance sheet of the Executive, from the month of December, ensures that calls worth 33.6 billion have been resolved, that more than 600,000 projects are being financed and that more than 400,000 companies and self-employed workers and 150,000 individuals have already received European funds.

But the feeling on the companies' side is much less luminous and there is no data to know exactly how many funds have completed their cycle: that is, they have been authorized, committed, obligated and paid.

Furthermore, a good part of them go to public entities (municipalities, communities, research centers or foundations) and only 39% fall directly to companies.

The State offers abundant information in the National Subsidy Database and in the Public Sector Contracting Platform, but it is not so easy to keep track of what the autonomous communities are executing or to know what part of the payments are finally made to the private sector.

The latest report in this regard, published by Llorente and Cuenca at the end of last month and prepared by the Baena team, speaks of a mixed balance: the award to specific beneficiaries for specific actions would be around 46% of the original allocation.

“It seems to us that it is going at a reasonable pace, but there is little time to execute,” says Chus Escobar, partner responsible for the Public Sector at EY Spain.

“As for the subsidies, I would bet that we will be able to absorb more than 90%,” she ventures.

The calculations made by Joaquín Maudos, deputy director of the IVIE, breaking down the tenders called one by one until June 2023 and also the subsidies granted, estimate that “24,000 million euros had reached the real economy, which represents 29% of the total non-refundable funds allocated to Spain in the first phase.

But if we compare those 24,000 million that are already in the real economy with those received so far from Brussels (37,000), the execution is 65%.

What happens is that there is still a lot to receive.”

The international panorama is not going better.

According to data from the Commission, only 143,970 million in subsidies and 80,150 million in loans have been disbursed, 30% of the MRR, with a high disparity between what some do and what others do.

Italy and Portugal lead disbursements and in total 535 reforms and 402 investments have been carried out, which represents 15% compliance with all national plans.

Water electrolysis plant to obtain green hydrogen in Puertollano, Ciudad Real, from the company Iberdrola.

Nacho Martin (IBERDROLA)

The Digital Kit is perhaps a good example of how to make something work.

With 300,000 SMEs benefiting, the Government does not hesitate to describe its data as “excellent”, both for the participation of companies and, above all, for the agility in processing.

But, after years of corruption cases uncovered due to misuse of public money, it is difficult to move a euro within the administration without duplicate guarantees.

José Amérigo, partner at PwC Tax & Legal, sensed from the first minute that bureaucracy was going to be one of the great difficulties in deploying the full potential of the Next Generation.

“The administration basically spends the money in two ways, entering into contracts and granting subsidies.

Thanks to my previous experience in the Administration, I know the difficulties that arise when executing the public budget when, with the same officials, tenders have to be multiplied.

These problems, which were identified, have surfaced.

That has not prevented the work from being carried out, but it has slowed down the pace and lowered the companies' expectations.”

Escobar recalls that Spain has to continue complying with the law on subsidies and contracts and, in addition, the EU has implemented additional controls that did not exist before related to the measurement of milestones and objectives.

As a result, the so-called Cooffe has been launched, a measurement system that supports the management of the plan that quantifies what 4,315 public entities and 17,000 projects do that contribute to meeting the objectives.

Manuel Hidalgo, professor at the Pablo de Olavide University, is one of those who think that all actions need control, “but many times these controls are doubled and tripled.

This leads to a very high level of security, but it also drives officials crazy and paralyzes investments.

"Talk to any official, they will surely tell you that what they fear most is the call from the auditor because there is a missing piece of paper," he illustrates.

Hidalgo believes that by 2026 “all the money could be committed at the rate we are going if we accept octopus as a pet.

That is, if we accept that the calls are resolved.”

But the actual execution of the funds is, he says, impossible, “not only because the administration is not capable, but because of the very nature of some investments.”

The Ministry of Economy defends itself by remembering that the Recovery Plan has been a good opportunity to simplify procedures.

“The use of responsible declarations has become widespread, processes have been digitized, interoperability systems between administrations have been improved to exchange information and the requirements for presenting guarantees have been reduced, among other actions.”

Operational bottlenecks have been added to the bureaucratic bottlenecks.

The same officials who designed, for example, the electric vehicle Perte had to work on the industrial decarbonization project or the naval Perte.

“Companies often did not understand why theirs was not called,” say several consulting firms.

The desire to make very ambitious programs also ended up receiving a reality check.

The 2022 call for the electric car Perte left no less than 2,182 million euros unallocated, 75% of the funds at stake.

A failure.

The alarms began to sound because in the Recovery Plan the money does not have communicating vessels, excess funds cannot be dedicated to other objectives.

Cecilia Medina, Innovation Manager at Sernauto, remembers by email that that first call was very complex, “both in bureaucracy and in the structure of the projects themselves.”

The plane had to be repaired mid-flight.

The corrections made the second attempt substantially better, which encouraged companies to come forward.

“What continues to fail mainly is the timing, because the projects in the value chain section continue to wait for their resolution since mid-September, the date on which the window closed.”

certain satiety

Some businessmen confess to being fed up.

A voice from the tourism sector who requests anonymity describes that he opted for digitalization aid that, theoretically, had to be published in October 2021. “They did not come out until June 2022. We hired a consultant, we did the project on which we spent 80,000 euros.

It was provisionally resolved in May 2023, 10 months late.

The Secretary of State for Tourism had to sign a commission to Segittur so that he could evaluate the projects.

“It took six months for that signature alone!”

The final resolution proposal finally reached them in July 2023. “They awarded 25 million to 148 companies, and one was mine.

But now another signature is missing for it to be definitive, it is a legal nuance.

We have been spending money for a year and a half to execute the project, but they have not paid us anything.

Zero.

My feeling is that the public administration complicates life in a wild way.

If a call for 2021 in 2024 has not been paid, imagine the rest,” he protests.

Other testimonies report similar problems anonymously, but of those contacted, no beneficiary company dares to publicly criticize the procedure.

In sectors more accustomed to dealing with the administration, access to funds has been, perhaps, less cumbersome.

At Hiperbaric they obtained subsidies for two projects in a consortium of several partners.

Carole Tonello, their sales director, explains that they have quite extensive experience in R&D, “with a team of three highly qualified people to put together the proposals.

Thanks to this and with the help of a consulting firm, the truth is that it was quite fast, with the surprise that we obtained the best rating in this year's Perte chip.”

Another company, PLD SPace, is developing a Spanish small satellite launcher, part of the Perte Aeroespacial, and was selected as the sole contractor in a 40.5 million euro tender.

You will receive 80% of the money when you deliver the prototype, but you will have to pay it back in full through royalties over a decade.

Ezequiel Sánchez, executive president, explains that this is a pre-commercial public purchase and emphasizes that the most innovative companies are usually used to requesting European funds.

“In our case it is a contract, not a subsidy.

It has an administrative burden, payment mechanisms that you have to understand.

But it is logical, the administration is a guarantee.”

Although he has asked for a guarantee to be able to contract with the administration, he admits that he cannot complain: 170 people are already working on the project.

There is another problem that is perhaps more painful than unhealthy bureaucracy.

As of December 31, 2023, more than 10,000 million in remainders could have been generated, funds that no one has taken.

Estimates are that up to 20% of the money may go nowhere when the program is completed.

For Raymond Torres, economic director of Funcas, there is perhaps a basic problem: “In very powerful sectors, where there is a productive chain, you can complement projects with public funds.

In cases where you start from nothing, without there being a sector behind it, it is much more complicated.”

The debate is complex, says Carlos Victoria, professor of economics at Icade, “because on the one hand there is the fear of financing what was already going to happen [in the case of the digitalization of SMEs, or the production of electric cars] and On the other hand, any promotion of a sector has to have boosting policies when we are in a preliminary phase, as happened with renewable energies.”

That is the essential component of the Next Generation, the letter T of transformation, but it is not achieved overnight.

Valentín Pich, from the Economists council, asks for a little common sense.

"Are we all gone crazy.

Thinking that such enormous amounts can be used in the short term is not realistic.

Everything was exaggerated, there was talk that it would increase productivity.

But that is not created just like that, you need the complicity of the business sectors.

Many things are not improvised.”

However, remembers Paloma Baena, it is still a matter of scare or death.

“If this model disappears we will have a domestic market war.

For Germany or France to invest on their side.

We are going to the past, we will go back.”

Europe has to compete, he sighs.

“Our future depends on us doing it well, and not only in Spain.”

Reforms, loans and the hangover the day after

The addendum signed in autumn opens the way to the granting of another 83.2 billion

The Recovery Plan has a side that is reminiscent of that sequence from

A Night at the Opera

by the Marx Brothers about the contracting party in the first part.

It is structured in four axes, 31 components, 111 reforms, 142 investments, 595 milestones and thousands and thousands of indicators and verification mechanisms.

Under the tangle of numbers lie a hundred laws, plans and initiatives, some approved and others on the way, such as the Start-up law, the National Sustainable Finance Plan, the issuance of green bonds, the Strategic Plan to promote Vocational Training, the Digitalization and Digital Skills Plan, the Telecommunications reform laws, the Audiovisual sector and 5G cybersecurity, the National Integrated Energy and Climate Plan, the Just Transition Strategy, the pension reform and even the Sports Law.

For example, one of the almost 600 objectives, number 33, requires that by the second half of 2026, 40,000 homes and 690,000 square meters of non-residential buildings have been renovated with a reduction in energy demand of 30%.

The Government has left the most difficult reforms for last, but the political scenario could put the mission in check.

As if that were not enough, in the remaining time of its life, the Recovery Plan will have to face all these challenges with a new tool: the 83.2 billion in loans that were negotiated in the addendum approved by the Ministers of Economy and Finance. of the EU on October 17.

“We are all silent about this matter,” they acknowledge in one of the big four.

Cofides, the European Investment Bank and the ICO will enter the scene with the hose of money under presumably advantageous conditions.

“The management centers of the administration already have life quite complicated, if you also add another 80,000 million in loans... the administration has little habit of managing credit risk,” warns a consultant.

To what extent will that mountain of millions be attractive?

Several respondents believe that it will depend on interest rates.

“We will have to see how the guarantee and counter-guarantee systems work, to what extent these products can become more expensive, and to what extent the indirect cost of obtaining financing at the expense of submitting to bureaucracy will compensate companies.

We may find that the incentive is for those investments that have no place in the market.

And if they don't have it, they already have credit risk,” explains Cándido Pérez, partner responsible for Infrastructure, Transport, Government and Health at KPMG in Spain.

In another large office they ironically end up making a book of Next Generation anecdotes: “Around here, especially at the beginning, the most esoteric projects were going on, from pig farms powered by hydrogen to underwater hotels.”

As happened during the pandemic with the ICO loans, the collaboration of the banks will be essential to determine what is worth financing within a framework that does not lead to Spain becoming famous for its projects of dubious usefulness.

And then will come (another thing that is also little talked about) the end of the Next Generation, and with it the withdrawal of the largest stimulus program in the history of the Old Continent.

“We are going to have a little hangover,” smiles Chus Escobar, of EY, “but the loans will still be in the market.

In addition, we have the funds from the 2021-2027 multiannual financial framework and we are going to have a much more digitalized country, especially from the administration point of view.

“The money for the ecological transition is not going to disappear.”

It will be time to start auditing the golden years of spending.

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