30 Mar, 2022 @ 14:15
2 mins read

EXPLAINED: What we know about Spain’s plan to lessen impact of Ukraine war on Spain’s economy

Spanish petrol station
Photo: creative commons licence.

A RAFT of measures has been unveiled this week by Prime Minister Pedro Sanchez in a bid to minimise the impact of the Ukraine war on the Spanish economy.

The left-wing coalition government announced a €16 billion aid package designed to cushion Spaniards from the effects of rising fuel prices, soaring inflation and an overall spike in the cost of living.

The Spanish government will release ‘approximately €6.0 billion in direct aid and tax rebates and €10 billion in state-guaranteed loans to cushion the impact of the crisis on families and businesses’, explained Sanchez on March 28.

Here’s a rundown of the main points included in the  new package which will be in place until June 30.

Fuel subsidy

A 20 cent reduction in fuel prices will be applied directly at the pump at petrol stations. The government will subsidise 15 cents of this, with fuel companies paying the remainder.

Spanish petrol station
The price at the pumps had soared. Photo: Creative Commons licence.

Slashed energy tax

With electricity costs soaring even before the Russian invasion of Ukraine, the government has decided to extend a reduction on VAT on electricity bills until June 30.

It means that the IVA as it is known in Spanish will remain at the cut price of 10% from the usual 21%, a measure that was introduced in June last year and extended again in December.

Energy cap and discount scheme

In addition to the above, the government said it will cap the price of fuel used in electricity production as an ‘exceptional measure’ as well as extend the temporary suspension of the 7% tax on electricity production.

Both measures are designed to bring down household bills.

What’s more, authorities plan to make an addition 600,000 households eligible for an electricity discount scheme thereby expanding the social energy tariff scheme to a total of 1.9 million families.

Who qualifies for the discount scheme?

Spain has clear guidelines on those who are eligible for a scheme offering discounts of up to 70% on the electricity bill

These are

  • A single adult who lives alone and earns less than €12,159
  • A household whose salary is less than €16,212 and includes one minor living at home
  • A household whose salary is less than than €20,265 with two minors at home
  • Those families classified as a ‘familia numerosa’ (having three or more dependants) no matter what the income. https://www.supportinspain.info/knowledge-base/card-for-larger-families-tarjeta-familia-numerosa/
  • Retired individuals with an income lower than €500 euros per month
  • Any household with less than €8,106.

Rent increase cap

Under the new plan, landlords will not be able to increase the rent for existing tenants by more than 2 percent over the next three months. 

This prevents landlords from using the rise in the Consumer Price Index as an excuse to hike up the rents.

Benefits will rise by 15 percent for three months

The minimum vital income – Ingreso mínimo vital in Spanish – offered by Spain’s Social Security will be increased by 15% for the next three months.

This is the benefit offered by the state to those who without work or the ‘paro’ which is contributory unemployment benefits.

It currently ranges from a minimum of €461 and up to €1,015 depending on circumstances.

Ban on layoffs

Spain has reintroduced the scheme it used to help businesses struggling during the pandemic by banning lay offs and instead allowing a furlough system.

This will run up until June 30. 


Costa Blanca Pensioner Gets Stolen Mobility Scooters Back After The Same Thief Struck Twice Within Weeks In Spain
Previous Story

Costa Blanca pensioner gets stolen mobility scooters back after same thief struck twice within weeks in Spain

Spain's Barcelona Picked To Host Yachting's America's Cup In 2024
Next Story

Spain’s Barcelona picked to host yachting’s America’s Cup in 2024

Latest from Lead

Go toTop

More From The Olive Press