The government opens a new Perte of 100 million for the circular economy in the textile sector

The textile sector is undergoing a transformation towards sustainability with the launch of a new strategic project for economic recovery and transformation (Perte) aimed at promoting the circular economy. This innovative approach, with a sum of 97.5 million eurosmarks a milestone in the textile industry, promoting more responsible and environmentally friendly practices.

As reported by the Ministry for the Ecological Transition and Demographic Challenge, this help line will make it possible to finance the best selected initiatives, with amounts ranging between 100,000 euros and 10 million euros per project and beneficiary entity. This means that companies and organizations interested in implementing projects that promote the circular economy in the textile, fashion and footwear sectors can receive significant funds to carry out their initiatives. This wide range of financing seeks to support both small initiatives and more ambitious and larger-scale projects, thus promoting the diversity of proposals and maximizing the impact on the transformation towards more sustainable business models.

The main objective of the call for these funds is to align with two key strategies: the European Strategy for the Circularity and Sustainability of Textile Products and the Spanish Circular Economy Strategy. Both have the purpose reduce the presence of dangerous substances in tissuesprevent the release of microplastics, promote the durability of fabrics and encourage reuse and recycling in closed cycles. These grants also contemplate the acquisition of digital tools with the aim of reducing waste generation at all stages of the process, from prototyping to stock management and post-consumer waste management, such as those generated in clothing returns. In addition, it seeks to promote personalized custom manufacturing to improve the efficiency of industrial processes and reduce the environmental footprint in terms of carbon, water and materials in the textile, fashion and footwear sector. Furthermore, this line of aid will improve competitiveness and distinction at the European level, in addition to complying with regulations and new forms of consumption.

The deadline to submit candidatures is extended until June 10. This aid is aimed at actions in the textile, fashion, clothing and footwear sectors that reduce the consumption of virgin raw materials, minimize the generation of waste and/or improve its management, contributing to the transition towards a circular economy. Categories eligible to receive support include research and development for eco-design, digitalization for innovation in processes and organization, increasing the level of environmental protection of the beneficiary entity, and improving the management of waste from third parties.

X-ray of the sector

The textile and fashion sector represents one of the fundamental pillars of the Spanish economy, contributing 2.8% to the Gross Domestic Product (GDP). This sector is made up of approximately 17,000 companies that generate more than 136,000 jobs throughout Spain. Madrid stands out as one of the leading autonomous communities in this sector, although it still presents opportunities for growth. In Madrid, there are 2,024 active companies that employ 7,367 workers and generate a turnover of 784 million euros, which represents 2.5% of the national total. In 2023, the total turnover of the sector amounted to 31.5 billion euros.

However, since the pandemic, the sector has lost steam. The main hubs in the sector textile in our country (Terrassa, Zaragoza and Madrid), which are the municipalities where the sector employs more than a thousand people, experienced a general decrease in the number of affiliates during 2023, according to data provided by the Ministry of Inclusion, Social Security and Migration. Hence, the importance of promoting aid that manages to reactivate this sector.

The “Executive survey” conducted by McKinsey and Business of Fashion (BoF) has photographed the fashion business in Europe. According to the report, executives’ opinions on the outlook for the textile and fashion sector are more divided than ever before since they began researching this topic in 2017. While 26% of respondents expect an improvement in annual conditions, 37% believe that the situation will remain unchanged, and 38% anticipate a worsening. This diversity of opinion reflects the uncertainty and challenges currently facing the sector, which may be indicative of significant changes in the economic and business landscape.

McKinsey analysis of fashion forecasts indicates that the global industry will experience revenue growth of 2 to 4% this year, although variations will depend on the region and the specific country. The luxury segment is expected to continue being the main generator of economic gains. However, companies operating in this sector will face significant challenges due to difficult economic conditions. The segment is projected to experience global growth between 3 and 5%, in contrast to the 5 to 7% expected in 2023, because consumers have limited their spending since the start of the pandemic. The uncertainty in the sector reflects the broader economic climate, with regional differences, through 2024. The anticipated pressure on household incomes will likely moderate demand for clothing, resulting in a decline in trade across all categories.

As changing purchasing habits of European consumers and this negatively affects the prospects for brick-and-mortar retail, new opportunities are emerging in other sectors, especially in online sales. In this digital market, the second-hand segment stands out prominently. Forecasts in Europe indicate a growth of 50% for the online fashion market in the region by 2025. Likewise, Europe will be at the forefront with an estimated value of 175 billion euros in 2025. This signals a significant shift towards e-commerce, with a particular focus on the second-hand market, presenting opportunities for growth and innovation in the online fashion sector.