Spain’s knowledge economy and the NGEU: Recent progress and outstanding challenges

Spain’s knowledge economy has experienced mixed progress since 2019, according to the European Innovation Scoreboard (EIS). Notable improvements include increased R&D investment, public-private partnerships and sales derived from product innovation, especially among SMEs, suggesting positive impacts from Spain’s Recovery Plan – the government’s main mechanism for implementation of NGEU funding. However, critical challenges remain, including declining STEM talent, insufficient ICT training across firms, and a weakening focus on environmental sustainability. Of the Recovery Plan’s almost 80 billion euros, allocations directly linked to the knowledge economy represent just under 12% of the total budget, indicating a need for more targeted support to strengthen Spain’s competitive position in the knowledge economy through enhanced structural reforms, increased investment in digitalization, strengthening of the regulatory environment and prioritizing sustainability within innovation policies.