The COVID-19 pandemic unleashed a health and economic catastrophe in most countries across the globe. The rapid spread of the virus, the inability of many health systems to fully meet the demand for health services, and the steps taken to restrict economic activity and social mobility showed just how unprepared many governments were to manage a crisis of this magnitude.

Congestion, environmental pollution and accidents are some of the issues that require action in order to reduce their negative effects. This is the focus of this IEB document, written by professors Antonio Russo (Loughborough University, UK), Jos van Ommeren (VU Amsterdam, The Netherlands), Maria Börjesson (Linköping University, Sweden) and Daniel Albalate and Xavier Fageda (University of Barcelona, Spain).

The shock of COVID-19 and the subsequent response has underscored the importance of the public sector’s role as a backstop. There is no doubt about that. The alternative to public-sector intervention would have been an unprecedented economic collapse. Indeed, unprecedented is more than a rhetorical expression: even with public intervention, Spain’s real GDP fell by nearly 11%. In other words, the initial economic growth forecasts for 2020 ended up being off by nearly 13 percentage points. This will have consequences, obviously, for the level of public debt and, potentially, for the sustainability of our public finances. In this respect, Spain’s situation is not very different from that of other developed countries.

For nearly a century, international taxation has been based on principles established within the framework of the League of Nations in the 1920s. The existence of sovereign tax systems in an incipient framework of cross-border economic transactions led at that time to the establishment of principles that would guarantee a certain degree of justice in international taxation by preventing both double taxation of the same profits in more than one state and the failure to tax profits in any state. The idea was to establish criteria or connecting factors—residence and territory—on the basis of which it would be decided which country, or countries, had the right to tax profits.

In developed countries, the importance of university systems for their respective societies is far greater than their
specific weight. The contribution they make, in terms of training human capital, research and knowledge transfer,
is a decisive force for the development of the knowledge society in said countries – and Spain is no exception.

Cities are a human invention that facilitate interaction between people. Urban life makes us more productive, because it enables us to learn things from each other and specialise in more specific tasks. More recently, cities have also become places where people want to live, so that they may enjoy a wider range of experiences and services, in the fields of culture and gastronomy, to cite just two examples. The SARS-CoV-2 pandemic has removed these advantages that were part and parcel of urban life, albeit on a temporary and partial basis.