Spain Recovery Plan: What is really in it?
Implications of the first wave of bailouts for energy and climate policies
The European Union: new Crisis, same recipe?
The measures taken to deal with the health emergency arising from the spread of COVID-19 have led to an unprecedented economic slowdown. As a result, public institutions have activated plans, mechanisms and instruments that are intended to stop the shock, reactivate the economy and restore pre-pandemic normality. In this context, at a time of great uncertainty big business, like the banks during the financial crisis of 2008, is taking advantage of public policy and enjoying the benefit of massive rescue packages.
On 24 March 2020, as a result of the economic impact of measures implemented to contain COVID-19, such as border closures and lockdowns, the ECB authorised1 a €750-billion extension of the programme (the Pandemic Emergency Purchase Programme (PEPP)).2 The process of selecting beneficiary companies was delegated to the central banks of Belgium, France, Germany, Italy and Spain, with the eligibility criteria being the financial stability of the company and the quality of the debt. The very blueprint for the PEPP means that it is only available to big business. Bond issues entail costly procedures and are only made for amounts ranging from hundreds of millions to billions of euros.
Furthermore, the eligibility criteria for bank intermediaries do not include any exclusions or conditions relating to social, environmental or climate aspects and it is stated that “there will be no positive or negative discrimination on the basis of the economic activity of the issuing entities”, and so large companies like Total, Airbus, Shell and E.ON and more than 50 other multinationals are reaping the rewards. In the case of the energy sector, Spanish companies, including most notably Iberdrola, Naturgy, Red Eléctrica de España and Repsol, were granted bailouts of €58 billion for the period until 30 October 2020.
Josep Nualart Corpas
Researcher on energy and climate at the Observatori del Deute en la Globalització (ODG).
- Spain Recovery Plan: What is really in it? Josep Nualart Corpas