The European funds Next Generation have had a positive impact on the Spanish economy, but their capacity to produce the structural transformation that the program sought still presents limitations. This is the conclusion drawn from the report The impact of the Next Generation funds on the Spanish economy, prepared by Funcas and Afi, which analyzes both the execution of the resources and their effects on growth, investment, and productivity.
The study differentiates between the effect of the funds on economic activity and their capacity to generate structural changes. In the first area, the authors identify a positive contribution. In the second, they point out several elements that condition the scope of the program.
The objective of the Next Generation was not only to contribute to the post-pandemic recovery. The European program also sought to boost investment, improve productivity, and accelerate the transformation of economies through green and digital transitions.
Funcas and Afi estimate that the European funds explained between 10% and 14% of the average annual growth of the Spanish real GDP between 2021 and 2025, equivalent to between 1.4 and 2.1 growth points. The report therefore acknowledges a positive effect on activity.
The analysis, however, raises that the impact on GDP is not the only indicator to evaluate the result of a program whose objective was also to transform the productive structure.
It is in this second aspect where the authors identify the main limitations.
The seven weaknesses pointed out by the report
1. A gap between the resources received and the effective spending
Spain had received 71.366 billion euros by the end of 2025. Of this amount, around 80% was committed and 55% had been spent.
The report distinguishes between the funds disbursed by the European Union, the resources committed by the administrations, and the spending that ultimately materializes in companies and households. The administrations had committed 57.395 billion, while the spending accounted for by companies and households was around 39.000 billion.
The authors use this difference to analyze the journey that exists between the resources received and their effective arrival in the economy.
2. Business investment continues below the pre-pandemic level
The evolution of private investment constitutes one of the indicators used by Funcas and Afi to assess the transformative effect of the program.
The report indicates that, by the end of 2025, business investment was 3.3 points below its real level of 2019.
The authors observe that European funds have contributed to sustaining investment, but they believe that the boost to business investment has been lower than initially expected.
This data is relevant to the program's objective because the mobilization of private investment was one of the mechanisms planned to amplify the effect of European resources.
3. Part of the financed investments would have replaced private investment
The study also introduces the so-called substitution effect.
According to the analysis by Funcas and Afi, part of the investments that have received European funding would have also been made using the companies' own resources.
Therefore, the volume of investment associated with the funds does not necessarily equate to the volume of additional investment generated by them.
The distinction allows the authors to separate the financing effect of the funds from the net effect they have on economic activity.
4. A limited additional impact on productivity
Productivity is another of the indicators used to assess structural change.
The report indicates that Spain has been the only one of the four major European economies where real productivity per hour would have improved compared to its previous trend. The estimated additional increase is 0.4 points.
Funcas and Afi consider this progress limited in absolute terms in relation to the size of the program.
Productivity constitutes one of the central elements of the transformative objective of the Next Generation, so its evolution is part of the balance made by the authors.
5. Administrative management and coordination condition execution
The size of the program has posed, according to the report, a challenge for the management capacity of the different administrations.
The execution model involves the participation of the General State Administration, the autonomous communities, and local entities. The State manages around 60% of the mobilized funds, the autonomous communities 25%, and local entities 15%.
Funcas and Afi observe differences in the execution rhythms between territories and relate them, among other factors, to the available technical capacities, the design of the calls, and the previous experience in managing European funds.
The authors thus raise administrative capacity and coordination between levels of government as relevant elements to determine the speed at which resources reach the economy.
In data
Eleven organizations lower the triumphalism about European funds: more money committed than executed
AIReF, Bank of Spain, European Commission, European Court of Auditors, Eurostat, IMF, and various national organizations agree on one caution: receiving funds from Brussels, calling for aid, or awarding projects does not necessarily mean that the money has reached the final beneficiary or that the investment is completed. AIReF distinguishes between called funds, awards, recognized obligations, and payments made, while the Court of Auditors has identified in various audits delays, planning problems, and deficiencies in outcome indicators. The European Commission, for its part, links its disbursements to the fulfillment of milestones and objectives, but its reports continue to demand speeding up investments and strengthening administrative capacity.
The Bank of Spain and the European Court of Auditors have also warned of the difference between the disbursements received and their effective absorption by the economy. Eurostat allows observing that distance by comparing the expenditure recorded by the States with the allocated resources, while the IMF has pointed out the difficulty of linking a payment system based on administrative milestones with measurable economic results. In Spain, CEOE, Cotec-Ivie, and Fedea have also pointed out problems of bureaucracy, access for SMEs, fragmentation of data, and difficulties in identifying payments to final beneficiaries.
The set of these analyses does not conclude that the Next Generation funds have failed, nor do they all make a specific assessment of the Government's management. They do introduce a relevant difference regarding the aggregated use of execution figures: money assigned, disbursed, committed, awarded, paid, and converted into a completed investment are distinct magnitudes. The question these organizations raise is, therefore, how much of the European resources has effectively reached the real economy, which projects have been completed, and what verifiable economic results have been produced.
6. A high concentration of resources among large companies
The size of the recipient companies is another of the elements analyzed.
Companies with more than 250 workers represent 0.4% of the Spanish business fabric, but concentrate approximately 45.7% of the spending commitments of the Recovery, Transformation, and Resilience Plan.
The microenterprises, which represent 89.3% of the business fabric, concentrate around 10% of those commitments.
The report indicates that the concentration in large companies is related to the nature and size of some of the driving projects, which require financial and technical capacity.
At the same time, the authors analyze how this distribution conditions the scope of the funds over the entire business fabric.
7. A sectoral distribution that does not always coincide with the most dynamic sectors
The report also analyzes the sectoral destination of the resources.
The sectors of manufacturing, information and communications, and construction concentrate more than 60% of the committed funds.
However, Funcas and Afi observe that the intensity of the funds does not always correspond with the evolution of investment in the different sectors. The study suggests that the distribution of resources does not necessarily coincide with the most dynamic sectors of the Spanish expansionary cycle.
The authors propose, based on this analysis, the convenience of considering more horizontal instruments in future investment programs.
A positive effect on growth
The report does not present a negative balance of the Next Generation funds. Funcas and Afi indicate that the program has contributed to sustaining economic recovery and that advances have been made in areas such as the green and digital transition.
The estimation of its contribution to GDP places the impact of the funds between 10% and 14% of the average annual growth between 2021 and 2025.
The analysis, however, introduces a difference between that cyclical impact and the structural objective of the program.
The funds were conceived to accompany the recovery after the pandemic, but also to raise productivity, mobilize private investment, and modify the productive structure.
It is in these last objectives where Funcas and Afi identify the main pending elements.
Execution as part of the impact
The study pays special attention to the difference between the call for resources and their effective execution.
The magnitude of the program has involved a complex administrative structure and participation from different levels of government. The authors consider that this configuration has generated differences in the capacity for execution and in the rhythms with which resources are converted into expenditure.
The report also raises a related question about the program's monitoring system: compliance with an administrative milestone does not guarantee by itself that the resources have generated the expected economic effect.
Therefore, the authors propose to complement the documentary monitoring with indicators that allow verifying aspects such as the effective mobilization of private financing or the existence of deserted tenders.
The balance: growth versus transformation
The study by Funcas and Afi places the result of the Next Generation on two levels.
The first is that of economic activity, where the authors estimate a positive contribution of the funds to Spanish growth between 2021 and 2025.
The second is that of structural transformation, where the report identifies a series of factors that limit the program's scope: the difference between received resources and effective spending, the evolution of business investment, the substitution effect, the impact on productivity, management and coordination difficulties, business concentration, and sectoral distribution.
The authors conclude that the transformative potential of the funds has not yet fully materialized.
Funcas and Afi thus point to the need to draw conclusions from the Spanish experience for the design of future European investment instruments. The analysis suggests strengthening administrative capacities, improving monitoring mechanisms, and adapting program design to promote greater mobilization of private investment and a broader impact on productivity.
The balance that the report offers, therefore, does not focus solely on how much money Spain has received or how much it has contributed to growth. Its analysis raises an additional question: to what extent have the Next Generation funds managed to convert that extraordinary volume of resources into a lasting change in investment, productivity, and the Spanish productive structure.
And it is precisely in that difference between driving growth and transforming the economy where Funcas and Afi place the main open questions about the program's outcome.