Logo Guide to Business in Spain

3Spain and the European Union

Spain became a full member of the European Economic Community in 1986. In this connection and according to figures published by the European Commission, Spain fully complies with the objectives established by the European Council.

A major impact of European Union membership for Spain, and for the other Member States, came in the mid-nineties with the advent of the European Single Market and the European Economic Area, which created a genuine barrier-free trading space.

Since then, the EU has advanced significantly in the process of unification by strengthening the political and social ties among its citizens. Spain, throughout this process, has always stood out as one of the leaders in the implementation of liberalization measures.

On July 1, 2013, with the addition of Croatia, the number of countries in the European Union was increased to 28 Member States8. Nonetheless, the referendum on whether the United Kingdom and Gibraltar should remain in the European Union was held on June 23, 2016, the result being in favor of their exiting the Union. Thus, on January 31, 2020 the United Kingdom left the European Union upon the entry into force of the Withdrawal Agreement, thus reducing the number of Member States to 27.

With the aim of strengthening democracy, efficiency and transparency within the EU and, in turn, its ability to meet global challenges such as climate change, security, and sustainable development, on December 13, 2007, the then 27 EU Member States signed the Treaty of Lisbon, which entered into force – subject to prior ratification by each of the 27 Member States – on December 1, 2009. The European Parliament elections took place between June 4 and 7 of that year9.

Spain holds significant responsibilities within the EU, evidenced by the fact that it is the fourth country in terms of voting power on the Council of Ministers. Spain will also hold the Presidency of the European Union in the second half of 2023.

The introduction of the Euro (on January 1, 2002) heralded the start of the third Spanish presidency of the European Council and represented the culmination of a long process and the creation of a veritable array of opportunities for growth for Spanish and European markets. Since January 1, 2023, with the addition of Croatia, Eurozone membership now stands at twenty.

The euro has led to the creation of a single currency area within the EU that makes up the world’s largest business area, bringing about the integration of the financial markets and economic policies of the area’s member states, strengthening ties between the member states’ tax systems and bolstering the stability of the European Union.

Furthermore, the adoption of a single European currency has had a clear impact at an international level, raising the profile of the Eurozone at both international and financial gatherings (G-7 meetings) and within multilateral organizations. The economic and business stability offered by the euro have contributed to the growth of the Spanish economy, as well as its international political standing. In addition, measures are being implemented to strengthen the European economy; for example, the Euro-Plus Pact designed to consolidate the coordination of the economic policy in the Economic and Monetary Union.

In May 2020 the European Commission presented a proposal for reviewing the Multiannual Financial Framework with a view to increasing investments in 2020 in order to confront the COVID-19 public health crisis.

Subsequently, on December 17, 2020 the Council of the European Union approved the Regulation laying down the multiannual financial framework of the European Union for the years 2021 to 2027, consisting of a financing instrument aimed at supporting all areas of action of the European Union, with a particular focus on ecological and digital transitions, and helping EU Member States to deal with the consequences of the COVID-19 public health crisis, stimulating their modernization and resilience. Spain thus remains committed to structural reforms, boosting economic growth, investment and employment, based on a more competitive European Union.

Spain has traditionally benefitted from EU funding from the Structural Funds and the Cohesion Fund and is the third largest recipient of such Funds. During the 2020-2027 period, European financing under the Multiannual Financial Framework, together with the temporary recovery instrument “Next Generation EU”, is expected to entail a positive contribution of over €2 trillion to help repair the damage brought about by the COVID-19 pandemic and to support the long-term priorities of the European Union in various areas of action.

European institutions are tasked with encouraging and supporting technological research and development. On December 11, 2020 the Council of the European Union reached a provisional political agreement with the European Parliament’s negotiators on the proposed Regulation establishing Horizon Europe for the years 2021 to 2027.

Horizon Europe is built around three pillars:

  1. Excellent Science.
  2. Global Challenges and European Industrial Competitiveness.
  3. Innovative Europe.

It seeks to boost industrial leadership in Europe and strengthen the excellence of its science base, which is essential to the sustainability, prosperity and wellbeing of Europe in the long term.

On February 18, 2022, the Council of Ministers passed the bill for reform of the 2011 Science Law, which aims to provide resources, rights and stability for R&D&I personnel, as well as ensure stable and growing public funding, with a target of 1.25% of GDP which, coupled with private investment, would meet the European Union R&D funding target of 3%.

In late 2015, the Government approved the creation of the State Research Agency in order to provide the Spanish science, technology and innovation model with a swifter, more flexible and independent management system. This body, which is responsible for financing, assessing and allocating R&D funds, acts in conjunction with the Center for Industrial and Technological Development (CDTI), the other major R&D&i funding body focusing specifically on business, and which approved a €39 million R&D&I funding package in 2022. Both entities steadily promote transnational and bilateral research and cooperation projects.

As part of the Recovery, Transformation and Resilience Plan, the Ministry of Science and Innovation has established special employment measures to encourage the return of researchers to Spain, launching various lines of subsidies and special loans in the budget, targeted at R&D projects in the healthcare and aerospace sectors, among others. At the end of 2022, the Ministry of Science and Innovation presented the general outline of the General State Budget for 2023, which includes a large direct investment in R&D&I. Specifically, the budget has been increased by 4% with respect to 2022, i.e., up to €3,991 million.

With a view to meeting targets under the European Green Deal, on August 31, 2002, the European Commission approved the 2023-2027 Common Agricultural Policy Strategic Plan for Spain (2023-2027 CAP). The main goals of the 2023-2027 CAP are to achieve a competitive and diversified agricultural sector, ensuring food security, protecting the environment and biodiversity, and strengthening the socio-economic fabric of rural areas.