The Bank of Spain has produced a study that concludes that the companies that received subsidies from the Next Generation European Funds, created by the European Commission to help the Twenty-Seven countries recover from the coronavirus crisis, are primarily small. The bottom line is that the beneficiaries of these funds are below the average size of the companies that typically receive these types of subsidies, according to the document. First characteristics of companies receiving NGEU funds in Spain..

“Companies receiving NGEU subsidies, in terms of
typically smaller than companies that benefit from other government subsidies,” the document states, noting that they have an average of 17 employees (small companies are those with 10 to 50 employees). “In the group of beneficiaries of NGEU Subsidies, there is a higher concentration of companies with 10 to 50 employees than non-beneficiary organizations and organizations that benefit from non-NGEU Subsidies. “As such, approximately 55% of companies benefiting from NGEU subsidies have fewer than 10 employees. “, the text also emphasizes, emphasizing that in general, companies that do not receive subsidies have this level of employees in 80% of cases.

In terms of amounts received, larger companies (more than 250 employees) receive larger subsidies. “NGEU subsidies provided to large companies are on average up to nine times larger than subsidies provided to companies ranging in size from 50 to 250 employees.” Despite this, in terms of the amounts provided, the distribution of subsidies is more concentrated among small companies: “About 40% of the total amount of NGEU subsidies provided is concentrated in companies with between 10 and 50 employees, in contrast to approximately 25% of the total amount provided in in the form of grants not included in the NGEU.”

The paper also finds that companies receiving Next Generation subsidies are 26% smaller than non-NGEU beneficiaries. [otras subvenciones de fondos que no son los Next Generation]. And it shows that companies receiving these subsidies have higher productivity, are older, have higher net worth, pay lower interest rates and are more resilient. “The results show that the business size of companies receiving NGEU subsidies is 26% (e-0.299 – 1) smaller than those of recipients of other subsidies, even after controlling for other company characteristics that determine their size.” And this is not only thanks to programs such as Digital Kit, especially aimed at small companies. “It’s more common.”

Tenders are awarded to companies with 60 employees.

On the other hand, regarding tenders, the supervisory authority notes that the aforementioned European funds are financing larger projects than in previous tenders, with an average amount of almost one million euros, compared to 73,000 in previous tenders. In this area, tenders are concentrated in sectors such as construction, information and communications and trade, in which case the winning companies are larger than those that do not win.

But they are also not very large companies: “the average size of NGEU companies is 57 employees, compared with the size of 15 and 52 employees for non-NGEU and non-NGEU awarded companies, respectively.” However, the companies that usually win tenders have an average staff of 250 people. As with subsidies, winning bidders also have higher productivity, greater net worth, lower interest rates on bank loans, and greater resilience during the pandemic.

However, the Bank of Spain recommends that the government develop specific tools to calibrate the macroeconomic effects of the funds: “Quantifying the macroeconomic impact of the NGEU program and the criteria for the distribution of funds between companies requires the development of modeling tools that will allow their cumulative effects to be calibrated in dynamic terms. It is worth emphasizing that the long-term impact of the NGEU program will mainly depend on the transformative capacity of the selected investment projects and their complementarity with the structural reforms being implemented – both aspects on which there is still no information. carry out a thorough study that will be the subject of priority analysis in the future for the Bank of Spain and the Ministry of Economy, Trade and Business.”

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