Spanish Government Announces Extensive Measures to Aid DANA-Affected Areas and Boost Economic Growth

In a significant move to address the aftermath of the recent DANA (Isolated Upper-level Depression) that devastated various regions in Spain, President Pedro Sánchez has unveiled a comprehensive package of measures aimed at supporting affected households, companies, and local councils.

DANA Response Plan

On November 5, 2024, President Sánchez announced that the Council of Ministers approved a first package of measures worth 10.6 billion euros. This substantial financial aid is targeted at the 78 municipalities in Valencia, Castilian-La Mancha, and Andalusia that were severely impacted by the DANA. The list of affected municipalities may be extended based on further assessments of the damage.

The measures include direct financial aid to citizens and companies, tax moratoriums and exemptions, social security support, lines of guarantees, ICO credits, and significant aid to local administrations. A key component of this plan is the creation of a 5 billion euro DANA Guarantee Facility, managed by the Official Credit Institute (ICO). This facility will enable SMEs, companies, the self-employed, and households to access loans under favorable conditions to re-equip businesses, reopen establishments, or repair homes promptly. The first tranche of 1 billion euros has already been approved, with the remaining amount to be approved in the coming days.

Financial Relief and Infrastructure Support

To alleviate the financial burden on affected individuals and businesses, the government has agreed with banks to allow citizens and SMEs with mortgages or consumer loans to postpone full repayment for three months and pay only interest for an additional nine months. For instance, a citizen with an average mortgage of 120,000 euros and a monthly payment of 600 euros will not pay for three months and then pay 300 euros for the following nine months. This relief is estimated to benefit around 30,000 businesses and thousands of households.

The government will also cover 100% of the emergency expenses incurred by local councils, including the removal of mud and debris, supply of drinking water, street cleaning, and accommodation for affected residents. Additionally, the state will fund up to 50% of the works required to repair infrastructure, facilities, and services such as roads, sports centers, and civic and cultural centers in the coming months and years.

Economic Growth and Startup Sector

Despite the challenges posed by the DANA, Spain's economy continues to show resilience and growth. The country is on track to expand its economy at three times the pace of the Eurozone, driven in part by the success of its startup sector. The 2022 Startup Law has created a more favorable environment for entrepreneurs, attracting significant foreign investment and fostering the growth of companies like Cabify, Glovo, and TravelPerk. The combined value of Spanish startups surpassed €100 billion in 2023, with these companies raising €2.2 billion across over 850 funding rounds last year[3].

Digital Infrastructure and Foreign Investment

Spain is also investing heavily in digital infrastructure to support its economic growth. The Spain Digital Agenda aims to extend ultrafast network coverage to the entire population and prepare 100% of the radio spectrum for 5G by 2025. This initiative is part of the Plan for Connectivity and Digital Infrastructures and the Strategy to Promote 5G Technology, which includes significant public and private funding to close the digital divide between urban and rural areas[2].

In addition to digital infrastructure, the government is promoting foreign investment through various initiatives, such as the FOCO Co-Investment Fund, which is endowed with 2 billion euros to attract investment in Spanish companies. Spain is also consolidating its position as a key hub for green energy projects in the European Union, further enhancing its appeal to international investors[5].

Golden Visa Scheme Reforms

In another significant development, Spain's government has decided to scrap its golden visa scheme, which allowed wealthy foreigners to obtain residency permits in exchange for significant investments. The real estate route, which accounted for 94% of applications, will be abolished to reduce pressure on the housing market. This move is part of the government's effort to make housing a right rather than a speculative business. The cancellation of the golden visa scheme is expected to be finalized in January 2025, although applications made before then will still be honored[4].

These measures and initiatives underscore the Spanish government's commitment to supporting affected communities, fostering economic growth, and promoting a more sustainable and digitally advanced future for the country.