Spain COVID-19
As of July 2021, Spain had suffered over 81,000 confirmed deaths, with its worst wave in January 2021.84 Lockdowns were put in place in March-June 2020 and in October 2020-May 2021. This took a toll on economic activity, as GDP dropped by 10.8 per cent and unemployment climbed to 15.5 per cent in 2020.85 The government’s emergency fiscal measures totalled €85 billion as of June 2021, with €24.7 billion being devoted to unemployment benefits for temporarily laid-off workers (Temporary Employment Adjustment Schemes, or ERTEs).86 An additional €100 billion was devoted to government guarantees for loans taken up by firms and self-employed workers. As of September 2021, over 80 per cent of the population had received at least one shot of the COVID-19 vaccine.87 The Banco de España, Spain’s central bank, forecasts 6.2
per cent GDP growth in 2021, with economic activity reaching pre-pandemic levels in late 2022.88
Long-term economic performance
While Spain’s post-financial crisis unemployment rate had peaked at 26 per cent in 2013, it was still at 14 per cent in 2019 – substantially higher than the eurozone average.89 As a result of high levels of protection for workers on permanent contracts, 25 per cent of the employed workforce has temporary contracts, over ten percentage points higher than the eurozone average.90 Many people on temporary contracts lost their jobs in the pandemic. The Banco de España blames the small size of Spanish firms (see Chart 17) and relatively low skills and technological capital as the main reasons for low economic growth in Spain. Spain’s central bank argued that the government needs to redesign the education system, and raise investment in innovation.91
Chart 17: Number of persons employed by enterprise size class, 2018 (as % of total employment) Small enterprises
Medium enterprises
Large enterprises
France
Germany
Romania
Poland
Spain
EU-27
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Source: CER analysis based on Eurostat data. Note: small enterprises employ fewer than 49 staff; medium enterprises employ between 50 and 249; large enterprises employ more than 250 staff.
84: Our World in Data, COVID-19 dataset. 85: OECD, ‘Spain Economic Snapshot’, consulted in June 2021. 86: International Monetary Fund, ‘Policy responses to COVID-19’, website last updated on July 2nd 2021. 87: Our World in Data, COVID-19 dataset. 88: Banco de España, ‘Proyecciones macroeconómicas de la economía española (2021-2023)’, Boletín Económico 2/2021.
89: International Labour Organisation, ILOSTAT database. Data retrieved on September 7th 2021. 90: Banco de España, ‘Informe anual 2020’, May 2021. 91: Banco de España, ‘Informe anual 2019’, June 2020.
WHY THE EU’S RECOVERY FUND SHOULD BE PERMANENT November 2021
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