You are in:

Speech after agreement reached at European Council

Moncloa Palace, Tuesday 21 July 2020

Good day everyone.

Firstly, my thanks go to the media and the journalists here with us for their patience. The workers form the Ministries of Foreign Affairs, Economic Affairs and the Treasury, thank you for your work and your professionalism. In short, thank you for your commitment to Spain.

I have always maintained that it was imperative for Europe to reach an agreement in July. Those whom we have lost to this damned pandemic deserved it, those who suffered the health consequences in hospitals and at home, those who have lost their jobs or seen their company close down as a result of the lockdown and of the very strict measures we had to take in Spain and in Europe as a whole, and because a great many Spanish men and women still live at this time of uncertainty with anguish. For all of them, for the hundreds of millions of fellow Europeans who we serve and owe this to, we needed to reach an agreement in the month of July. Europe had to reach an agreement in the month of July and it has.

As you know, this has been a difficult and complex negotiation; a marathon that began some months ago. As you know, we have gone through some extraordinarily complex months, because we have had to focus our efforts primarily on the response to an unprecedented health emergency in the last 100 years, the final stretch of which, with five days closed in debating, has been as extenuating as it has been successful.

Europe faced up to an historic challenge and found a response through an agreement in the same terms - historic! This is a great agreement for Europe, and also for Spain.

Today, have no doubts, one of the most brilliant pages in the history of the European Union has been written and, as the profound pro-European that I am, allow me to pass on my deepest emotion at the time we are going through.

I will now outline the most important points of the agreement:

Firstly, we have approved the creation of a great Recovery Fund, if you will allow me to use this name, of 750 billion euros for the next six years.

To give you an idea of the size of what we are talking about, 750 billion euros was 60% of the Gross Domestic Product of our country in 2019, and 4.6% of the European Gross Domestic Product. That is the size of the fund approved, in historic terms, at today's European Council. A genuine Marshall Plan to provide a decisive response, firstly, to the COVID crisis, but also looking to the future to undertake these transformations that we need to make if we want to be a resilient, competitive, inclusive, digital and green economy over the coming decades.

The aim of the Recovery Fund is to mobilise a huge amount of public European resources, which will have the knock-on effect of mobilising a large amount of private resources, to enhance the economic recovery following the COVID crisis and ensure, furthermore, that this recovery comes quickly, strongly and is also sustainable.

And I wish to pay tribute, in this case and recognise the work of the European Commission, firstly, and the work of the different European governments, particularly the German Government and the French Government, which presented a joint package of 500 billion euros. And I also want to recognise the work and the contribution to the European debate, and to this push that a great many governments have given to ensure that today's agreement became a reality, including the Government of Spain, with the proposals it presented over the course of recent months, precisely advocating this Marshall Plan.

This recovery, based on this fund we have approved today, must be sustained on the three pillars that will allow us to grow strongly, in a balanced and a sustainable fashion.

Firstly, the digital transition; secondly, the ecological transition and thirdly, education and the training of our students and our workers. In short, a recovery that must be green, that must be digital, with better human capital to ensure that the European economy, and consequently, the Spanish economy, is a more competitive, inclusive and sustainable economy.

Of the 750 billion euros in the Recovery Fund, 390 billion will be paid out in transfers to all the countries in the European Union, while some 360 billion will be paid out in loans.

In order to mobilise all these resources over the next six years - remember, I feel it is very important to once again underline this, these resources amount to 4.6% of the European Gross Domestic Product, that is what will be mobilised - the European Commission will go into debt for the first time ever to finance these programmes. This is the other unprecedented aspect of what we are seeing, of what has been approved today, not just the mobilisation of an historic sum of resources, as I said before, but also that the European Commission will go into debt for the first time ever to finance these programmes.

If this decision is showing anything, it is precisely that Europe has taken a united response, a common response to a crisis - that of COVID - that affects everyone to a greater or lesser degree, in its three areas - health, economic and social.

As far as Spain is concerned, our country has managed to obtain approximately 140 billion euros, to be disbursed over the next six years. To give you an idea, we are talking about 11% of the Gross Domestic Product of Spain in 2019. Of these 140 billion euros, 72.7 billion will come in the form of transfers, and the remainder will be loans.

Hence, 140 billion euros approximately, the equivalent of 11% of the Gross Domestic Product of Spain in 2019, of which 72.7 billion in transfers and the rest in loans.

To give us an idea of what this means in historic terms for Spain, let me remind you of the cohesion funds. These funds meant a leap in modernisation for Spain, in cohesion, in the competitiveness of our country in the 1990s, in the 20th Century.

If the cohesion funds amounted over six years for Spain to the sum of 7.8 billion euros, what we have approved today amounts to the mobilisation of almost 73 billion euros in the same period, that is, over six years, almost ten times more than those cohesion funds which means so much for the progress and prosperity of our country.

This extraordinary boost in resources, pooled by the European Union, completes what the European Budget already does in other core areas for European policy - the cohesion policies, the agricultural policy, which have once again shown during the pandemic their essential and key role.

Allow me to highlight the following Recovery Fund programmes: firstly, the Recovery and Resilience Facility, with a total provision of 672.5 billion euros, of which 312 billion will be in transfers, with 59 billion corresponding to Spain.

And thanks to these programmes, we are going to be able to set up the National Reform Plan, to foster investments for this growth and this green, digital and inclusive transformation that I mentioned before, and also allocate economic resources to science, to vocational training and to education.

The government, as you know, has already been working on this plan for more than four weeks now, which we will take to Brussels as soon as it is possible for its approval. This will mean, as I said before, a new modernisation of our country following the modernisation of infrastructures which arose out of those cohesion funds and those structural funds in the1990s.

Secondly, the REACT- EU programme, with an allocation of 47.5 billion euros, of which 12.4 billion will correspond to Spain.

This new programme is fundamental for tackling the economic and social consequences of the COVID crisis, and all these funds, together with traditional cohesion funds under the Multiannual Financial Framework, will particularly contribute to ensure this economic, social and territorial cohesion in our country.

Thirdly, within the Multiannual Financial Framework you have the Common Agricultural Policy. The government, as you know, undertook to provide our crop and livestock farmers with sufficient funding, and to the rural environment. This has been the goal and the commitment of the government since the start of the negotiations. So, I can say that we have complied with the target that we set ourselves. All of the amounts under the Common Agricultural Policy in the form of direct aid, rural development measures and market measures will be the same as in the 2014-2020 Multiannual Financial Framework.

It is clear that the conditions of the political and budgetary context have been much more difficult in the negotiation of this framework that the Council has just agreed upon but, despite that, we have achieved deserved European support and I would also like to underline that fact, which is sufficient to tackle the economic, environmental and social challenges of our crop and livestock farmers.

As regards governance, there has been quite a long debate over the course of this Council. First, I would like to remind you that the Recovery Fund is an historic milestone, a new instrument created by the European Union, which hence requires a new form of governance. This has nothing to do with the governance of other instruments that already exist. So, this is an historic milestone, it is a new fund and it has a new form of governance, where the European Commission is the cornerstone.

We have strengthened the supervisory role of the European Council, of the Recovery Fund, but what is most important, what the Government of Spain has always wanted and most of the members of the European Council, is to safeguard the institutional balance between the Council and the Commission, each in its own role.

When you have a flagrant breach by a country of the performance of the Recovery Fund, any other country, on good grounds, can request a political debate at the European Council. But it will still be the Commission that has the ability to enforce this Fund.

In short, this necessary institutional balance between the European Commission and the European Council will be maintained, which is what the Government of Spain has advocated throughout this debate.

On this point, allow me to also underline the importance of the decisions we have taken in relation to the origin of the Recovery Fund.

The Commission, as I said before, will resort to obtaining funding in the markets to obtain financial resources that will be distributed throughout the Member States as transfers. Hence, this is an absolutely revolutionary facility - the Recovery Fund - which allows the position of some countries in relation to this matter to be understood.

And lastly, I want to refer to the Multiannual Financial Framework, the Budget for the next seven years. We have agreed that it will amount to 1 trillion euros, or better put, 1 trillion and 74 billion euros.

This is a very significant amount, very ambitious, particularly taking into account the context in which we are moving at this time and that this is in addition to the Recovery Fund, which we have also agreed on.

In short, this is a great agreement for Europe and a great agreement for Spain.

Today, Europe has laid the foundations to provide a response to the crisis that Europe is suffering, which is the COVID crisis, but without losing sight of tomorrow, without forgetting the changes that have speeded up and which require a swift response from everyone - from public institutions and also from private parties. The ecological transition, the digital transition, the education of our children and also the training of workers.

Europe is beginning a path towards a great change. We are at the start of this great change, a great change towards modernisation. Let's give it a boost to place Europe where it deserves to be, which is at the forefront of the digital transition and of the ecological transition, without leaving anyone or any region behind.

In short, this is an exercise in leadership and inclusion by the European Council and the European institutions over the course of these months and which has culminated today. This is the task that all Europeans are called to - European leadership which, and I want to underline this, is more necessary now than ever before.

When we see other geopolitical areas with difficulties in finding a quick and consequential solution to this huge unprecedented crisis we are suffering from, Europe has sent out a strong message to the world to say that it is ready to tackle the global challenges facing us.

Today will be a day to remember in the most outstanding chapters of the history of the European Union. All of Europe wins today and the European Union comes out much stronger. The challenge was extraordinary. The work has been extenuating but the outcome has been worthwhile.

I will end now. Great agreements have many hours of work behind them, interminable hours of technical negotiations, even at the cost of spending time with our families, and of course losing sleep.

Spain is lucky enough to have a body of highly qualified public servants, committed and dedicated to the task of defending the legitimate interests of our country - a task which they have performed with extraordinary brilliance and efficacy. And I wish to express my recognition of them, because this historic agreement for Europe and for Spain would not have been possible without them.

So thank you very much for your work.

I will now take any questions you may have.

Q: Good day, President of the Government, Jacobo Regoyos, from Onda Cero. Since this money exists to undertake reforms, what is the structural reform that is a priority for Spain in your opinion in employing these funds? And, do you believe that the rule of law in the European Union will be strengthened through this agreement? Thank you.

President of the Government: Well, look, one of the things that I haven't announced in my speech, but which we have also achieved after long hours of negotiations, is that the eligibility, the timing of the eligibility to incorporate national reform plans is February 2020. Why that date? Why were there some countries, like ours, that wanted to also incorporate those reforms as from February 2020? Not just because that is when the pandemic broke out and consequently when all countries started to structure a response to the COVID crisis, but also because we have started to undertake reforms. I would simply remind you that, for example, the draft Climate Change Act is one of the reforms that we will propose and include in this National Reform Plan. For example, the Law to Modernise our Education System is also a draft law, which is currently in its passage through the Lower House of Parliament, which we will include in the National Reform Plan, because it is in line with many of the questions that the Government of Spain has proposed, and also the European Commission in its specific recommendations to each country, or, for example, everything that we are doing with the Temporary Lay-off Plans (Spanish acronym: ERTE) and social dialogue tied into the Temporary Lay-off Plans, since, of course, if this ends well, this could be one of the fundamental elements of this National Reform Plan.

Hence, it is important to convey this, that we are already undertaking reforms, and hence, for Spain it is important to incorporate them as from February.

And as regards the second question, I feel that this is an initial approach that we have made at the European Council, but clearly there is a legislative draft underway and there will also have to be other institutions that give their opinion, in this case, the European Parliament.

Q: Thank you, President of the Government, my name is Griselda Pastor, from Cadena SER. Continuing with the subject of the reforms, I would like to know whether the labour reform, which you inherited from former President of the Government Rajoy, may be reformed as a condition and as a result of the content of the debates held here and although it is clear that you have come away with an agreement, this has taken five days and many nights. Can the EU continue operating like this?

President of the Government: Well, I feel that today is a great day for Europe. We are 27 countries. We are all entitled to vote, regardless of population size, whatever our importance in GDP terms on the European Council. And I believe that this is also one of the great strengths of the European Union, that we are all at the same level and we all contribute. And it is true that we have had to go without many hours of sleep, but this effort, as I said before, has been extenuating, but in the end the outcome is positive. It has been worthwhile. Today Europe is taking a huge step forward and, by the way, this is providing a response to the crisis that is completely different to the one given ten years ago

Today we are talking about a Recovery Fund that will mobilise 750 billion euros in total for the digital transition, for the ecological transition, for worker training, for education, for better training for our young people… In short, this is a completely different response to the one proposed ten years ago, and hence I want to underline that this is a great agreement for Europe and a great agreement for Spain.

And secondly, as regards the labour reform. Remember the following - the procedure, firstly, is a new instrument, and this new instrument requires governance, new governance that cannot break the institutional balance between the European Commission and the European Council, which is what we have managed to achieve. And then Spain, like all EU Member States, must negotiate with the European Commission and then uphold a great many specific recommendations that the Commission makes to countries under the European Semester. In other words, this is nothing new. And by the way, I will tell you something else, what does the agenda of the European Union talk about, if you look at the country recommendations for 2019 and 2020, which is what the national reform plans will relate to and also the negotiations we will have with the European Commission and its ultimate approval at the European Council? It talks about the digital transition, of an inclusive economic policy, which fosters social cohesion. It also talks about the digital transition. These are the broad strokes of the specific recommendations made by the European Commission to countries and what I should say is that the agenda of the European Union and of Spain are absolutely synchronised.

Q: President of the Government. María García, from Aquí Europa. Mark Rutte champions himself as one of the main villains of this event. We have seen, well, leaks have reached us about major and intense moments with [Emmanuel] Macron, the Bulgarian [Boyko] Borisov and even with [Viktor] Orbán. We would like to know whether you have also had any confrontation with the Dutch PM and what the tone of the negotiations were. We have seen [Guiseppe] Conte be a little more aggressive and stronger. I don't know if you were the good cop and [Guiseppe] Conte the bad cop in the negotiations.

President of the Government: Not at all. On the contrary, I feel that five days of negotiations mean that you take on many roles, but that Spain has always wanted to play a constructive role, a role which… in the end, the only red line we had in these negotiations was that of not reaching an agreement. Europe could not afford not to reach an agreement. This is a great agreement for Europe, it is a great agreement for Spain and, of course, if Spain has done anything, it has precisely been to build bridges and not fall into any type of provocation, which on many occasions is not so much conviction as a negotiating tactic and, in the end, we have to be aware that we are all members of the same club, of the same team. Everyone has their own perspective, their way of seeing how Europe should be built. Clearly I have a different perspective to other European colleagues but in the end unity is what makes us stronger and I believe that the result is that we will be freeing up 750 billion euros over the next six years. 390 billion euros, in other words, 60% of Spain's Gross Domestic Product, to undertake the great transformation, the great modernisation of our continent, of our common project.

We are really at the start of a new milestone, a new chapter in the European construction, one of the most brilliant and brightest pages in the European construction. Perhaps we are not that aware yet because we are so close, just minutes away from approving an unprecedented and historic decision, but I can assure you that the unconditional mobilisation that will take place, the multiplication of energies that this will lead to over the next six years to offer a positive response to this crisis and give a great leap of modernisation in Europe and in Spain, will, I believe, call millions of citizens towards a horizon of hope which is more necessary than ever at this time, because millions of Spaniards and millions of Europeans are leading highly anguished daily lives, not just because of the health emergency, but also due to the economic and social consequences we are seeing.

Q: President of the Government, when you speak about the emergency brake, we have noted in these negotiations that there is a certain mistrust among the frugal countries, to give them a name, among your partners, in taking these decisions. Do you truly believe that this emergency brake will not be over-used and that this will not prejudice Spain when undertaking certain reforms or taking steps forward because you feel that these countries will not use it?

President of the Government: Thank you very much, Patricia. Let's see, what would prejudice Spain and Europe is if an agreement had not been reached, first of all. Secondly, I repeat, this is the first time in the history of the European Union that the Commission will go into debt to finance programmes.

This is the first time and let's be aware of the step we are going to take, that we are taking; this is the first time ever that the European Commission will go into debt to finance the digital transition, to finance the ecological transition, to finance the boost to science, education and training. The European Commission is going to do that, it will go into debt and hence we will all go into debt.

Because these 750 billion euros will be paid by all the Member States, not just Holland or Sweden, but also Spain, Portugal, France and Germany, all countries will pay the debt the European Commission will go into, by providing this Budget. This is not free. We will all be paying for it.

What do I mean by this? Well, that I understand that this is a new instrument created with this new governance, since there are countries that say, listen, if I am going into debt, then these economic resources should be spent under those plans and programmes for which this Recovery Fund was created.

What, for me, is my objection, let's say, to this approach? It does not break the institutional balance, it does not prejudice the position of the European Commission because it is necessary to have an institutional balance between the European Council and the European Commission, which is what Spain has advocated. And in relation to the conditions, I repeat, Spain already has its own agenda aligned with that of the European Commission, as is only right. And not just Spain, but all Member States, because all Member States must examine themselves and present our economic policies under what is called the European Semester.

Q: Good day, President of the Government, Jorge Valero from El Economista, two quick questions. The first, you have repeated on several occasions the fact that the 750 billion and the 500 billion in non-repayable support was the minimum, the last time I think was with your counterpart, Antonio Costa. Why is this agreement so good when it lowers the non-repayable amount by 20%. And a second question. Your colleague, Mark Rutte, has shown a great deal of interest in the pension and the labour reform; I was wondering whether in these several meetings you have had these days to facilitate the agreement he has enquired after the reforms that Spain was going to undertake in these two areas or whether you have given him some idea as to where you were going to head, for example, by being prudent with the labour reform and the introduction of this sustainability in the pensions, as the Commission also called for.

President of the Government: I will tell you, I have an extraordinary relationship with the Dutch Prime Minister, he knows that we are a reformist government. He also agrees that the Government of Spain is a reformist government and, in relation to your first question, I can clearly say yes, that I would have liked to have had 500 billion in transfers.

But between having 500 billion and 150 billion in transfers, and having more loans than none, well there is a considerable distance.

I also said during these visits that I made to some of the tougher countries in terms of the idea of opening the door to transfers for the first time in the history of the European Commission that I was prepared to give ground, because the true red line was not reaching an agreement, that was the only red line we had.

We had to reach an agreement in the month of July and Europe has reached a great agreement in July that will benefit Europe, its economy and Spain a great deal and help calm our fellow countrymen because it offers certainty, it offers hope, it offers a horizon and this will convey a very positive message to workers and business owners in our country and on our continent.

We are going to mobilise public and private resources, precisely as hasn't been done for decades to guarantee these great transitions that our country and our continent need. I believe that this is a huge step forward. We are taking an historic step. This term is used many times, but believe me, this is an historic day in the common European project.

And I will tell you something else, what is paradoxical, on some occasions, is that it is true that transfers have been cut. We have gone from 500 billion to 390 billion, as you reminded us, from the Commission's proposal to the Council's final proposal that we approved, but given that they have been maintained in the agreement, these have been the main pillars establishing the repayment percentages of each country, just look, in this proposal of 500 billion and of 750 billion, I believe we were due to receive around 140 billion euros in the Commission's proposal. And we came out with 140 billion euros. That is paradoxical, but it is what Spain has achieved. The transfers have been cut in global terms, but in the terms that correspond to us as a country, we have the same proposal as the one made by the Commission before going in to the debate and the negotiations at the Council. I feel that this also says a great deal about the people who have negotiated this agreement on behalf of Spain.

Q: How are you? Good day, President of the Government. Aside from the figures, we also wanted to ask you about the origin of this whole problem, the epidemiological situation in our country. I wanted to ask you if the government is worried about the spikes we are seeing in our country in recent days, particularly the situation in Catalonia, and if in some of these areas, specifically in Catalonia, conditions may mean that a partial state of emergency is invoked which the government said it would implement if the circumstances so dictated, or if the situation worsened in some regions of our country. And I also wanted to take the opportunity to ask if you have been able to talk with the French President, with Emmanuel Macron, about preventive measures, perhaps on the border; we have heard some rumours in this regard.

President of the Government: He hasn't mentioned this to me (Macron).

In short, of course we are following up-to-the-minute, I would say, the development of the COVID crisis throughout Spain. I have spoken with Regional President Torra on more than one occasion; the Minister for Health is in daily contact not only with the Regional Government of Catalonia, but also with the Regional Government of Aragon and with many other regional governments that are seeing spikes, not on the same scale as Catalonia and Aragon, and we must continue to monitor this.

And what I can guarantee is that the Government of Spain has always maintained the same criteria, the same attitude, based on one thing - what is fundamental is to protect the public health of our fellow countrymen, and hence we offer the utmost institutional loyalty to the regional governments, which directly manage healthcare, as you know - utmost loyalty and collaboration. We are here to get to work, to help out, to coordinate all the work that is needed within our jurisdiction to strengthen this common goal of protecting the public health of our fellow countrymen, with the Regional Government of Catalonia, with the mayors there, and also with the Regional Government of Aragon and with each and every regional government. We have been doing this since the start of the pandemic, and we will continue to do this now that we have these spikes that we are obviously following closely.

Q: Thank you very much, President of the Government. I am from El Confidencial and have two questions.

The first, you said that in the end Spain comes out of this in more or less the same way as with the European Commission's proposal, but now, however, with the size of the transfers you said, it would seem that we lose 5 billion euros in transfers. I imagine that this is by credit, in other words, that in this proportion we have come out losing. And another question. Spain was the first country to make the initial proposal of a fund of more than 1 trillion euros, and hence I wanted to ask you if you thus think that this could be enough, particularly taking into account the possibility of this second wave. Do you think that this might fall short if the situation worsens?

President of the Government: As regards your first question, indeed, we are not satisfied at 100% transfers. We are at 95%. But that is what negotiations are about. At any event, this amounts to 140 billion euros, 72.7 billion in transfers.

To give you an idea, I will repeat this: the cohesion funds that did our country so much good in the field of competitiveness and social and territorial cohesion, represented little more than 7.8 billion euros. Here we are talking about multiplying this amount by ten. Hence, we are talking about an unprecedented scale that will require a tremendous effort to manage. But anyway, I am calm because I know we have some extraordinary public servants. We have political leadership, and we have practically completed the plans. Some of them are already completed, for example, the National Energy and Climate Plan, which you are familiar with, and the Law to Modernise Education and the Digital Agenda, which we will present soon. Hence, I want to say that we are clear about what the objectives are. We share these with the European Union and we have been developing optimum work from a political and technical point of view in recent months.

And in relation to the second question, it is true that we proposed the mobilisation of up to 1.5 trillion euros of resources because we indeed thought in the same way as the European Central Bank and also the International Monetary Fund and as the estimates of the Government of Spain, that the fall in the Gross Domestic Product as a result of the lockdown in these quarters has been so harsh as for us to have a negative growth rate this year that is very high, unprecedented in Spain, as in Europe, and thus we need to mobilise resources on the scale of the fall in GDP that Europe will post. In addition to these 750 billion euros, we must remember that the agreements of the Eurogroup need to be added, which already freed up more than 500 billion euros.

I feel that we have the foundations and the instruments so that, despite the uncertainty that prevails as a result of the unprecedented crisis we are immersed in, we can have instruments to provide an effective response. But I repeat, we are going through a time of great uncertainty and we will have to see, as time goes by, whether these are the right instruments or whether we will need more in the future. But this is something which, I repeat, I cannot answer because no one can answer this question categorically at this stage.

Thank you very much.

(Transcript edited by the State Secretariat for Communication)

Non official translation