European Commission warns that Spain’s recovery plan penalties could hit funding if reforms miss milestones
The European Commission warned that failing to deliver the core reforms of Spain’s recovery plan, including pensions, could be costly. In Madrid, government officials continued to push for swift progress before a delegation from the European Parliament, emphasizing the urgency of completing reforms that are tied to the plan’s disbursements.
When asked about Spain’s pension reform, which is intended to be finished by the end of 2023, Community sources stated that failure to comply with a fundamental reform of the recovery plan would carry a high price and could result in delays of nearly two months. The Commission outlined a methodology for partial payments to member states that do not fully meet certain commitments. In such cases, the amount payable would be reduced in proportion to the non-compliances, distributed across the total number of milestones and goals within the plan. In Spain’s case, among 415 milestones there is a target of 69.5 billion euros; for commitments related to enacting a reform or completing an illegal reform, penalties could be multiplied by five.
Escrivá in Brussels: Pension agreement expected before month’s end
José Luis Escrivá, Minister of Inclusion, Social Security and Immigration, was in Brussels on Monday and said that the government is very close to finalizing the pension reform. The completion would allow Spain to fully access the next tranche of the 10 billion euro bailout fund, an as yet unclaimed payment, subject to the reform’s final steps and compliance with milestones.
Back in Madrid on Tuesday afternoon, Escrivá held meetings with members of the European Parliament’s Budget Control Committee, who were in Spain this week to review the management of European funds, following an earlier visit by Finance Minister Maria Jesus Montero.
Execution of funds and governance measures
Montero highlighted that Spain is the most advanced country in implementing the funds, reporting 75 percent of recognized obligations already in place. He stressed that resources budgeted for 2021 and 2022, and their distribution, are managed jointly with autonomous communities and municipalities.
During a press conference after a Council of Ministers gathering, Montero suggested that Members of the European Parliament seemed surprised by the tools the Spanish government has introduced to improve the management of European funds. He pointed to strengthened supervision, auditing, and conflict-of-interest controls designed to prevent misuse. Two key tools were presented: the comprehensive system for monitoring and managing milestones and targets (CoFFEE), and a conflict-detection system through data mining (Minerva). A robust internal control program also includes training for more than 2,200 public servants who manage European funds and collaborate across the budgetary framework.
SMEs and the self-employed: gaps in fund reach
Lorenzo Amor, president of ATA and vice president of CEOE, criticized the insufficient reach of European funds to the business sector, particularly small and medium-sized enterprises and the self-employed. He noted that self-employed workers remain underserved, with more than 3,300,000 individuals in this group and only about 5 percent applying for funds. He argued that around 170,000 self-employed could benefit, and ideally at least one million should be reached. Celia Ferrero, vice president of ATA, echoed the call for action after meetings with MEPs, stating that the goal is to move forward immediately. As an illustration, she pointed to the digital kit assistance, which has benefited only about 70,000 freelancers.
Endeavoring to illustrate the scale of the effort, several participants stressed the need to broaden access to funds for the self-employed and SMEs, to ensure the funds translate into tangible improvements across the entrepreneurial landscape in Spain. The discussions highlighted ongoing coordination between national authorities and European partners to optimize fund allocation and monitoring, with an emphasis on transparency, accountability, and effective use of resources.
Source attribution: European Commission statements and briefings, and remarks by Spanish officials in Brussels and Madrid. Additional context comes from public communications tied to the reform agenda and the oversight activities of the European Parliament and the European Commission regarding the recovery plan implementation.