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The European Commission has backed Spain following allegations that Madrid used EU funds to pay pensions, saying there is no evidence that any rules were broken.
In a letter sent to the European Parliament, the Commission said it had found no evidence of misuse of EU public funds by the Spanish government, despite a report by the national auditor suggesting that budget credits linked to a post-pandemic recovery fund were used to finance pension payments in November 2024.
Madrid has categorically denied the claims.
“Every payment request submitted by Spain has been thoroughly and transparently assessed,” the letter, signed by Commissioners Raffaele Fitto, Piotr Serafin and Valdis Dombrovskis and seen by Euronews, said.
“It is also worth clarifying that the Spanish recovery and resilience plan contains no milestone or target under which EU funds would be used to cover pension expenditure, since such spending is ineligible.”
Following the initial media reports, which triggered a controversy in Germany, Madrid provided the Commission with a technical explanation, arguing that the issue amounted to little more than an accounting technicality.
Yet, member of the European parliament insists the saga is far from over.
On Wednesday, Johan Van Overtveldt, an influential member of the European Parliament sitting on its budget committee, told Euronews that the explanations provided by the Commission were not satisfactory, describing them as vague and obtuse.
“They are talking about the existence of excess liquidity, and what they argue is a degree of liberty for member states to use it,” Van Overtveldt told Euronews. “But my god. How do we control this? And what is the money being used for? Until the Commission comes up with a clearer explanation and clearer numbers, there will remain a cloud of doubt.”
A Spanish official told Euronews that the letter, addressed to two members of the European Parliament including budgetary control committee chair Andreas Schwab, demonstrated that the allegations were unfounded.
Frugality clashes with joint debt supporters
The timing of the letter offers a political lifeline to the Spanish government, which had come under scrutiny at a sensitive moment, with negotiations over the EU’s next long-term budget about to begin.
The talks are expected to pit member states calling for a larger budget — including permanent joint borrowing instruments — against more fiscally conservative countries pushing for tighter spending controls.
Budget negotiations have traditionally opposed southern European countries against the more frugal northern states, seen as stronger economically. But the tables have turned in recent years, with southern economies now outperforming parts of core Europe in terms of GDP growth.
Spain is currently the fastest-growing major economy in the euro area.
In the wake of the controversy — presented in the German tabloid press as yet another example of the wealthy north subsidising the south — officials close to the Spanish government suggested the episode was being weaponised to weaken Madrid’s negotiating position ahead of difficult budget negotiations.
Van Overtveldt told Euronews his criticism stems from a lack of transparency from the Commission itself.
“These arguments are nonsensical. They have to explain to us how they supervise the system of funding allocation and how the RFF is controlled. That’s what we need,” he said.
“Can we not ask questions? A lack of transparency, not questions, will hurt the budget talks. As you saw in the press in some member states, this is all quite worrisome,” he added. “We absolutely need more specific information.”
The European Commission considers the issue solved.
“The Commission takes the issue of transparency on the use of union funds very seriously and continues to insist on this,” the executive added in the letter seen by Euronews published Wednesday.