European Commission
Europe 2020

Country-specific Recommendations

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 12 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.

Proposed recommendations for Spain 2012

In 2012, Spain's economic activity is expected to contract by 1.8%, and by 0.3% in 2013. Unemployment is foreseen to increase further to 25.1% in 2013, also for the young.

Spain has recently adopted ambitious reforms, including in key areas such as the financial sector, the labour market and collective bargaining. It also introduced legislation to strengthen the fiscal framework and reformed pensions. Reflecting the outstanding challenges, Spain has announced comprehensive and far-reaching plans for further measures to strengthen fiscal discipline and enhance competitiveness to boost the country's growth.

Spain continues to face important policy challenges following the bursting of the housing and credit bubble. Further fiscal consolidation and fiscal discipline at regional level are necessary to restore market confidence and to halt the rapid increase in government debt. The tax structure lacks efficiency and there is room for making the tax system more growth friendly. The banking sector remains fragile due to high private and corporate debt levels. Low levels of competition in sheltered sectors such as professional services and retail, sluggish adjustment of prices and wages and low productivity growth hamper the economic recovery and the re-orientation of the Spanish economy towards a new growth model. Unemployment has reached a record high, and employability and labour market segmentation constitute significant bottlenecks. Problems in the education system include low levels of achievement at secondary level, too many students leaving school early and a vocational training system insufficiently tailored to market needs.

Overview of recommendations

1. Deliver an annual average structural fiscal effort of above 1.5% of GDP over the period 2010-13 as required by the EDP recommendation by implementing the measures adopted in the 2012 budget and adopting the announced multi-annual budget plan for 2013-14 by end July. Adopt and implement measures at regional level in line with the approved rebalancing plans and strictly apply the new provisions of the Budgetary Stability Law regarding transparency and control of budget execution. Establish an independent fiscal institution to provide analysis, advice and monitor fiscal policy, as well as to estimate the budgetary impact of proposed legislation.
   More information on Spain’s economy
2. Accelerate the increase in the statutory retirement age and the introduction of the sustainability factor foreseen in the recent pension reform and underpin the Global Employment Strategy for Older Workers with concrete measures to develop lifelong learning further, improve working conditions and foster the reincorporation of this group in the job market.
   More information on pensions in the EU
3. Introduce a taxation system consistent with the fiscal consolidation efforts and more supportive to growth, including a shift away from labour towards consumption and environmental taxation. In particular, address the low VAT revenue ratio by broadening the tax base for VAT. Ensure less tax-induced bias towards indebtedness and home-ownership (as opposed to renting).
   More information on taxation
4. Implement the reform of the financial sector, in particular complement the on-going restructuring of the banking sector by addressing the situation of remaining weak institutions, put forward a comprehensive strategy to deal effectively with the legacy assets on the banks' balance sheets, and define a clear stance on the funding and use of backstop facilities.
   More information on banking and the single market
5. Implement the labour market reforms and take additional measures to increase the effectiveness of active labour market policies by improving their targeting, by increasing the use of training, advisory and job matching services, by strengthening their links with passive policies, and by strengthening coordination between the national and regional public employment services, including sharing information about job vacancies.
   More information on the European employment strategy
6. Review spending priorities and reallocate funds to support access to finance for SMEs, research, innovation and young people. Implement the Youth Action Plan, in particular as regards the quality and labour market relevance of vocational training and education, and reinforce efforts to reduce early school-leaving and increase participation in vocational education and training through prevention, intervention and compensation measures.
   More information on the EU youth strategy
7. Take specific measures to counter poverty, by making child support more effective and improving the employability of vulnerable groups.
   More information on social protection and social inclusion
8. Take additional measures to open up professional services, including highly regulated professions, reduce delays in obtaining business licences and eliminate barriers to doing business resulting from overlapping and multiple regulations by different levels of government. Complete the electricity and gas interconnections with neighbouring countries and address the electricity tariff deficit in a comprehensive way, in particular by improving the cost efficiency of the electricity supply chain.
   More information on the EU enterprise policy and on the energy strategy for Europe

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

European Semester Documents

National Reform Programme

All Member States have committed to the Europe 2020 strategy. However, each country has different economic circumstances and translates the overall EU objectives into national targets in its National Reform Programme – a document which presents the country's policies and measures to sustain growth and jobs and to reach the Europe 2020 targets. The National Reform Programme is presented in parallel with its Stability/Convergence Programme, which sets out the country's budgetary plans for the coming three or four years.

Macroeconomic indicators

Europe 2020 targets – State of play