Key Challenges

Calls for healthcare
system reform
The evaluation of the COVID-19 response across the different levels of government will be crucial over the months to come. There have already been calls for the Spanish national health system to be reformed and the Spanish Ministry of Health to be strengthened. In accordance with this demand, the country’s Recovery and Resilience Plan (RRP) includes proposals to improve the coordination functions of the ministry in order to ensure national standards in healthcare delivery.
Recovery funds offer
hope, with challenges
The implementation of the RRP will be a key challenge in the coming years. The RRP could lead to powerful crowding-in effects and a strong impact of key reforms on potential growth. However, the persistence of the pandemic in other countries could weigh on economic growth, notably by delaying a full recovery in the tourism sector. Supply-side bottlenecks and high energy and transport prices could also delay the recovery, while labor market mismatches could affect the implementation of green and digital investments connected to the RRP.
Rise in relative
poverty rate
The pandemic had a disproportionate impact on the poorest and most vulnerable. After some positive post-2014 public policy results in this field, the relative poverty rate has increased during the pandemic, this time more sharply. Maintaining social cohesion is becoming a critical challenge.
Making the economy more resilient;
improving labor-
market policies
But there are also traditional challenges that must be addressed in order to make the system more competitive and resilient. First, economic competitiveness and the resource efficiency of economic activity must be improved, and the economy’s reliance on tourism must be reduced. Public policies should prioritize labor-intensive and climate-compatible public investment, and the government must place greater emphasis on innovation and education. Second, the resilience of domestic SMEs should be fostered through internationalization and the creation of jobs. Flexible fiscal support must be retained, with measures focusing on vulnerable groups and viable SMEs. Third, an institutional framework that promotes cooperation and coordination between the different levels of government should be created. Fourth, the tax system must be consolidated and expanded, and public debt reduced. New tax measures for 2020/2021 are an important step toward increasing government revenue. However, the tax system needs to be more efficient and the incidence of tax evasion must be reduced. Fifth, the labor market reform needs to be implemented and active labor market policies need to be improved. Sixth, social cohesion should be strengthened and the social impact of the coronavirus crisis mitigated. The new guaranteed minimum income scheme is an important step and should be consolidated. Seventh, the clearest challenge to the welfare system is population aging, which is exerting pressure on the sustainability of the healthcare system and the viability of the pension system. As of the time of writing, negotiations over pension reform were still ongoing, and it will be vital to increase the revenue and/or reduce the expenditure of the social security system while minimizing the impact on its beneficiaries and contributors.
Funding system for
regions outdated
Most social policies fall under the responsibilities of the autonomous regions. In this sense, the funding system for regional competences needs to be reformed so that subnational governments have sufficient resources to address their responsibilities.
Developing EU-level
health policies
At the EU level, Spain should support the development of effective EU mechanisms for managing future health crises (supply of medical equipment and the design of a sort of European state of alarm), and for harmonizing oversight and monitoring of infections in the immediate term. Spain should also advocate a long-term transformation strategy for the European Union’s economic sectors, a reform of the stability and growth pact (toward greater flexibility and off-balance-sheet investments for public investments), and long-term investment funds.
Strengthening executive capacities
To achieve these policy goals, specific reforms should be implemented to strengthen the government’s executive capacities. This means reinforcing the position of actors dealing with strategic decisions at the center of the policymaking process. The government should also develop the RIA process in such a way as to ensure participation, transparency and quality evaluation. In addition, it is necessary to foster societal consultation in the policymaking process, which also means improving citizen access to knowledge about public policies.
Allies needed for
reform stability
Regarding political stability, the minority collation government will require allies for most legislative initiatives. This means that its political parties must strike compromises with other parties in the parliament on most issues. In today’s polarized political climate, this will be a significant challenge.

Party Polarization

Decades of bipolar competition; newly fragmented party
From the mid-1980s to the mid-2010s, Spain’s national party system was dominated by a simple competition between the social-democratic Spanish Socialist Workers Party (PSOE) and the conservative People’s Party (PP). The bipolar left-right competition led to a majoritarian and confrontational style of democracy, but the electoral predominance of the two main national parties (accounting for more than 70% of the total vote) and the parliamentary agreements with moderate regionalist parties – even in context of absolute parliamentary majority – contributed to curbing polarization with regard to policymaking. However, a number of factors (including economic crisis, corruption scandals, lack of popular trust in the two mainstream traditional parties and the secessionist conflict in Catalonia) have produced a newly fragmented and more polarized party system. Since 2014, the leftist anti-establishment Podemos party and the center-right Ciudadanos have entered the national arena, the moderate nationalist Catalan forces have collapsed, and an strong right-wing populist party, Vox, has emerged. Vox cultivates an antagonistic and populist style of discourse that fuels contentious politics in Spain, and has become an important external supporter of several regional and local governments.
Polarization an obstacle
to cross-party agreement
The fragmentation of the party system has intensified since the 2019 general elections when 22 parties won seats within the Congress of Deputies. Polarization – which is based on ideology and identity rather than on the specificities of public policies – has also proved to be a significant obstacle to cross-party agreement and the formation of parliamentary majorities. In this regard, polarization and fragmentation within the Congress of Deputies have severely affected the parliament’s legislative function in the last years. In 2020, however, the first coalition government was formed, which has since faced a wave of strong hostility from the political right. Despite its minority status, the government has been able to pass most of its policy initiatives with support from other parliamentary groups. (Score: 5)
Dieter Nohlen, Mario Kölling (2020). Spanien: Wirtschaft – Gesellschaft – Politik. Wiesbaden: Springer.
Rodríguez-Teruel, Juan (2020), Polarisation and Electoral Realignment: The Case of the Right-Wing Parties in Spain, South European Society and Politics, 25:3-4, 381-410, DOI: 10.1080/13608746.2021.1901386
Miller, Luis (2020), Polarisation in Spain: more divided by ideology and identity than by public policies, ESADE working paper,
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