The central challenge for governments is funding the wide range of citizen needs. Spain, however, faces a striking dilemma: it has a large pool of money from European funds — around 163 billion euros in subsidies and loans — yet struggles to spend it within the European Commission’s deadline set for June 2026. This difficulty arises from strict expense quality demands and management gaps within the European Union’s Recovery and Resilience Mechanism and within Spanish institutions at the state, regional, and local levels, which must channel these public investments in a limited timeframe.
Brussels offered some relief by allowing certain investment blocks in Spain’s programs to be realized after 2026. Areas targeted include electric vehicles, green hydrogen, industrial decarbonization, and the circular economy, with roughly 5 billion euros allocated to these efforts.
Modified Recovery Plan
Spain’s amended Recovery Plan, approved by the European Commission on October 2, enables the country to qualify for 79.8 billion euros in subsidies from New Generation EU and related EU mechanisms, plus 83 billion euros in loans under the Recovery and Resilience Facility, totaling nearly 163 billion euros. The investments under the amended plan aim to accelerate reforms and projects without waiting for every piece to be finished before funds are released.
The plan does not escape the June 2026 constraint. To mitigate the risk of losing subsidies, the government negotiated with Brussels to push some investments beyond 2026, totalling close to 5 billion euros. This package includes green hydrogen (1.6 billion in subsidies), circular economy initiatives (300 million in subsidies), electric vehicles (250 million in subsidies and 1.2 billion in loans), and industry decarbonization (430 million in subsidies and 1.05 billion in loans).
Securing the extension to the European Recovery and Resilience Mechanism required political negotiation, since some institutions, including the Bank of Spain, questioned the need for a broad call for funds. Government sources indicate that a solution was found with Brussels to extend the period beyond 2026 through specific channels managed by public institutions and organizations, ensuring that the extended investments align with the regulation.
Consequently, the revised Recovery Plan incorporates a substantial portion of the addendum that Spain submitted in June. It allows activities currently in the trust framework of entities such as the National Innovation Company Enisa for electric vehicles and decarbonization; the Institute for Energy Diversification and Conservation IDEA for green hydrogen and the circular economy; and the Biodiversity Foundation for circular economy initiatives to proceed beyond June 2026.
Officials explain that the key milestone is awarding aid by 2026, not the completion of every project. This stance comes from Paloma Baena, Senior Director of European Affairs and Next Generation EU at the LLYC consulting firm, who emphasizes that milestone-based funding is essential for timely EU alignment.
It’s all about deadlines
It is the deadlines that matter, notes Baena. Spain’s implementation pace appears steady from an EU scrutiny perspective, with about 37 billion euros of European funding already received. Of this amount, roughly 30 billion euros have been allocated to civil works, services tenders, and aid disbursements, supporting more than 200,000 financings and hundreds of thousands of investment projects, according to government data. The government continues to transfer funds to autonomous regions and city councils to keep aid and investment programs on track.
Nevertheless, delays are evident in how autonomous communities and municipal councils resolve calls for funds. The overall trajectory shows late starts in some areas, and a push to accelerate where possible, as noted by Baena.
Spain has yet to request payment for the loan tranche four, amounting to 10 billion euros. The current administration intends to finalize this step once the necessary procedures are completed and Ecofin confirms the updated Recovery Plan, which has already received European Commission approval. Earlier plans anticipated two payments in 2023 totaling 17 billion euros, but electoral events delayed reform delivery, including civil service reform. Now, the fourth tranche of 10 billion euros is anticipated to proceed soon.
Delayed goals
The revised plan stretches timelines for several reforms, moving the mobility law approval target from December 2023 to June 2026. Other measures may be cut or altered, such as the toll system for roads, while some reforms can now be enacted by decree.
In several cases, aid or investment timelines have been pushed back. For example, the plan originally included a Green Energy Storage Center in Extremadura scheduled for late 2023. The aim to distribute funds for 238,000 electric vehicles has been revised to 348,000 by the third quarter of 2026, with charging points in homes and along major routes. Tax incentives for 110,000 new cars were extended, and the Digital Kit program was adjusted to benefit 670,000 companies instead of one million.
The extended deadlines have created a slower timetable for disbursing various tranches of European funds to the Treasury, reflecting a careful balancing act between European expectations and national implementation realities, as reported by government commentary and EU monitoring notes. [EU monitoring reports] The overarching message remains that the drive to unlock significant European support continues, with careful management of timing and milestones guiding the process, as stated by the government and EU observers.