Thursday, March 30, 2023

Infraestructures, the forgotten key sector awaiting new investiments

Belén Rodrigo, Prémio

Spain infrastructures are one of its best letters of introduction to the world. Among its achievements is its high-speed connection, the second largest railway network in the world, right after China. Its airport network is one of the most modern in the world and with the highest number of flight connections, along with its good and competitive road network and ports.

But the current situation as regards the infrastructure sector is worrying. In the 1980s, a large proportion of European funds were allocated in Spain to public works. However, since 2010, due to the previous financial crisis, public investment has been falling from 5.2% of GDP in 2009 to 2% today, reaching an all-time low. In 2020/21 Spain is again the country with the lowest investment ratio in the EU, with a public investment 64% lower than the average of the 4 largest European economies, according to data from Seopan (the employer’s association of construction companies and concessionaires).

Experts share the same opinion and state that this sector has reached low levels in recent years, both as regards maintenance of existing infrastructures and the new constructions. In this context, 2021 could be a major opportunity thanks to the increase in the national budget and the expected new EU funds. The General State Budgets accounts for € 11,527 million for infrastructures. This represents a 27.3% increase at the national level. Furthermore, the Government expects to receive European Next Generation funds, which is poised to include infrastructure projects. This opens up new opportunities, but there is a great deal of caution because this type of investment takes time.


The main challenges of the civil engineering sector pertain to climate change and meeting the sustainable development goals, SDGs. “No other sector is as effective in achieving both goals. Hence, we should prioritise everything directly affecting the well-being of people and the progress of society, such as transportation and mobility, the integral water cycle, renewable energy, waste treatment, smart cities, protection of natural systems and safety in the face of extreme natural events”, explains Francisco Javier Martín-Carrasco, director of the School of Civil Engineers, Channels and Ports of the Polytechnic University of Madrid.

But it is also a challenge to persuade public officials of the undeniable need to invest in new public works and the preservation and maintenance of the existing infrastructure of this kind. “In Spain, we are living on income from infrastructure, a system that until recently was, as a whole, probably the best in the world and helped to generate unprecedented economic development in our country,” adds the lecturer. Hence, it becomes an obligation to increase and maintain it and it’s paramount to promote and attract investment for other Spanish economic sectors, such as the agricultural, industrial, tourism and services sectors for the progress of society as a whole.

We know that infrastructures generate induced economic activity, provide a financial return to public administrations in terms of job creation, and also given the social benefit that it induces. European funds are a unique opportunity to activate and recover the Spanish economy provided they are allocated to investments that generate employment instead of subsidies.

But the sector also requires public-private collaboration, a recommendation made by the European Commission itself. There is liquidity in the market, both in institutional funds and in sovereign funds. “Spain cannot be left out of this private investment attraction, scenario,” says Julián Muñoz, president of Seopan. This employer, together with his engineering company (Tecniberia), has drawn up an action plan with 10 tractor megaprojects that represent € 100,813 million investment. It involves 2,280 actions covering different areas, including housing renovation and urban regeneration, urban mobility, public facilities, water purification and sanitation networks, and safe, connected mobility. A plan that may generate an economic impact of 30,000 new full-time jobs in engineering, € 1.4 million new full-time jobs in construction, € 46,481 million of fiscal return and €191,320 million of induced economic activity.

The infrastructure sector is an essential activity and has not been hit hard by the health crisis. And it is expected to play a very important role in the economic recovery of the country, considering that this is an industry that transmits at high speed all the euros invested in the real economy. Spain must be able to spend all the subsidies and direct aid that it is going to receive.

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