Spain dangers falling quick on promise of EU restoration funds, warns Catalonia

Catalonia has known as on the Spanish authorities to make use of billions of euros in EU restoration funds to reverse deindustrialisation, arguing it dangers squandering an opportunity to spice up progress by placing an excessive amount of emphasis on small tasks.

Natàlia Mas, the highest financial official within the Catalan regional administration, mentioned the central authorities — which is overseeing the deployment of €140bn in EU funds in Spain — had to ensure investments had been tailor-made to areas hollowed out by manufacturing facility closures.

“In case you chop up the sources excessively, in the event you don’t help large transformational tasks, it’s uncertain that you simply’ll obtain a everlasting impression,” she informed the Monetary Instances. “We can not afford to have gaps in strategic areas.”

Spain has requested Brussels for extra time to distribute the EU funds — from a programme arrange earlier than the Ukraine conflict to help the post-pandemic restoration — and is dealing with non-public sector criticism over transparency and the allocation of funds.

Mas’s feedback spotlight tensions with regional governments which are partnering with Madrid to handle a few of the so-called Subsequent Era EU investments.

In Catalonia, the method is overlaid with political rancour stemming from the regional authorities’s aspirations for independence and the fallout from an explosive 2017 referendum, which was fiercely opposed by Madrid and dominated unlawful by judges.

Catalonia has thus far been assigned €4bn in restoration funds. A central authorities official mentioned it was the area receiving the second-largest quantity. However Catalan officers say the area remains to be being allotted lower than it’s due based on its 7.7mn inhabitants and financial weight.

Mas, a former European Central Financial institution official who grew to become head of the Catalan financial system and finance division final month, mentioned she didn’t oppose utilizing restoration funds to assist small companies, citing initiatives championed by Madrid to assist arrange web sites or set up photo voltaic panels.

“Sure tasks involving small and medium-sized enterprises have an effect, however it may be diluted over time if we don’t generate new industrial and technological capacities,” she mentioned.

The central authorities official mentioned 9,000 Catalan firms — together with 8,000 small and medium-sized enterprises — had been benefiting from the restoration funds.

Catalonia, an export-oriented industrial zone accounting for nearly one-fifth of Spain’s gross home product, has suffered from mass manufacturing facility closures in latest a long time as jobs shift to lower-cost international locations. Most lately it was hit by Nissan’s resolution to close its Barcelona automobile plant in 2021 after 40 years because it retreated from Europe to chop prices.

The central authorities’s restoration fund plans embody 11 large-scale public-private initiatives, referred to as Pertes, which are explicitly labelled “strategic tasks”.

One covers electrical autos and contains Volkswagen-owned Seat’s overhaul of the final remaining Catalan automobile plant in Martorell close to Barcelona, in addition to its development of a brand new battery plant in Valencia, which neighbours Catalonia.

Mas famous that solely €877mn of the automobile Perte’s €3bn in public cash had been assigned to tasks and blamed the low proportion on Madrid’s central management, saying a “backside up” strategy that gave regional governments an even bigger say would facilitate the allocation of funds.

“We all know the tasks, the commercial ecosystems, the transformation wants, the particularities of the electrical automobile worth chain in every territory,” she mentioned.

There’s additionally a Perte for healthcare innovation for which about 60 per cent of the €11mn assigned thus far goes to Catalan firms. However Mas mentioned it was “very compartmentalised” and questioned whether or not it might help the type of initiatives she wished to see in superior therapies.

This month Cisco, the US semiconductor maker, mentioned it might open a brand new chip design centre in Barcelona however didn’t disclose how a lot it might make investments. Cisco mentioned its plans had been “framed inside” a Perte for microelectronics and semiconductors “though we’re nonetheless defining the particular phrases with the Spanish authorities”.

Intel mentioned this 12 months it might open a joint computing lab with the Barcelona Supercomputing Heart.

The central authorities official mentioned choices of Intel, Cisco and Seat confirmed Spain’s restoration plan was already having a “noticeable” impression on the mobilisation of personal sector funds.

The official added: “The restoration plan is a nationwide plan that requires the collaboration of all. Co-governance is proving to be very efficient and the colourful deployment of investments by the [Catalan government] is proof of this.”