Spain's €77 billion fund barely moved incomes

Spain received more than €77 billion from the EU’s jointly financed recovery fund over five years. According to El Mundo, citing an EY-backed final assessment, Spanish income per head ended up just 0.2% higher, while private investment was 3% lower than before the programme began (El Mundo).

This is not only a Spanish story. Malta, like every member state, is tied into the same experiment: the Recovery and Resilience Facility, or RRF, financed through common European borrowing on a scale the EU had not attempted before. It was presented after the pandemic as more than emergency support. It was meant to modernise economies. With the August 2026 deadline now close, Europe can show money spent more easily than it can show economies changed.

The Milestone Machine

The RRF does not work like older EU funds. Under traditional programmes, governments are usually reimbursed for actual project costs. Under the RRF, the Commission releases money when governments meet agreed milestones and targets: passing a law, setting up an agency, connecting a number of homes to broadband, or digitising public services. The point was to reward results rather than paperwork (Netherlands Court of Audit).

The weakness is that this proves administrative completion before it proves economic change. A government can pass a reform law and tick the milestone box without showing that wages rose, that firms invested more, or that productivity improved. The European Court of Auditors, the EU’s independent spending watchdog, has warned repeatedly that the Commission does not collect actual costs for individual RRF measures, even where governments hold the data (eucrim).

Payments can still go through in full even when procurement or state-aid rules have been breached, provided the milestone has been met (ECA). That matters in any member state. In a small country like Malta, where public contracts and political networks are never abstract, the distinction between a box ticked in Brussels and a project properly delivered on the ground is not a technicality. It is where taxpayers and honest contractors either get protection or lose it.

The European Parliament found that by October 2023, only 50% of funds paid to governments had actually reached final beneficiaries in 15 of the 22 member states examined (European Parliament). Half the money was still somewhere between the treasury and the project.

Spain’s Case Is Not Empty — But It Is Incomplete

Madrid presents the fund as a success: more than 6% of GDP mobilised, 338 milestones met, and a fast recovery (Mineco, La Moncloa). The IMF confirms that Spanish public investment rose 51.3% in real terms since 2019 (IMF). The state spent.

The private-sector response was much weaker. Private investment grew just 8.5% over the same period (IMF, European Commission). Private R&D spending is 0.84% of GDP, far below the EU average of 1.49% (European Commission).

A quarter of Spain’s RRF receipts between 2020 and 2024 went to current expenditure rather than capital investment (SEFO Funcas). Current spending keeps services going now. Capital investment builds the capacity to earn more later. If the fund was meant to transform, too much appears to have gone into maintenance.

The distribution also raises questions. Large companies accounted for only 1.4% of beneficiaries but received nearly 30% of resources (BBVA Research). Small firms, which employ most Spaniards, had less access. For Maltese readers, the pattern is familiar enough: EU money can be designed for broad renewal and still end up favouring the actors best equipped to navigate the system.

Why This Shapes Europe’s Next Borrowing Debate

Spain is not an outlier. Italy, which has the EU’s largest national plan at €194.4 billion, had fully completed public works representing only about 6% of total value by the end of 2025 (Il Sicilia). The problem is European.

Spain’s economy minister is already pressing for a permanent common-borrowing facility. That is where the politics becomes harder. Germany’s Bundestag budget committee is warning against higher EU contributions, with a possible additional cost of around €27.5 billion a year (FAZ). The Dutch Court of Audit says the Netherlands itself has "only limited understanding of the relation between results and costs" in its own recovery plan (Netherlands Court of Audit).

The Commission’s own rigorous evaluation is not due until 2028 (European Commission). But the argument over permanent EU borrowing is taking place now, before the evidence is in. The first RRF built a payment machine. Europe still has to prove it built an investment machine.