Spain is one of the worst affected eurozone countries by COVID-19. The country went into the pandemic with weak macroecoanomic fundamentals including an unemployment rate of 14% (now higher). The tsunami of funds from Next Generation EU is a golden opportunity to make the economy more sustainable and more inclusive. The government must accompany this with long overdue structural reforms, particularly in the ailing pensions system and the labour market, and improve the education system, which is not providing the skills that Spain needs (the early school-leaving rate is 16%). The funds will sorely test Spain’s administrative capacity to adequately plan and execute them at a time when politics is absurdly polarised, particularly in Catalonia, whose government continues to push for independence.
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