Spain extends these measures to mitigate the economic consequences of war

by Lorraine Williamson
council of ministers meeting

Spain announced yesterday that it would extend many support packages until the end of 2023. This article provides an overview of all measures that will be extended and which will stop at the end of June. Minister Calviño also told on Tuesday how much the war in Ukraine has now cost Spain. 

After Tuesday’s Council of Ministers, it became clear that many measures to mitigate the crisis will be extended, that new support measures will be added, but also that some measures will expire at the end of this month. It was already announced yesterday that the VAT reduction on basic products in supermarkets will be extended, but there were more measures on which the Council of Ministers took a decision on Tuesday. 

The revision of the measures introduced is intended to absorb the economic consequences of the war in Ukraine, including high inflation, in Spain. 

These measures remain the same in Spain 

In addition to the VAT reduction on groceries, the subsidy for public transport will also be extended, making travel cheaper by half. It also remains the case that frequent travellers will continue to benefit from free travel passes for the services of Cercanías, Rodalies and Media Distancia. 

Furthermore, it will also remain the case that people who purchase an electric car will pay 15% less tax on it in the coming years. Until the end of September, people who refuel for business, including transporters, farmers and livestock farmers, will receive a 10 cent discount per litre on petrol. However, from September this discount will be reduced to 5 cents per litre. 

Cogesa Expats

The government also wants to continue to support more vulnerable groups in Spain when it comes to buying a home. The government wants to cover up to 20% of the mortgage for families with small children and young people up to the age of 35 who earn no more than €37,800 per person per year. The aim is that up to 50,000 homes can be purchased by these target groups in this way. 

In the context of housing, the government has decided to suspend evictions until the end of the year. The aim is to protect vulnerable households when they are (temporarily) no longer able to meet their housing costs as a result of inflation. 

The Spanish Council of Ministers also extends the right to take up to 5 days’ leave per year for employees in case of force majeure when someone from the family or within the family needs to be taken care of. Parental leave of up to 8 weeks is also approved, which may be taken without continued payment of wages until the child reaches the age of 8. 

Despite much criticism, the government is not extending this measure 

The automatic renewal of rental contracts is, however, one of the measures that will no longer apply. Previously, all leases that expired between December 28, 2022 and June 30, 2023 were automatically extended for a further six months, subject to all conditions. The idea was to prevent unlawful rent increases. What critics fear is that the end of this measure will indirectly cause thousands of “invisible evictions” as many vulnerable tenants will no longer be able to pay the rent after such an extension. 

How much has the war in Ukraine cost Spain? 

According to Deputy Prime Minister and Minister Calviño of Economy, extending this package will cost around €8.9 billion in the second half of this year. In the past year and a half, since Russia invaded Ukraine and prices have risen considerably, the Spanish government has already invested €47 billion (3.4% of GDP) in measures to support the population’s livelihoods. 

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