Spain’s EU billions miss private capital

The promise behind Europe’s recovery fund was simple enough: public money would go in first, and private money would follow. Spain has now offered Brussels an awkward answer. After five years of EU recovery spending, income per person rose by just 0.2%, while private investment fell 3%, according to a final EY assessment reported by El Mundo.

That is a poor return on the programme’s own terms. NextGenerationEU, the EU’s pandemic-era common borrowing scheme, was never meant to be just a large transfer from Brussels to national treasuries. It was meant to change the investment behaviour of economies that had under-invested for years. Spain’s numbers suggest the opposite happened: the state spent more, but the private sector pulled back.

How the money was supposed to work

The Recovery and Resilience Facility, or RRF, is the main channel for NextGenerationEU money. It allowed the EU to borrow collectively so that governments with tighter budgets could invest without bearing the full cost themselves (European Commission). For Ireland, which remembers the Troika years well, the political novelty matters: this was not the old eurozone reflex of loans, lectures and adjustment programmes. It was common debt, tied to reforms and project milestones rather than simple proof that money had been spent (EUR-Lex).

The logic had two stages. First, public spending on infrastructure, equipment and services would create work and orders. Then, if the projects were chosen well, they would make firms and workers more productive through cleaner energy systems, digital upgrades or better regulation. Income per person, an economy’s output divided by its population, is a useful test because it asks whether a country is creating more wealth for each resident rather than merely pushing more money through the system.

Spain’s 0.2% gain says the immediate lift was thin. The 3% fall in private investment is more damaging. The scheme assumed public money would crowd private money in. In Spain, on EY’s assessment, public money arrived while private investment went the other way.

The same pattern across the biggest recipients

Italy, the largest beneficiary, had received €166 billion through nine EU instalments by April 2026, though spending on the ground was still well behind schedule (ACEN). That distinction matters. Money received from Brussels is not the same as money spent in Italy, and money spent is not the same as a finished project changing how an economy works.

Italy’s construction industry expects public works to remain its engine until the programme ends in 2027, before dropping away. That is the Spanish problem in a larger economy: building sites can lift activity for a time, but they do not automatically leave behind a more dynamic private sector.

Portugal shows the fiscal boost is real, but temporary. RRF money added more than 0.5% of GDP to Portugal’s budget expansion in 2026, meaning the state was supporting demand at a pace heavily dependent on EU transfers (ECO). The same analysis warns that 2027 turns contractionary as the EU money fades. Growth built on a temporary transfer has to face the moment when the transfer stops.

Greece gives the strongest defence of the model. Its plan relied more on EU loans and required private co-financing, tying public and private money more tightly together (Bank of Greece). Even there, real wages, meaning pay after inflation, rose by just 0.1% in 2025, with a similar forecast for 2026 (Powergame). The version most designed to involve private capital has not yet produced income gains people can feel.

The bill arrives before the proof

The EU begins repaying the common debt in 2028, with payments running until 2058 (EUR-Lex). Germany, the Netherlands and other net contributors accepted that obligation on the basis that the fund would produce durable returns, not just a few years of state-backed demand. The European Court of Auditors has already pointed to the weakness in the evidence base: its 2025 audit of RRF-funded home renovations found poor targeting and limited proof that the work actually saved energy (ECA, Jornal Económico).

Brussels can count euros sent and milestones completed. It has a weaker case that the money created extra private investment, higher productivity or better incomes across the largest recipient countries. Spain’s EY report does not prove the whole programme failed. But as repayment nears, and as fresh rounds of common borrowing are discussed, the question is whether the EU can show transformation rather than disbursement. That is the test Ireland should care about too.