Economic Policies
#28Key Findings
Hard-hit by the pandemic, Spain falls into the lower-middle ranks internationally (rank 28) with regard to economic policies. Its score in this area has improved by 1.3 points since 2014.
Spain experienced a severe collapse in GDP in mid-2020. With little margin for government spending, its response measures were less aggressive than those of some peers. However, its measures helped restore the economy to substantial growth in late 2020. Recovery since that time has been less vigorous than initially estimated, with the 2021 growth rate projected at 4.5%.
In the labor market, the government’s response focused on temporary layoffs, with workers still receiving 70% of their basic wage. This helped the unemployment rate recover to pre-pandemic levels by late 2021. A labor-market reform underway aims to enhance employment stability and incentivize training. Gig workers have been deemed company employees rather than self-employed workers.
New taxes have been passed on digital services and financial transactions. Tax collections overall are being increased. The 2021 deficit rose to 12.2% of GDP, with debt climbing to 120.3% of GDP. These figures are now on the decline. While research is traditionally a weak point, a new plan seeks to double public and private R&D funding by 2027.
Spain experienced a severe collapse in GDP in mid-2020. With little margin for government spending, its response measures were less aggressive than those of some peers. However, its measures helped restore the economy to substantial growth in late 2020. Recovery since that time has been less vigorous than initially estimated, with the 2021 growth rate projected at 4.5%.
In the labor market, the government’s response focused on temporary layoffs, with workers still receiving 70% of their basic wage. This helped the unemployment rate recover to pre-pandemic levels by late 2021. A labor-market reform underway aims to enhance employment stability and incentivize training. Gig workers have been deemed company employees rather than self-employed workers.
New taxes have been passed on digital services and financial transactions. Tax collections overall are being increased. The 2021 deficit rose to 12.2% of GDP, with debt climbing to 120.3% of GDP. These figures are now on the decline. While research is traditionally a weak point, a new plan seeks to double public and private R&D funding by 2027.
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How successful has economic policy been in providing a reliable economic framework and in fostering international competitiveness?
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9
Economic policy fully succeeds in providing a coherent set-up of different institutional spheres and regimes, thus stabilizing the economic environment. It largely contributes to the objectives of fostering a country’s competitive capabilities and attractiveness as an economic location.
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6
Economic policy largely provides a reliable economic environment and supports the objectives of fostering a country’s competitive capabilities and attractiveness as an economic location.
5
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3
4
3
Economic policy somewhat contributes to providing a reliable economic environment and helps to a certain degree in fostering a country’s competitive capabilities and attractiveness as an economic location.
2
1
1
Economic policy mainly acts in discretionary ways essentially destabilizing the economic environment. There is little coordination in the set-up of economic policy institutions. Economic policy generally fails in fostering a country’s competitive capabilities and attractiveness as an economic location.
The measures taken in response to the coronavirus pandemic from 2020 – 2021 resulted in an unprecedented contraction of economic activity, with the service sector – especially tourism – being most affected. During 2020 and 2021, relief packages were adopted for the sectors most affected by the crisis (e.g., hotel and catering industry). However, relief packages were smaller than in other advanced economies, while the overall quantity of direct aid has been low compared to other EU member states. The crisis hit Spain at a time when the government had a very small spending margin (both in terms of the debt and the deficit), which prevented the government from adopting more aggressive measures, such as offering equity injections for businesses or paying the rents of restaurants.
Economic indicators improved in the second half of the year 2021, and the economic recovery gained traction through the review period, with private consumption as its main driver. Although indicators in 2021 have left the impression that the most critical stage of the crisis has passed, the economy is recovering less vigorously than previously estimated, and the OECD has sharply reduced the projected growth rate from 6.8% to 4.5% in 2021. In addition, health risks and other new risks still remain, such as the price of energy raw materials, which are at all-time highs, the emergence of manufacturing bottlenecks, and rising inflation. The forecast incorporates expenditures financed by RRF grants, and GDP is currently projected to grow by 5.5% in 2022 and by 3.8% in 2023.
On 16 June 2021, the European Commission adopted a positive assessment of Spain’s Recovery and Resilience Plan (RRP). The commission noted that the balanced set of reforms and investments contained in the plan reflects the challenges the country faces. The RRP is based on four pillars: ecological transition, digital transformation, gender equality, and social and territorial cohesion. There are doubts as to whether the Spanish administration will be able to manage these funds; however, in order to increase administrative capacities, the government approved a royal decree-law for the modernization of the public administration and for the implementation of the RRP that establishes the principles and basic rules for the programming, budgeting, management and implementation of the funds. The law foresees new forms of public-private partnership, collaboration and coordination between all administrations and public bodies involved in the management of the projects.
Citations:
Royal Decree-Law 36/2020, of 30th December, approving urgent measures for the modernization of the public administration and for the implementation of the Recovery, Transformation and Resilience Plan.
EC (2021), Summary of the assessment of the Spanish recovery and resilience plan, https://ec.europa.eu/info/files/summary-assessment-spanish-recovery-and-resilience-plan_en
Spanish Government (2021): Programa nacional de reformas [National Program of Reforms]. Available at: http://serviciosede.mineco.gob.es/Indeco/DescargaArchivo.aspx?estadisticas=True&tipo=1
Economic indicators improved in the second half of the year 2021, and the economic recovery gained traction through the review period, with private consumption as its main driver. Although indicators in 2021 have left the impression that the most critical stage of the crisis has passed, the economy is recovering less vigorously than previously estimated, and the OECD has sharply reduced the projected growth rate from 6.8% to 4.5% in 2021. In addition, health risks and other new risks still remain, such as the price of energy raw materials, which are at all-time highs, the emergence of manufacturing bottlenecks, and rising inflation. The forecast incorporates expenditures financed by RRF grants, and GDP is currently projected to grow by 5.5% in 2022 and by 3.8% in 2023.
On 16 June 2021, the European Commission adopted a positive assessment of Spain’s Recovery and Resilience Plan (RRP). The commission noted that the balanced set of reforms and investments contained in the plan reflects the challenges the country faces. The RRP is based on four pillars: ecological transition, digital transformation, gender equality, and social and territorial cohesion. There are doubts as to whether the Spanish administration will be able to manage these funds; however, in order to increase administrative capacities, the government approved a royal decree-law for the modernization of the public administration and for the implementation of the RRP that establishes the principles and basic rules for the programming, budgeting, management and implementation of the funds. The law foresees new forms of public-private partnership, collaboration and coordination between all administrations and public bodies involved in the management of the projects.
Citations:
Royal Decree-Law 36/2020, of 30th December, approving urgent measures for the modernization of the public administration and for the implementation of the Recovery, Transformation and Resilience Plan.
EC (2021), Summary of the assessment of the Spanish recovery and resilience plan, https://ec.europa.eu/info/files/summary-assessment-spanish-recovery-and-resilience-plan_en
Spanish Government (2021): Programa nacional de reformas [National Program of Reforms]. Available at: http://serviciosede.mineco.gob.es/Indeco/DescargaArchivo.aspx?estadisticas=True&tipo=1
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How effectively does labor market policy address unemployment?
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Successful strategies ensure unemployment is not a serious threat.
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7
6
Labor market policies have been more or less successful.
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3
4
3
Strategies against unemployment have shown little or no significant success.
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1
1
Labor market policies have been unsuccessful and rather effected a rise in unemployment.
Although the effects of the coronavirus pandemic continued to be felt in the Spanish labor market, at the end of 2021 the labor market had recovered from the 2020 COVID-19 crisis, and the unemployment rate had recovered to pre-pandemic levels.
In order to cushion the impact of COVID-19 on the labor market, the government applied temporary employment regulation schemes (ERTE). The ERTE scheme is a lesson learned from the economic and financial crisis. An ERTE allowed firms to lay off workers temporarily until the end of the first nationwide state of alarm. Affected workers were entitled to 70% of their basic wage under the benefit. The Spanish government, together with Spain’s two largest unions (UGT and CCOO) and the business confederation (CEOE), approved several extensions to the ERTE scheme. Although the Bank of Spain questioned the “suitability” of the program, the ERTEs mitigated job destruction during the pandemic remarkably, and paved the way for a quick labor market recovery.
The RRP includes employment measures seeking to reduce labor market segmentation and enhance active labor market policies. Moreover, the European Commission advised reforming the labor market to favor a transition toward indefinite-duration contracts, along with an improvement in unemployment benefits.
In July 2021 the Congress approved law 6/2021, also called the “riders’ law,” which states that delivery workers are to be considered company employees, rather than self-employed workers merely associated with the apps.
In December 2021, the government proposed new organizational measures and tools to improve employment policy, training and access to job offers throughout Spain. One measure will be the transformation of the decentralized Servicio Público de Empleo Estatal (SEPE) into a state agency, which will increase speed, agility and flexibility in active labor policy.
At the end of December 2021, the government, after reaching an agreement with trade unions and employers, approved a royal decree-law on urgent measures for labor market reform, the guarantee of employment stability and the transformation of the labor market. The reform aims to put an end to existing labor market dysfunctionalities. The main measures of the regulation include the following: the priority given to company agreements over other agreements is repealed; the standard contract will be the permanent contract; permanent discontinuous contracts will have the same social protection rights as other contracts; and there will be two types of training contracts, with public incentives for companies to invest in training. Moreover, the reform simplifies the procedures for companies to take advantage of ERTEs.
The reform is the result of several months of negotiations among the government, unions and the business association. However, as of the time of writing, the royal decree-law still needed the support of the lower house of parliament, the Congress of Deputies. Some regional parties and leftist groups have already voiced their opposition to the new legislation, on the grounds that it is not a complete overhaul of the legislation put in place in 2012.
Citations:
Gobierno de España (2021), Recovery, Transformation and Resilience Plan, specifically component 23 “New public policies for a dynamic, resilient and inclusive labor market,” https://planderecuperacion.gob.es/politicas_y_componentes/componente-23-nuevas-politicas-publicas-para-un-mercado-de-trabajo-dinamico-resiliente-e-inclusivo
Real Decreto-ley 6/2021, de 20 de abril, por el que se adoptan medidas complementarias de apoyo a empresas y autónomos afectados por la pandemia de COVID-19.
Real Decreto-ley 32/2021, de 28 de diciembre, de medidas urgentes para la reforma laboral, la garantía de la estabilidad en el empleo y la transformación del mercado de trabajo.
In order to cushion the impact of COVID-19 on the labor market, the government applied temporary employment regulation schemes (ERTE). The ERTE scheme is a lesson learned from the economic and financial crisis. An ERTE allowed firms to lay off workers temporarily until the end of the first nationwide state of alarm. Affected workers were entitled to 70% of their basic wage under the benefit. The Spanish government, together with Spain’s two largest unions (UGT and CCOO) and the business confederation (CEOE), approved several extensions to the ERTE scheme. Although the Bank of Spain questioned the “suitability” of the program, the ERTEs mitigated job destruction during the pandemic remarkably, and paved the way for a quick labor market recovery.
The RRP includes employment measures seeking to reduce labor market segmentation and enhance active labor market policies. Moreover, the European Commission advised reforming the labor market to favor a transition toward indefinite-duration contracts, along with an improvement in unemployment benefits.
In July 2021 the Congress approved law 6/2021, also called the “riders’ law,” which states that delivery workers are to be considered company employees, rather than self-employed workers merely associated with the apps.
In December 2021, the government proposed new organizational measures and tools to improve employment policy, training and access to job offers throughout Spain. One measure will be the transformation of the decentralized Servicio Público de Empleo Estatal (SEPE) into a state agency, which will increase speed, agility and flexibility in active labor policy.
At the end of December 2021, the government, after reaching an agreement with trade unions and employers, approved a royal decree-law on urgent measures for labor market reform, the guarantee of employment stability and the transformation of the labor market. The reform aims to put an end to existing labor market dysfunctionalities. The main measures of the regulation include the following: the priority given to company agreements over other agreements is repealed; the standard contract will be the permanent contract; permanent discontinuous contracts will have the same social protection rights as other contracts; and there will be two types of training contracts, with public incentives for companies to invest in training. Moreover, the reform simplifies the procedures for companies to take advantage of ERTEs.
The reform is the result of several months of negotiations among the government, unions and the business association. However, as of the time of writing, the royal decree-law still needed the support of the lower house of parliament, the Congress of Deputies. Some regional parties and leftist groups have already voiced their opposition to the new legislation, on the grounds that it is not a complete overhaul of the legislation put in place in 2012.
Citations:
Gobierno de España (2021), Recovery, Transformation and Resilience Plan, specifically component 23 “New public policies for a dynamic, resilient and inclusive labor market,” https://planderecuperacion.gob.es/politicas_y_componentes/componente-23-nuevas-politicas-publicas-para-un-mercado-de-trabajo-dinamico-resiliente-e-inclusivo
Real Decreto-ley 6/2021, de 20 de abril, por el que se adoptan medidas complementarias de apoyo a empresas y autónomos afectados por la pandemia de COVID-19.
Real Decreto-ley 32/2021, de 28 de diciembre, de medidas urgentes para la reforma laboral, la garantía de la estabilidad en el empleo y la transformación del mercado de trabajo.
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How effective is a country’s tax policy in realizing goals of revenue generation, equity, growth promotion and ecological sustainability?
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Taxation policy fully achieves the objectives.
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Taxation policy largely achieves the objectives.
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3
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Taxation policy partially achieves the objectives.
2
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1
Taxation policy does not achieve the objectives at all.
Spain collects less in taxes relative to wealth than do most other European countries, and produces less redistribution effects in the whole population. Between 2020 and 2019, increases in the tax-to-GDP ratios or stable ratios were observed in 18 EU member states; on a percentage-point basis, the highest increases were recorded by Spain (from 35.4% in 2019 to 37.5 % in 2020), but even this remains low when compared with an EU average of 41.3% in 2020.
In 2020, the government announced a commitment to increase annual tax collections to 42% of GDP. The measures included in the 2020 and 2021 budgets comprised an increase in income-tax rates (for high-income individuals), changes in corporate-tax structures and an increase in tax surcharges on fuel.
In October 2020, the parliament approved two new laws, which created a tax applicable to digital services and the Financial Transactions Tax (Law 4/2020 and Law 5/2020). The digital tax will levy 3% on online advertising, intermediation and sales of data. Spanish entities as well as foreign companies with net revenues exceeding €750 million worldwide and €3 million in Spain, whether or not they are established in the EU, will be subject to this indirect tax. Regarding the Financial Transactions Tax, Spain decided to tax the acquisition of shares in Spanish companies with a market capitalization above €1 billion at a rate of 0.2%. Public revenues will also increase due to other fiscal measures, such as an increase in the VAT rate on sugary drinks (from 10% to 21%). There are also new “green taxes” (e.g., a new tax on single-use plastic) in the 2020 and 2021 budget laws. The government is working on the implementation of new road charges that will come into force in 2024. The favorable tax treatment for private pension plans was reduced in 2021 and 2022.
The Recovery and Resilience Plan (RRP) addresses reforms to the tax system, following the EC recommendation of making taxes more progressive. To this end, a committee of experts for tax reform was set up with a twofold objective: to analyze the tax system and to propose the reforms that should be made. The committee was slated to publish its conclusions in February 2022.
At the regional level, the disparity of tax schemes raises controversy around the benefits faced by the low-taxed region of Madrid. Other regions have accused it of promoting so-called fiscal dumping.
The new taxes and the change in rates have not weakened Spain’s position in international tax competition; the tax burden relative to wealth in Spain remains lower than in most EU countries. Moreover, the Financial Transactions Tax (Law 5/2020) goes hand in hand with international efforts regarding this tax, for example with the scope and objectives of the EC’s proposals for an EU-wide FTT. The tax rate is still very low, and the relevant legislation includes many exemptions, so there will be not negative effects for Spain’s competitive position. In addition, the digital tax goes hand in hand with broader international efforts in the same sphere.
New “green taxes” have been included in the 2020 and 2021 budget laws (one for waste products and another for plastic packaging). These taxes contribute to the promotion of ecological sustainability. In addition, the registration tax on new vehicles increased in 2021. However, the government was unable to pass on a tax to increase the cost of diesel, and total revenues from environmental taxes in 2021 were still well below the EU average.
Citations:
EC (2021), Tax revenue statistics, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Tax_revenue_statistics&oldid=460966#Tax_revenue-to-GDP_ratio:_Denmark.2C_France_and_Belgium_show_the_highest_ratios
In 2020, the government announced a commitment to increase annual tax collections to 42% of GDP. The measures included in the 2020 and 2021 budgets comprised an increase in income-tax rates (for high-income individuals), changes in corporate-tax structures and an increase in tax surcharges on fuel.
In October 2020, the parliament approved two new laws, which created a tax applicable to digital services and the Financial Transactions Tax (Law 4/2020 and Law 5/2020). The digital tax will levy 3% on online advertising, intermediation and sales of data. Spanish entities as well as foreign companies with net revenues exceeding €750 million worldwide and €3 million in Spain, whether or not they are established in the EU, will be subject to this indirect tax. Regarding the Financial Transactions Tax, Spain decided to tax the acquisition of shares in Spanish companies with a market capitalization above €1 billion at a rate of 0.2%. Public revenues will also increase due to other fiscal measures, such as an increase in the VAT rate on sugary drinks (from 10% to 21%). There are also new “green taxes” (e.g., a new tax on single-use plastic) in the 2020 and 2021 budget laws. The government is working on the implementation of new road charges that will come into force in 2024. The favorable tax treatment for private pension plans was reduced in 2021 and 2022.
The Recovery and Resilience Plan (RRP) addresses reforms to the tax system, following the EC recommendation of making taxes more progressive. To this end, a committee of experts for tax reform was set up with a twofold objective: to analyze the tax system and to propose the reforms that should be made. The committee was slated to publish its conclusions in February 2022.
At the regional level, the disparity of tax schemes raises controversy around the benefits faced by the low-taxed region of Madrid. Other regions have accused it of promoting so-called fiscal dumping.
The new taxes and the change in rates have not weakened Spain’s position in international tax competition; the tax burden relative to wealth in Spain remains lower than in most EU countries. Moreover, the Financial Transactions Tax (Law 5/2020) goes hand in hand with international efforts regarding this tax, for example with the scope and objectives of the EC’s proposals for an EU-wide FTT. The tax rate is still very low, and the relevant legislation includes many exemptions, so there will be not negative effects for Spain’s competitive position. In addition, the digital tax goes hand in hand with broader international efforts in the same sphere.
New “green taxes” have been included in the 2020 and 2021 budget laws (one for waste products and another for plastic packaging). These taxes contribute to the promotion of ecological sustainability. In addition, the registration tax on new vehicles increased in 2021. However, the government was unable to pass on a tax to increase the cost of diesel, and total revenues from environmental taxes in 2021 were still well below the EU average.
Citations:
EC (2021), Tax revenue statistics, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Tax_revenue_statistics&oldid=460966#Tax_revenue-to-GDP_ratio:_Denmark.2C_France_and_Belgium_show_the_highest_ratios
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To what extent does budgetary policy realize the goal of fiscal sustainability?
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Budgetary policy is fiscally sustainable.
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Budgetary policy achieves most standards of fiscal sustainability.
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Budgetary policy achieves some standards of fiscal sustainability.
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Budgetary policy is fiscally unsustainable.
Measures taken by the government to overcome the crisis caused an exceptional deterioration in Spain’s public finances in 2020. According to the European Commission’s autumn economic forecast, the public budget deficit was expected to rise to 12.2% of GDP and the gross public debt to 120.3% of GDP by the end of 2021. The supportive macroeconomic scenario, partly due to the implementation of the RRP, as well as the action of automatic stabilizers, will help the debt-to-GDP ratio decrease to 118.2%, and keep improving the general government budget balance, with the deficit expected to fall to 5.2% in 2022.
The budget plan forecasts that government spending as a share of GDP will fall to 44.7% in 2022, from 49.6% in 2021 and 52.4% in 2020. The high share was due to the sharp downturn in the economy caused by the pandemic, as well as the government’s measures to support families and businesses to mitigate the consequences of the recession.
However, the 2022 budget bill will also provide for the largest social investment in recent history, with almost 60% of the national budget, €240.4 trillion, allocated to social investment. European funds, of which Spain will receive €27.6 trillion in 2022, will largely be used for investment in energy transition, digitalization and sustainable mobility. Moreover, according to government projections, the economy will grow in 2022, and rising domestic demand and job creation will improve tax revenues by 10.8% compared to 2021.
Citations:
EC(2021), Autumn 2021, Spain
https://ec.europa.eu/economy_finance/forecasts/2021/autumn/ecfin_forecast_autumn_2021_es_en.pdf
The budget plan forecasts that government spending as a share of GDP will fall to 44.7% in 2022, from 49.6% in 2021 and 52.4% in 2020. The high share was due to the sharp downturn in the economy caused by the pandemic, as well as the government’s measures to support families and businesses to mitigate the consequences of the recession.
However, the 2022 budget bill will also provide for the largest social investment in recent history, with almost 60% of the national budget, €240.4 trillion, allocated to social investment. European funds, of which Spain will receive €27.6 trillion in 2022, will largely be used for investment in energy transition, digitalization and sustainable mobility. Moreover, according to government projections, the economy will grow in 2022, and rising domestic demand and job creation will improve tax revenues by 10.8% compared to 2021.
Citations:
EC(2021), Autumn 2021, Spain
https://ec.europa.eu/economy_finance/forecasts/2021/autumn/ecfin_forecast_autumn_2021_es_en.pdf
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To what extent does research and innovation policy support technological innovations that foster the creation and introduction of new products?
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Research and innovation policy effectively supports innovations that foster the creation of new products and enhance productivity.
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Research and innovation policy largely supports innovations that foster the creation of new products and enhance productivity.
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Research and innovation policy partly supports innovations that foster the creation of new products and enhance productivity.
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Research and innovation policy has largely failed to support innovations that foster the creation of new products and enhance productivity.
Research and technology policy is traditionally a weak point, as evidenced by the low number of patents registered, the relatively poor international ranking of universities and the low level of spending on R&D.
According to the European Commission’s 2021 Innovation Scoreboard, Spain’s innovation performance has notably improved relative to 2010, with human resources the strongest-performing innovation dimension. Moreover, Spain performs above the EU average with regard to innovation-friendly environment and employment impacts. Spain also scores high with respect to new doctorate graduates, sales of new-to-market and new-to-firm product innovations, broadband penetration, and the share of the population with tertiary education.
In 2020, the government approved the new Science, Technology and Innovation Strategy for 2021 – 2027, with the aim of doubling the amount of public and private investment in R&D to 2.12% of GDP by 2027. The strategy was elaborated together with regional governments, economic and social stakeholders, universities, research organizations, and scientific bodies.
In July 2020, the government approved the Action Plan for Science and Innovation. After a decade of cuts and a lack of reforms, the plan includes 17 measures based on three cornerstones: research and innovation in health, the transformation of the science system and attracting talent, and driving business R&D and the science industry. Although the plan focuses on short-term measures, it takes into account the long-term recovery of the science and innovation system.
In fact, in 2021, the budget of the Ministry of Science and Innovation was increased by 59.4% as compared to 2020. However, a large part of these funds came from the NextGenerationEU program. The Science and Innovation Ministry will also receive a historically high amount of €3.8 billion in 2022.
In addition, regional governments contribute with their own research and innovation policy to technological innovations. The autonomous communities increased their R&D budgets in 2021. The 2021 Regional Innovation Scoreboard (RIS) indicated substantial variation in regional performance, with the best performing regions, the Basque Country and Madrid, performing three times as well as the lowest performing region, Ciudad Autónoma de Ceuta.
Citations:
EC(2021), European Innovation Scoreboard
https://euraxess.ec.europa.eu/worldwide/asean/european-innovation-scoreboard-2021-published
Spanish government (2020) Plan de choque para la ciencia y la innovación
https://www.lamoncloa.gob.es/serviciosdeprensa/notasprensa/ciencia-e-innovacion/Documents/2020/09072020_PChoqueCiencia.pdf
According to the European Commission’s 2021 Innovation Scoreboard, Spain’s innovation performance has notably improved relative to 2010, with human resources the strongest-performing innovation dimension. Moreover, Spain performs above the EU average with regard to innovation-friendly environment and employment impacts. Spain also scores high with respect to new doctorate graduates, sales of new-to-market and new-to-firm product innovations, broadband penetration, and the share of the population with tertiary education.
In 2020, the government approved the new Science, Technology and Innovation Strategy for 2021 – 2027, with the aim of doubling the amount of public and private investment in R&D to 2.12% of GDP by 2027. The strategy was elaborated together with regional governments, economic and social stakeholders, universities, research organizations, and scientific bodies.
In July 2020, the government approved the Action Plan for Science and Innovation. After a decade of cuts and a lack of reforms, the plan includes 17 measures based on three cornerstones: research and innovation in health, the transformation of the science system and attracting talent, and driving business R&D and the science industry. Although the plan focuses on short-term measures, it takes into account the long-term recovery of the science and innovation system.
In fact, in 2021, the budget of the Ministry of Science and Innovation was increased by 59.4% as compared to 2020. However, a large part of these funds came from the NextGenerationEU program. The Science and Innovation Ministry will also receive a historically high amount of €3.8 billion in 2022.
In addition, regional governments contribute with their own research and innovation policy to technological innovations. The autonomous communities increased their R&D budgets in 2021. The 2021 Regional Innovation Scoreboard (RIS) indicated substantial variation in regional performance, with the best performing regions, the Basque Country and Madrid, performing three times as well as the lowest performing region, Ciudad Autónoma de Ceuta.
Citations:
EC(2021), European Innovation Scoreboard
https://euraxess.ec.europa.eu/worldwide/asean/european-innovation-scoreboard-2021-published
Spanish government (2020) Plan de choque para la ciencia y la innovación
https://www.lamoncloa.gob.es/serviciosdeprensa/notasprensa/ciencia-e-innovacion/Documents/2020/09072020_PChoqueCiencia.pdf
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To what extent does the government actively contribute to the effective regulation and supervision of the international financial architecture?
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The government (pro-)actively promotes the regulation and supervision of financial markets. It demonstrates initiative and responsibility in such endeavors and often acts as an international agenda-setter.
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The government contributes to improving the regulation and supervision of financial markets. In some cases, it demonstrates initiative and responsibility in such endeavors.
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The government rarely contributes to improving the regulation and supervision of financial markets. It seldom demonstrates initiative or responsibility in such endeavors.
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The government does not contribute to improving the regulation and supervision of financial markets.
Though aware of its limitations as only a medium-sized power and indebted economy, Spain behaves as an important partner in international forums and tries to contribute actively to improving the regulation and supervision of financial markets. After a deep transformation in the last financial crisis, the Spanish banking sector has gained stability and remained resilient during the pandemic. Spain is a permanent invited guest to G-20 meetings, and sits on the Financial Stability Board. It is also part of the IMF system (with 1.94% of the votes) and the World Bank (1.74%). Spain has also been engaged within the OECD in the fight against tax havens, with a particular focus on Andorra and Gibraltar. At the European regional level, Spain is a member of the European Union and is the fourth most important state within the euro area. Spain has pushed hard in recent years for a banking union and for the European Central Bank to take a more active role in strengthening the single European currency. It has also sought to strengthen regulation of rating agencies. In October 2021, acting within the OECD/G-20 framework, Spain supported the agreement for the reform of the international tax framework aimed at curbing tax avoidance by multinational enterprises. The 2022 budget law established a minimum 15% rate for corporation tax, which, according to the government, once again places Spain “at the forefront of international taxation.”
Citations:
Bank of Spain (2021): Financial Stability Report. Autumn. Available at : https://www.bde.es/bde/en/secciones/informes/estabilidad-financiera/informe-de-estabilidad/
Citations:
Bank of Spain (2021): Financial Stability Report. Autumn. Available at : https://www.bde.es/bde/en/secciones/informes/estabilidad-financiera/informe-de-estabilidad/