Weak business investment in Spain following the pandemic: an analysis based on the Banco de España Business Activity Survey

Rationale Business investment has been notably weak in Spain in the past few years. This article analyses recent developments in such investment, the limiting factors and the role played by the Next Generation EU (NGEU) funds, drawing on information from a specific module included in the Banco de España Business Activity Survey (EBAE). Takeaways •The largest and most productive firms report greater momentum in their investment decisions, while firms with more idle capacity report less buoyant investment. •The obstacles to investment most often reported by firms are uncertainty over economic policy, the outsourcing of production processes and business regulation. •A total of 45% of firms with NGEU-funded projects stated that they would not have made such investments without the support of this programme, while 31% would only have made a portion of them, suggesting that these funds have a relatively high degree of additivity. However, lower additivity is observed in the case of green investments.