Industrial policy in the EU and Spain: Recent debates

This paper provides an overview of the key elements of the current debate surrounding the conception, design, and implementation of industrial policy in the EU and Spain. Firstly, it outlines the six fundamental external dependencies, or interdependencies, characterising the EU and its member states, which are concentrated in the areas of: trade, energy, raw materials, digitalisation, finance and labour markets/immigration. Next, it looks at the Inflation Reduction Act (IRA) passed in the US in 2022, which includes certain protectionist provisions, and the key responses being explored by the EU. There seems to be consensus around: the importance of avoiding an escalation in trade tensions, assessing the opportunities the IRA may imply for certain EU sectors and keeping trade negotiations open to limit the impact of the protectionist elements. Thirdly, turning to policy in Spain, we analyse some of the obstacles that have hindered the deployment of plans for the country’s strategic sectors devised under the umbrella of the NGEU funds: structural/ regional weaknesses of the Spanish economy; obstacles arising from regulation and lack of administrative agility; rigidity in tender terms; and, potential to increase agreement among business associations and local authorities. Tackling these obstacles will be key in order to implement appropriate industrial policy measures to ensure the transformation of the Spanish economy.