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.
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: