Spain's industrial losses and the future of decarbonisation funding amid funding reductions
Spain has begun to significantly scale back its industrial investment programmes just six months before the expiry of the Next Generation EU funds. The government of Pedro Sanchez has cut industrial related losses by up to 40 percent, reducing allocations from 42.48 billion euros to just over 25.31 billion euros. The precise economic impact of these reductions remains uncertain but could have substantial consequences for the industrial sector and decarbonisation initiatives.
One of the most notable reductions concerns the Perte for Industrial Decarbonisation. In the latest addendum submitted by the Spanish authorities to the European Commission, this scheme has been scaled back by 1.635 billion euros, reflecting a 51.6 percent cut from its original design. This adjustment raises questions about the continuity and scope of sustainability efforts in industry sectors that depend on these incentives.
Similarly, the Perte chip scheme has undergone a substantial reduction, with an 80.8 percent decrease in its planned investments. The January addendum revealed cuts amounting to 9.903 billion euros, limiting the execution to only seven projects, with no new factories expected to emerge in Spain. This contraction underscores a shift away from high impact industrial regeneration and innovation initiatives.
Beyond scheme-specific cuts, the overall decline in funding extends to loans and transfer payments across multiple sectors. For instance, 14.79 billion euros allocated for loans supporting schemes such as Perte Agua, Perte Vehicle (including Electric Vehicles), Perte Health, Aerospace, and New Economy of Language have been erased. Transfers linked to Water, Health, and Aerospace Perte schemes have also been diminished, indicating a broad retrenchment in strategic investments.
In aggregate, these reforms have resulted in a reduction of more than 10 billion euros across critical sectors including housing, health, transport, environment, research and development, tourism, industry, renewable energy, employment training, and social inclusion programmes. Notably, the industrial sector faces the disappearance of the legal promise to pass the Industrial Law, a key promise used to promote reindustrialisation efforts. Since 2018, Spain has seen the closure of 15,400 industrial companies, equating to 8.5 percent of the sector, further highlighting challenges in industrial resilience.
Specific initiatives such as the housing energy efficiency programmes have also been scaled back. The reduction from the initial targets—improving 510,000 homes—to issuing only 32,390 energy certificates indicates a reprioritisation and limited scope for improving residential energy standards. Similarly, the Digital Kit designed to benefit 2.5 million companies is now reported to have aided only 865,000 small businesses, well below original expectations, reflecting diminished support and organisational capacity.
Additional legislative setbacks include the abolition or suspension of certain laws related to fishing, cinema, sports, family diversity, and health services. Many reforms have been substituted with less comprehensive regulations, reducing the normative weight of key social and industrial laws. The failure to pass the new Industrial Law and other key legislations exemplifies the broader legislative stalemate that hampers industrial and social reforms.
Overall, Spain's decision to reduce funding commitments and reform core policies indicate a significant shift in government priorities. The scaling down of industrial and decarbonisation investments may impair Spain's ability to meet its climate and economic objectives, especially as EU funds exit. The long term impact on the resilience of the Spanish industry and its capacity to innovate and decarbonise remains uncertain amid these cutbacks and legislative reversals.