The European Court of Auditors (TCE) has singled out Spain as the country that used EU funds the least efficiently for the period 2014-2020.
Spain receives the third-highest level of EU structural funds, behind only Italy and Poland. However, according to an analysis of the EU’s July report by Spanish news site Voz Populi, it is the worst country at actually using the funds.
On average, EU member states used 90% of their allocated funds. For example, Poland has managed to distribute 99% of the EU funds it receives while Italy, lagging far behind the EU average, has used 78%. But Spain has only distributed 74% of its EU structural funds, leaving 11 billion euros “pending absorption,” that is, still to be requested from the European Commission. Spain was allocated 45 billion euros from Brussels, Poland 79 billion, and Italy 49 billion.
These funds come through several long-standing programs: the European Regional Development Fund (ERDF), the Cohesion Fund (CF), and the European Social Fund (ESF), which are parts of EU’s Structural and Investment Funds, intended to support “economic, social and territorial cohesion” and “generate smart, sustainable and inclusive growth.”
Spain also receives funds from the Youth Employment Initiative (YEI) for support of regions where youth unemployment is over 25%, and the European Aid Fund for the Most Disadvantaged People (FEAD), intended to provide the most basic needs for people in poverty—food, clothing and other essential items.
The European Court of Auditors also found that Spain had made the most mistakes when spending the funds and demanded that undue expenses be recovered “quickly.”
For example, Spain was criticized for allocating EU funds to people and projects that did not meet the program requirements. The report stated that such mistakes were “the most significant type of error detected by all auditors between 2018 and 2022, both numerically and due to financial impact.”
It specifically cites a youth employment program where almost a quarter of the recipients audited by the EU were actually ineligible for the grant they received. Spain had created a program for the so-called “NEETs,” youth who are not in education, employment, or training.
“Eight of the thirty candidates whose applications we verified were, at the time of application, employed at another university or pursuing postgraduate studies at the contracting university, which means that they did not meet the requirements of the NEET status, so the corresponding expenses were not eligible,” the report explains.
In its annual report on the implementation of the 2022 EU Budget (posted in October last year), Brussels had already given examples of Spain’s misuse of EU funds by using the money to fund ordinary expenses or programs already included in the national budget.
It cited the example of a program run by the Spanish tax agency in 2021 that
encouraged multinational companies to disseminate information about their operations. However, according to the EU auditing body, this expense had been an item on the ordinary national budget item since 2017. In the field of structural funds, it also pointed to a purchase of masks by the Ministry of Health in 2020 using money from ERDF.
At the same time, an investigation into a 30 million euro corruption case involving mask purchases is ongoing, with the EU’s corruption watchdog investigating whether EU funds may have been used.
Spain has also received two extensions from the EU to report expenses related to the period of 2014-2020 and receive money from the various EU structural funds. It first received an extension from the original deadline of December 31, 2023 (after three years of grace) until July 1, 2024. It then received another extension of a year until June 30, 2025.
Spain has a lot more EU money to spend, too. It stands to be the country that will benefit the most from the post-pandemic exceptional financing scheme best known as Next Generation Funds. It is expected to receive some 80 billion in non-refundable transfers and possibly another 84 billion in the form of loans. But Spain is racing to allocate the funds to projects before the 2026 deadline. It still has 35 million euros to grant to projects that are supposed to both inject new life into the Spanish economy and help pave the way to a “net zero” industrial future.
Spain is also the third-largest recipient of EU structural funds for the current period of 2021 through 2027, again coming in only behind Italy and Poland. For these programs, it has received 36.7 billion from Brussels.
