eco TV Week

Spain: renewable energies offer new opportunities


While Spain’s recovery plan will begin to take shape over the summer, investment in the renewable energy sector could provide significant support for economic growth and employment creation in the coming years.

Guillaume DERRIEN

TRANSCRIPT // Spain: renewable energies offer new opportunities : June 2020

As the Covid-19 epidemic continues to recede in Spain and Europe, Prime Minister Pedro Sanchez is now trying to unite political parties around a recovery plan; this recovery plan, which is still at an early stage, should focus on the development of so-called green technologies in many sectors, as well as on the strengthening of vocational training. This plan should also propose new taxations on financial or digital transactions. It will without any doubt be closely aligned with the European Green Deal, which promotes a growth model that reconciles environment, employment and the reduction of inequalities in Europe. Spain should be one of the major beneficiaries of the European reconstruction fund unveiled in May and will therefore have to put in place a public investment plan in line with Brussels' ambitions.

For sure the Covid-19 epidemic has hit the Spanish economy hard. The number of job seekers has jumped by almost 804,000 since the beginning of the crisis in March. This is an unprecedented increase well above the figures seen during the 2008 financial crisis and European sovereign debt crisis in 2011.

However, Spain can in the long run be one of the biggest beneficiaries of this acceleration towards renewable energies. Spain became last year the first European market for onshore wind, and especially for solar energy. The Spanish government presented an Energy and Climate Plan at the end of May, which would ban any new project based on fossil fuels and would target 100% of the electricity produced to be renewable by 2050.

This plan is an environmental issue but matters also for employment. According to the government, this plan would create around 300,000 jobs by 2030. A point highlighted by the president of Iberdrola, one of the largest electricity suppliers in Spain and in the world, who recalled during the summit in Madrid that “for every job generated in the electricity sector, 12 are created in other sectors. The spillover effects are therefore very significant in this sector.

The Covid-19 crisis will nevertheless drastically reduce the budgetary margins of the government of Pedro Sanchez. The Bank of Spain estimates in its June forecast that the public deficit would reach between 9 and 11% of GDP by the end of this year, which would lead to an increase in public debt between 114 and 119% of GDP.

Despite this, the opening decade offers new prospects for growth and jobs that the government will have to seize in order to sustainably restore its economy. Prime Minister Pedro Sanchez walks therefore more than ever on a tightrope.

View more videos Eco TV Week

On the Same Theme

Under the threat of a resurgence of the epidemic 7/24/2020
The Q2 GDP figures – released next week – should confirm that Spain has been one of the European economies hit hardest by the health crisis...
Recovery measures meet fiscal reality 7/15/2020
The unprecedented economic contraction in H1 2020 raises serious doubts about the upcoming recovery. Although the reopening phase has proceeded smoothly so far, the recovery in employment was very small in June. Tourism remains under the threat of a resurgence of the Covid-19 epidemics in Europe. The swelling public deficit will force Prime Minister Pedro Sanchez to design a tight recovery package that balances between short-term emergency measures and long-term investments. This difficult equilibrium is likely to heighten the tensions in the governing coalition between Podemos and the socialist party. Subsidies allocated as part of the European Recovery Plan would give Spain some fiscal leeway, but the final terms and amount of the funds are yet to be finalised.     
A recovery strewn with obstacles 6/26/2020
The barometer for Spain has begun to improve with the introduction of post-lockdown data, but it continues to fluctuate around historically-low averages [...]
Hopes of a green recovery 6/9/2020
The Covid-19 crisis will leave its mark on the economy. However, the decade ahead offers new prospects for growth and employment. Spain suffers from a lack of employment and investment in technology-related sectors, but has opportunities to close these gaps. The renewable energy sector can be a significant source of employment over the medium to long term.The National Energy and Climate Plan is a significant step forward (if passed and implemented). The European Green Pact and Brexit may also help boost high-tech investment in the country.
At the height of the crisis 5/7/2020
The Spanish data has sharply deteriorated – well below their historical averages – since the beginning of the lockdown in March. The trend in exports and industrial output remains positive on the graphic below but the latest figures are only for February. They will also plunge in March/April [...]    
Putting the unemployment numbers into perspective 4/9/2020
The number of unemployed people leapt by 311,037 in March (seasonally-adjusted figures), the biggest monthly increase on record. However, the unemployment report only included a fraction of people in partial unemployment (data for April should show a much bigger jump). The latest Government accounts (2019) show a substantial narrowing of the primary deficit since 2013. The improvement in public finances gives the government some leeway to face the current crisis.
Badly hit by the Covid-19 4/8/2020
Spain is Europe’s second hardest-hit country by the coronavirus pandemic, and is likely to suffer a sharp economic contraction this year. The economic impact remains hard to quantify. GDP is nonetheless likely to fall by more than 3% in 2020, before a recovery in 2021. The structure of the Spanish economy – turned heavily towards services and with a high proportion of SMEs – suggests that the economic shock could be greater than in other industrialised countries. Endemic unemployment could intensify, leaving a lasting mark on growth over the medium term. However, the improvement in public finances before the virus outbreak and a more stable political situation gives the government some leeway to face the crisis.
Spain : the weight of services in the economy continues to increase 3/4/2020
The weight of the tertiary sector in the Spanish economy has grown steadily over the years, and this growth has accelerated in the last five years. Value added for the services sector (volume terms) has increased by 16.2% since Q3 2008, the previous peak achieved before the financial crisis. Conversely, the industrial sector remains 6.9% below its 2008 level. This structural transformation could reflect the growing role of new technologies and the digital economy as engines of growth for both consumption and investment choices. This trend is reflected not only in Spanish domestic demand, but also in the country’s international trade. Indeed, Spanish exports of services have risen 46 % (volume terms) since the autumn of 2008.
Towards weaker economic growth in 2020 2/28/2020
Economic activity was solid in Q4 in Spain last year. Growth in Spain should nonetheless continue to slow in 2020.
The new coalition takes its first steps 1/24/2020
Although Spanish growth remains solid, it is by no means sheltered from the European slowdown. In 2020, growth is expected to continue slowing to about 1.7%, after reaching 2% in 2019. The slowdown is also beginning to have an impact on the labour market. From a political perspective, Pedro Sanchez was the winner of November’s legislative election, although he failed to strengthen the Socialist party’s position. He was invested as a prime minister in early January by Parliament and he will lead a minority coalition government alongside the extreme left Podemos. The coalition will depend on the implicit support of some regional and nationalist parties, notably the pro-independence Catalan ERC party.

ABOUT US Three teams of economists (OECD countries research, emerging economies and country risk, banking economics) make up BNP Paribas Economic Research Department.
This website presents their analyses.
The website contains 2485 articles and 640 videos