Pedro Sánchez, Prime Minister of Spain. | Reuters

The Spanish Prime Minister, Pedro Sánchez, will present the so-called 'Recovery, Transformation & Resilience Plan for the Spanish Economy' on Wednesday which will be sent to Brussels shortly.

It contains his strategy to address the coronavirus crisis and the challenges of the next decade for the "second modernisation" of the Spanish economy.

Based on four cross-cutting axes; ecological transition, social and territorial cohesion, digitisation and gender equality, the plan involves 25,000 million euros of European funds in 2021, contributing 2.7 points of growth to GDP in 2021 and a potential growth increase of 2% in a decade.

Prime Minister Sánchez will present his plan via a video conference attended by all members of the Executive, employers and unions, the ambassadors of the 27 member countries of the Union European Union and numerous representatives from civil society, including the media, according to Moncloa.

During his speech, Prime Minister Sánchez will break down the guidelines of the plan that the Executive has been working on for months, including the main policies, which according to the Government, will allow the economy to recover and ensure "robust, sustainable and inclusive growth” and reflect the 140 billion euros worth of European funds.

At 18:00, the four vice presidents of the Government, Carmen Calvo, Pablo Iglesias, Nadia Calviño and Teresa Ribera will explain the main pillars of the plan, but Moncloa points out that the main figures and policies of the Recovery, Transformation & Resilience Plan will be presented throughout the day and "the purpose is to start the second great modernisation of the Spanish economy.”

The presentation of the Recovery Plan comes one day after the Council of Ministers approved the new macroeconomic framework that envisages an 11.2% fall in GDP this year and an advance of 7.2% in 2021, which will reach 9.8% thanks to the impact of the Recovery Plan.

The Executive has also set a limit for non-financial spending, or the 'spending ceiling' of the State Budget for 2021 which increases by 53.7% to 196,097 million euros, including extraordinary transfers to the Autonomous Communities and Social Security and part of the European funds.

With a GDP deficit of 11.3% forecast this year and a public debt of 118% of GDP, the deficit reference rate has been set at 7.7% in 2021.

The impulse associated with the Recovery, Transformation & Resilience Plan is 2.7 percentage points of GDP, which represents a multiplier effect of approximately 1.2, according to information the Government used to prepare the macroeconomic table sent to AIReF, which endorses the 'macro' picture but warns of the risks of depending on the outbreaks and the execution of European funds.

The plan will mean an economic boost of 25,000 million euros in 2021, which will be oriented mostly to public investment in infrastructure and intangible assets associated with digitisation and innovation.

Another set of funds will be used to increase energy efficiency, the promotion of entrepreneurship, the improvement of education and continuous training and the reinforcement of inclusion policies, amongst other elements.

Third vice president, Nadia Calviño says the Recovery Plan will provide a potential growth increase of 2% in a decade.

The European Council approved the mobilisation of 750,000 million euros in July, which will be articulated mainly through a Recovery fund and Spain will receive a total of 140,000 million euros; 72,700 in transfers and the rest in loans.

Spain is entitled to 59,168 million from the Recovery & Resilience Mechanism between 2021 and 2023 and will obtain 12,436 million euros from the 'REACT-EU' Program next year.

The Recovery Plan that Spain will present to the European institutions will collect 25,000 million euros in transfers from the Recovery Mechanism in 2021, which are added to the 'spending ceiling’.

10,000 million of the 12,436 million from the 'REACT-EU' program will be allocated to the Autonomous Communities and the remaining 2,436 million will be incorporated into the Ministry of Health to be distributed amongst the regions to purchase vaccines, strengthen primary care or renew health supplies.

The Government will incorporate a total of 27,436 million euros of European funds to the 'spending ceiling' of 2021, derived from the 25,000 million of the Recovery Mechanism that it plans to receive next year and the 2,436 million of the 'React program -Eu 'to be obtained by the Ministry of Health.

Four axes

The Recovery, Transformation & Resilience Plan is oriented around four axes of transformation which will permeate ten work levers which pass through the urban and rural agenda, infrastructures and ecosystems resilient, a just and inclusive transition, a 21st century public administration, the modernisation and digitisation of the industrial ecosystem, services and SMEs, a country agreement for science and innovation and the strengthening of the National Health System.

It also involves education, professional training and the continuous training of citizens, a new care economy and the modernisation of active employment policies, the development and promotion of the culture and sports industry and a "fair" fiscal framework.

The presentation of the plan is framed within the strategy 'Spain can', which Prime Minister Sánchez presented at the end of August.