Europe 2020 in Spain

The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 18 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.

Country overview

Overall, Spain continues to go through a deep structural adjustment following the build-up of large external and internal imbalances during the housing and credit boom. Adjustment needs remain large, while structural rigidities and financing constraints have been hindering a faster adaptation of the real economy and have aggravated the employment situation.

In response to the 2012 country specific recommendations (CSRs), the government announced a comprehensive reform plan covering fiscal, labour market, education and product market reforms, as well as measures to improve the business environment. However, progress in implementation has been uneven as key reforms, such as the establishment of an independent fiscal council, a law on market unity and further liberalisation of professional services, have been delayed. While the proposed reform agenda is comprehensive and goes in the right direction, Spain should adopt and swiftly and effectively implement determined reforms so that they can start deploying the expected positive effects on growth and employment and support the correction of imbalances.

The main challenge for Spain is to boost economic growth and employment and correct the excessive macroeconomic imbalances. Continued fiscal consolidation and stronger fiscal institutions are needed to ensure sustainable public finances. Completing financial sector repair and restructuring is paramount to support the real economy. Competitiveness and export capacity need to be further improved, while competition in domestic goods and services sectors is still insufficient. Most crucially, the labour market situation remains critical. Early school leaving and a vocational training system which is insufficiently tailored to market needs remain a problem. Poverty and social exclusion are on the rise.

2013 European Commission's recommendations for Spain in brief

The Spanish economy is undergoing deep structural changes. The Commission has issued nine country specific recommendations (CSRs) to Spain to support the reform agenda and to ensure its urgent implementation. The recommendations are in the areas of:

  1. Sustainable public finances
    Spain has made a sizeable consolidation effort in 2012 and 2013 towards correcting the excessive deficit. But fiscal consolidation needs to continue in order to rein in the increase in public debt and to bring public finances back onto a sustainable path. The objective of the Spanish budgetary strategy is to bring the general government deficit below the 3% of GDP reference value by 2016.
  2. Efficiency of the tax system
    Although important measures were introduced in 2012 Spain can still make its tax system more efficient and can increase the share of more growth-friendly indirect taxes. Spain also needs to step up efforts to tackle tax fraud and evasion.
  3. Financial sector
    The Spanish financial sector adjustment programme is on track and Spain needs to continue implementing it in line with the agreed timetable.
  4. Labour market
    The situation on the Spanish labour market remains critical. There is a need to speed up and further complement the on-going reforms of activation policies, as well as to take stock of the effects of the labour market reform of 2012.
  5. Education
    Structural weaknesses in the education and training systems have contributed to the high youth unemployment rate and are still largely unresolved. Spain needs to implement all the planned reforms in the area of education.
  6. Social inclusion
    Poverty and social exclusion are on the rise in Spain, mainly as a result of the labour market situation, but also due limited effectiveness of social protection in reducing poverty. Measures need to be taken to improve the effectiveness of policies in this area.
  7. Business environment
    Spain needs to speed up reforms to address weaknesses in the business environment, such as barriers to doing business, and increase decisively competition in product and services markets.
  8. Energy and transport
    The potentially sizeable contingent liability for the budget implied by the electricity tariff deficit remains a non-negligible macroeconomic risk. Spain therefore needs to urgently complete the reform of the energy sector. Spain also needs to step up reform efforts in transport sector.
  9. Quality of public administration
    The highly decentralised structure of Spain calls for enhanced coordination between the various public administrations, both to reduce costs and to limit the administrative burden on companies and households.

See how Spain compares with other EU Member States in key areas

European Semester Documents