Brussels calls on Spain to advertise enterprise funding in innovation | Economy | EUROtoday

The Spanish economic system faces important imbalances, regardless of presently rising greater than most EU international locations. Among them, its low productiveness and a public debt that also simply exceeds an quantity equal to 100% of GDP stands out. To handle them, economists from the European Commission suggest that the Government search for a solution to increase non-public funding in analysis and improvement, “which remains one of the lowest in the Union (0.8% of GDP, compared to 1 .5% of the EU), according to a report on the situation of the economy in Spain in 2023 released this Monday. The document also focuses on one of the mantras that are launched from Brussels to Madrid over and over again: the need to put together a “credible strategy” of fiscal consolidation.

Spain has had a productiveness drawback for a very long time. Promoting it, within the opinion of the technicians of the General Directorate of Economy and Finance, requires touching a number of keys. One of them is to unravel the disconnect that exists within the labor market between the {qualifications} that corporations demand from employees and their coaching. “There are gaps in the qualification of the skills necessary to contribute to the ecological and digital transition, such as information and communication technologies (ICT), as well as engineering and mathematics. These challenges are especially serious for small and medium-sized companies, which translates into a lower ability to attract talent,” the doc notes.

Also in that very same part, which begins by saying that “increasing productivity and competitiveness continues to be essential for small and medium-sized companies,” the necessity to improve funding in analysis and improvement (R&D) within the non-public sector is identified. , an everlasting evil of the Spanish productive sector that no Government manages to stimulate. The picture from 2022, the final yr with information obtainable in Eurostat, factors to spending on this chapter equal to 0.8% of GDP in Spain, removed from 1.5% within the EU or within the euro zone as a complete and nonetheless greater than 2.5% from Belgium or Sweden.

The lack of personal effort in what is named R&D signifies that Spain can be left behind its closest atmosphere when public funding is added. Those eight tenths of distance are maintained (the equal of 1.44% of Spanish GDP in comparison with 2.27% within the euro zone) and a tenth up or down has remained that means since at the very least 2011. That distinction is transformed to an abyss when the comparability is made with Israel, the place 5.5% of GDP is invested in R&D or South Korea, shut to five%. “It would be very beneficial to improve public support for R&D and […] strengthening links between science and business and knowledge transfer, as well as to improve the business environment by streamlining size-dependent regulation that hinders business growth,” the report explains.

Along with boosting productiveness and, by extension, competitiveness, the Commission factors, as soon as once more, to a different nice Spanish Achilles' heel: public debt. The Union technicians spotlight that there have been nice advances lately, in addition to the advance that the 2021 labor reform has led to. They evaluation how final yr it fell from 116% to 107.5%, in line with their calculations, and He expects it to drop only one extra level this yr. This slowdown could be as a result of cooling of the economic system, as a result of as they’re chargeable for remembering locally capital, the discount within the debt-to-GDP ratio has come completely as a result of financial progress and never as a result of discount within the whole quantity. Another trigger could be the rise in rates of interest.

In this situation, the Commission takes the sustainability analyzes of the Spanish debt carried out in Brussels, which point out that within the quick time period the chance could be very low, however that within the medium time period the issues may multiply till reaching a excessive danger stage. Hence, it calls for, because it did final fall when it examined the essential traces of the Spanish accounts for 2024 (truly, these for 2023 prolonged), an adjustment plan as a result of Spain has a “very difficult” fiscal scenario. And this case might be sophisticated, neighborhood economists level out, as a result of demographic getting older.

The significance of the drawing proposed by Brussels comes as a result of, foreseeably, within the coming months, international locations with a debt better than 60% of GDP should negotiate with the Commission their fiscal adjustment plans lasting 4 years with the opportunity of extending them to seven. These paths are the central foundation of the brand new fiscal guidelines that, supplied the European Parliament ratifies the ultimate textual content in April, will start to use within the fast future. In them, together with these plans, there may be one other key problem: a spending rule by which recurring spending (discounting curiosity funds and a superb a part of the unemployment invoice) can’t exceed revenue. If we add to this that Spain has dedicated in its restoration plan to a tax reform that have to be deployed within the following sections, it’s logical to assume that a rise in tax assortment ought to be included on this “credible” fiscal technique.

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