Spain is using the EU's Next Generation relief Funds to pay pensions

Raymundo Larraín Nesbitt, May, 6. 2026

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By Raymundo Larraín Nesbitt
Lawyer – Abogado
6^th of May 2026

El Mundo newspaper published a story on the 3^rd of May in which Spain’s Tribunal de Cuentas, the public body responsible for supervising and overseeing Spain’s public expenditure, confirmed that Spain has been using EU public funds to pay Spanish pensions.

This is of enormous gravity.

I had already published an article Now you see it, now you don’t, way back in February 2021, warning that mismanagement of these public funds would likely be the case without proper supervision. Unfortunately, time has proven the article right. The EUs funds were devised to assist countries gripped by the Covid-19 epidemic to help them get back on their feet and give them a gentle nudge.

This is particularly concerning news because Spain’s public coffers have been the beneficiary of three simultaneous windfalls:

EU Next Generation Funds of over €163bn
Spain is one of the very few countries worldwide which does not deflate income tax brackets or to adjust income tax for inflation. Meaning the Spanish Tax Office has made an EXTRA 20%, or more, in tax revenue as a result of this unfair, and unprofessional, practice.
Unprecedented property boom that has driven property prices to historic records, higher than in 2008, which translates into the tax office cashing in big time on Property Transfer Tax (resales), VAT and Stamp Duty (new builds).

One would think, in view of the above triple whammy, that Spain should have more than enough money to pay all its debts and invest on its future. Well, you’d be wrong.

Spain, instead of using the NGEU Funds to improve and modernise its economy, bring it into the digital era, has used it to plug budget holes such as paying public pensions. This goes on to show the enormous mismanagement of Spain’s economy and how EU public funds, which were tagged for a certain purpose, have been used instead for several other non-related purposes.

Spain is still working with 2023 public budget as the government has failed, time and again, to muster the necessary political support to approve new annual budgets. The government just keeps extending 2023 budget every year, which is ludicrous.

Last year, Spain’s Tax Office broke its revenue record on receiving over €300bn in taxes.

The question is what are Spanish Authorities doing with all these vast amounts of money?

Clearly, this money is not being spent on healthcare, education, transportation, or its pitiful Armed Forces (Morocco now surpasses Spain militarily).

Meanwhile, Spain has now exceeded €2 trillion in public debt, crossing a red line, in my opinion, of which there is no return. The official public debt figures do not take into account €500bn of public debt held by Spain’s 17 autonomous regions.

Something is rotten in the state of Spain.

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