Spain | NGEU funds are coming to an end

The bulk of the implementation of the NGEU European funds has come to an end. Based on the latest available data, from 2021 to June 2026, Spain has awarded contracts and grants financed by Recovery Plan transfers totaling 62.726 billion euros, nearly four percentage points of GDP. The figure is impressive. It also raises a question: has this effort been accompanied by an equivalent increase in public investment, a significant drag effect on private investment, and an appreciable improvement in productivity?

A modest investment leap

According to European Commission data, public investment went from 2.2% of GDP in 2019 to 2.9% in 2025, but it remains far from the 4% range that the 2021 Plan aimed to reach, the EU average (3.7%), and the levels recorded prior to the Great Recession. The progress also does not represent a significant acceleration compared to the pre-pandemic trend.

Certainly, it is not possible to measure the additionality of these NGEU funds without observing what would have happened in their absence. The result is consistent with incomplete additionality and a certain substitution of national funding for European funding. Therefore, the objective that the public investment effort should have an additive character and allow for closing the gap with the European average has not been met. The question is what will happen when the temporary stimulus of these funds disappears and whether Spain will avoid a new downward step in public investment.

Similarly, the objective of the Plan having a significant tractor effect on private investment that would close its gap with the EU does not seem to have been achieved either. It was expected that the 140 billion euros planned (in practice much less, as the majority of the loans provided for in the Recovery and Resilience Facility were renounced) would serve as a lever for 500 billion euros in private investment over six years.

There are indications that some drag effect has occurred. A BBVA Research study of about 240,000 credit transactions finds that, one year after an NGEU award, new credit to companies increases more than after an ordinary tender, including long-term financing. However, more credit or more investment among awardees does not by itself demonstrate a net effect on the entire economy. The beneficiary companies are not random, some investments displace projects financed by other means, and the temporal coincidence does not necessarily identify causality.

It is also observed that during these years there has been an increase in investment in intangibles (which includes software and new technologies such as AI), at the same time that Spanish exports of non-tourism services have grown four times faster than GDP. But we do not have sufficient information to confirm what part is due to the execution of the Plan or to the initiative of the companies.

All in all, in 2025, private investment as a percentage of GDP was 0.4 percentage points below its 2019 level. It can be argued that this does not invalidate the initial expectations, but rather that the more unfavorable evolution than expected is explained by the lower execution of the Plan and because its positive effects may have been offset by the accumulation of negative shocks in an environment that is more uncertain and unfavorable for investment.

Productivity: awaiting a regime change

The set of policies and reforms in the Plan aimed to increase the short-term drag capacity of the funds on activity and employment, and to support a transformation process that would increase productivity and potential growth. However, real GDP per employed person was approximately at its Q4 2019 level in the second quarter of 2026, while real GDP per hour actually worked had increased by about 2.4% in six and a half years, barely 0.4% per year.

The composition of growth offers an additional contrast. According to BBVA Research estimates, the effect of supply shocks (which transform the economy and increase productivity) on the growth of GDP per working-age person has been diluting over time. Demand shocks predominate behind the growth of the last three years.

Again, it can be argued that the evidence does not allow us to conclude that the Plan has been ineffective in increasing productivity, due to the presence of other shocks. The execution period has been characterized by intense employment growth (of the same magnitude as GDP), explained for the most part by the increase in the immigrant labor force. The concentration of new employment in services with below-average productivity leads to composition effects that dilute the productivity gains of the rest of the economy. Furthermore, digital, energy, or human capital investments may take time to show their effects, so they may not be visibly robust in macroeconomic aggregates.

Pending challenges

The design of the Plan was aligned with the 2019 and 2020 European recommendations for Spain regarding innovation, energy efficiency, interconnections and rail, digitalization, education, and training. The European Commission has certified compliance with numerous relevant milestones and reforms, so that, after the sixth disbursement, Spain has received more than 78 billion euros in European funds. But meeting the requirements to receive these funds, the money mobilized, and its economic results are different issues. The 2026 European recommendations again point to low private R&D investment, regulatory fragmentation, small business size, the weak connection between science and business, skills mismatches, energy infrastructure shortcomings, and the need to improve evaluation and budgetary sustainability.

We do not have a counterfactual that allows us to attribute how much the Plan has contributed to the improvement of investment and productivity, and to isolate its effects from other disturbances. To identify that contribution, it will be necessary to have detailed information on its execution and to estimate its effects with the help of economic models. Although without the funds, investment and GDP would have been lower in a stage marked by the pandemic, energy crises, inflation, and rising interest rates, it can be concluded that the Plan has not been sufficient to observe the net improvement in macroeconomic indicators that its objectives pursued.

Ultimately, the success of this European program must be measured by the quality of its execution, the additionality of public investment, its capacity to mobilize private capital, and its effects on productivity. The NGEU has cushioned crises and opened opportunities. Converting them into higher potential growth requires preserving productive investment, evaluating projects and reforms, removing barriers to business growth, and strengthening human capital. The effects may continue to arrive, but it is up to us to evaluate and demonstrate them as part of a detailed accountability exercise.

Press article. Published in Actualidad Económica (El Mundo) on September 20, 2026.