EU holds Spain to ransom as Madrid forced to CUT pensions in return for bailout ...

Coronavirus impact will be ‘very tough’ on says expert

Tensions are rising in Madrid where the Podemos party, the junior partner in Prime Minister Pedro Sánchez’s Socialist-led coalition, is refusing to back changes it warned will reduce future pensions for millions of people. And there are fears the fierce opposition to reform in Spain could be the first in a series of clashes between the European Union and its central and southern European member states who are the main recipients of the coronavirus cash.

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Anyone planning such an action is going against a contract we have made with the citizens

Pablo Iglesias

The £665billion recovery plan was welcomed by cash-strapped member states such as Spain and which have both been hit hard by the pandemic.

But the cash comes with a catch: before they can get money from the recovery fund, EU governments must prepare plans for how to spend it under the guidance of the Commission.

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The plans have to meet EU requirements of making economies greener, more digitalised, improving their resilience to crises and boosting their potential growth.

They also need to take into account individual country recommendations issued by the Commission last year.

Pedro Sanchez and Ursula von der LeyenSpanish PM Pedro Sanchez and EU chief Ursula von der Leyen (Image: GETTY)

The Commission said Germany and the Netherlands should boost investment and household income to reduce their huge current account surpluses.

It said Spain, , Greece, France and Portugal had to tackle high public and private debts, competitiveness and productivity issues.

Nations which fail to implement reforms agreed with the European Commission could have future Covid recover fund payments withheld - Spain is due to receive £124billion spread over the next six years.

One EU diplomat said: “This is not only about investments in the economy — it is about reforms necessary to

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