This Monday, 31 August, was the first of three deadlines associated with the EU’s Next Generation financing scheme, designed to help member states recover from the pandemic. Since 2022, when Pedro Sánchez incorporated the first tranche of Next Gen funds into Spain’s biggest-ever budget, Madrid has received €78 billion from Brussels, around 76% of its total allocation (the second largest, after Italy’s). Finance minister Maria Jesús Montero said that the EU funds would ensure an economic recovery that reached every Spanish household; but their impact so far has proved much more difficult to assess - not just in Spain, but across the bloc.

This is not entirely the fault of individual countries. Next Gen EU was an unprecedentedly complex scheme, dogged by cumbersome bureaucracy. Member states’ receipt of disbursements depended on whether they had reached investment goals stipulated by Brussels (most of which pertained to digitalisation and the green agenda), making it difficult to channel the funds directly into welfare policies.

Last Monday was the deadline for hitting these investment targets. If Spain convinces Brussels that it has met the last cluster of milestones by the end of September, it will receive its seventh and final installment of about €25 billion. The Next Gen scheme will close on 31 December, with no payments carried over into 2027.

Mitigatory circumstances notwithstanding, Spain’s deployment of Next Gen money has been criticised by Brussels from the beginning. In February 2023, a delegation from the EU’s

Committee on Budgetary Control visited Madrid to try to find out what it was being spent on. Answers weren’t forthcoming, in part due to a huge delay in the development of the computer system required to log disbursements.

In August 2024, the European Court of Auditors identified Spain as the least effective spender of EU money, and requested that it return unused or misspent funds. The EU Public Prosecutor’s Office has also investigated whether Next Gen cash was misused in connection with the Koldo corruption case - although Spain’s Supreme Court said last October that it had found no evidence to support this possibility.

The biggest scandal broke in May this year, when a report by the Spanish Court of Auditors found that Sánchez’s government used some Next Gen money to cover civil service pensions in 2024. Germany and the Netherlands were outraged and the European Taxpayers’ Association called it a “first-order scandal”.

Repayments of the international bonds that financed the Next Gen scheme are due to start in 2028 - but some countries, including Spain, want to delay and borrow more. This puts them against the bloc’s frugal northern nations, many of which are already angry at what they see as Madrid’s financial irresponsibility. Although the Next Gen scheme will close at the end of 2026, the debate about whether it was a good idea is only just beginning.