Pedro Sánchez on Friday announced a sweeping €5 billion ($5.8 billion) economic relief package aimed at cushioning the impact of the ongoing Middle East conflict on Spain’s economy.
The measures, approved after an emergency cabinet meeting, include a “drastic reduction” in energy-related taxes and financial support for key sectors affected by rising costs.
“Extraordinary situations require extraordinary responses,” Sánchez said while unveiling the 80-measure package designed to protect households and businesses from surging prices.
Set to take effect on Saturday after publication in the official gazette, the plan features cuts to value-added tax on gas and fuel. The reductions are expected to lower pump prices by up to 30 euro cents per litre, translating to savings of about 20 euros per tank for the average motorist.
The government will also reduce electricity taxes by 60 percent, suspend a production tax, and cut VAT on electricity to 10 percent from the previous 21 percent.
In addition, the package introduces a direct fuel subsidy of €0.20 per litre for transport operators, farmers, ranchers, and fishermen. Similar financial support will be extended to fertiliser purchases, aiming to stabilise agricultural production costs.
Sánchez further revealed plans for a temporary nationwide rent freeze, a policy that still requires parliamentary approval following negotiations with coalition partner Sumar.
“Clearly, these measures will not prevent the effects of this illegal war from reaching Spain, but they will at least mitigate their impact and make them somewhat more bearable,” the Prime Minister said.
The announcement underscores Spain’s efforts to shield its economy from external shocks as global tensions continue to disrupt energy markets and drive inflation.
