05/06/2024 · Published in Business Over People

France’s, Spain’s and Belgium’s lost an opportunity to center public crisis financing for COVID-19 and cost of living crisis around collective rights

The European elections will take place at a key moment, when the EU Member Governments are drafting their reform plans, to shape their path to reduce debt and public deficit. In other words, they have to commit to cuts and austerity measures. With these national adjustment plans ahead, a period of exceptionality with respect to the flexibility of public spending comes to an end. Due to the COVID-19 pandemic, the European Commission suspended in March 2020 the fiscal rules that allowed Member States to borrow without limit to face the impacts of the health crisis and, in 2022, the cost of living crisis. A new report by European Network of Corporate Observatories (ENCO), looks into how did Spain, France and Belgium spend this money.

Public funding in times of crisis is a political choice, and these policies can deepen existing inequalities if they are not adequately designed and implemented. Looking at public money expenditure during the crisis years 2020, 2021 and 2022, the research reveals that Spain, France and Belgium did not guarantee a recovery focused on collective needs nor took into account ecological or gender criteria. In a nutshell, these are the 4 main findings:

Fact 1: France, Spain and Belgium provided stimulus measures far from a desirable 10% of GDP in 2020, 2021 and 2022 (4% at best).

**Crisis financing of GDP. Source: Own elaboration. Business Over People (2024) by ENCO network**

Fact 2: From the 456 billion Euro measures identified, between a third and half of the crisis funding were allocated to private companies.

**Breakdown of crisis financing France, Spain, Belgium between 2020 and 2022 (EUR, thousands). Source: Own elaboration. Business Over People (2024) by ENCO network**

Fact 3: If indirect grants are also accounted for, such as job protection measures or household energy subsidies, they received 69% (France), 68% (Spain) and 58% (Belgium) of public financing.

**Direct and indirect aid for private businesses, % of totals. Source: Own elaboration. Business Over People (2024) by ENCO network**

Fact 4: Between 2020 and 2022, a very small percentage of financing has been allocated to essential sectors to protect collective needs and people in vulnerable situations. Socially necessary sectors such as health care, education and public transport received less than 17% of public financing to face the crisis.

**Crisis funding for health care, education and public transport, % of totals. Source: Own elaboration. Business Over People (2024) by ENCO network**

Regarding measures for public sector support, although in the first months of the COVID-19 pandemic the need to fund and reinforce the public sector and especially the public health system was central to public debate, it actually received a comparatively small fraction of public funds. Of all crisis spending during the three years, the public health system received only 15.09% in France, 4.71% in Spain and 5.66% in Belgium. Furthermore, the measures did not contribute to the improvement of the working conditions of health workers, nor did they resolve structural problems of lack of financing and personnel in primary care.

Regarding public funding for social protection, between 24% and 54% of all funds spent during 2020, 2021 and 2022 in France, Spain and Belgium went to social protection measures. However, the majority of these funds went to job protection measures. France spent 19.92%, Spain 31.77% and Belgium 30.87% of all crisis funds in job protection and unemployment allowance measures. Emergency measures that are intended to help people keep their jobs in times of crisis are very important, since they guarantee an income for households in case workers face temporary unemployment. However, they were not enough as they benefited only part of the population with regulated labour conditions, and left people in informal working conditions, like women doing unpaid care work, migrants or groups in a situation of vulnerability, without significant public financial support during the crisis.

Almost none of the public crisis measures during 2020, 2021 and 2022 in France, Spain and Belgium allocated a significant proportion of their funds to specific groups in a situation of vulnerability to tackle the impact of the crisis. Generally, no inequality assessments were conducted before decisions were made, no binding social or gender criteria for crisis spending were set up by governments, no disaggregated data was collected by administrations, and no intersectional indicators were demanded for public funding to prove positive impacts when it came to reducing inequalities. Furthermore, during the crisis it was evident that essential jobs in the agricultural and care sector were the most precarious; however, there were not enough public funds to improve their working conditions. An example are the day and seasonal migrant workers in southern Spain, who picked food for European consumers in inhumane conditions during and after the pandemic.

Where did the French, Spanish and Belgian public crisis funds go to? Once again, the main beneficiary of the crisis measures during 2020, 2021 and 2022 was the private business sector, receiving subsidies, favorable loans, fiscal leverages and public guarantees, but also enjoying indirect support, for example by receiving billions of public money to maintain its workforce. Many guarantee measures related to employment protection can be seen as an indirect corporate stimulus, since they were aimed at maintaining company income by the authorities bearing the costs, in particular wage costs. A lot of energy security measures in 2022 can also be seen as an indirect support to companies, like the subsidies to households during the energy crisis. The logic is the same, public money that ends up in the coffers of companies through individuals. If indirect grants are also accounted for, private business sector received 69% in France, 68% in Spain and 58% in Belgium of all public crisis financing.

As we have seen, France’s, Spain’s and Belgium’s governments did not guarantee a recovery focused on collective needs and planetary well-being, but instead they put business over people. To reverse the trend of who wins and who loses in times of crisis, as well as in times of transitions, we must move towards public financing that is based on ecological, fair and feminist criteria and that guarantees collective rights above market interests. This public financing would involve valuing essential and socially necessary work and it would exclude from any public program of financial support and crisis financing companies that carry out activities that put planetary well-being at risk or violate human rights. Progressive tax reforms must be implemented instead of increasing public debt to pay for anti-crisis measures, starting by making the tax on extraordinary profits in banking and energy companies permanent and implementing taxes on large fortunes aimed at reinforcing the fight against poverty, economic and social inequalities, and that allow financing urgent measures to combat climate change, as requested for example by the TaxTheRich campaign. Ultimately, crisis financing measures should always aim at contributing to an ecosocial transformation and the democratization of the economy, including the logic of resilience and degrowth, and strengthening local community projects instead of corporations.

Nicola Scherer, researcher at the Observatori del Deute en la Globalització (ODG), Twitter @NicolaKSch