Spain is preparing a package of measures to ‘protect citizens from the impact of the Iran war’ that could include tax cuts to reduce fuel costs.
Such a move would be welcome in sectors most affected by rising prices, including agriculture and transport.
Economy minister Carlos Cuerpo met on Thursday with the government’s economic team, business leaders from CEOE-Cepyme and representatives from the unions UGT and CCOO.
Cuerpo described the meeting as ‘very productive’ and sought to reassure the public, saying the current situation is ‘far’ from the economic shock caused by the war in Ukraine.
He also urged caution, noting that the final impact on prices will depend on how long the conflict lasts and how it develops.
Cuerpo stressed that the current scenario is not comparable to 2022, when Spain introduced emergency measures such as cutting VAT on some food products, suggesting that different tools may be used this time.
He also acknowledged that the previous subsidy of 20 cents per litre on fuel – introduced during the energy crisis – received significant criticism for the way it was implemented.
According to the minister, that measure is now among those ‘least recommended’ by both economic sectors and social partners, so alternatives are being considered.
The government is also working with Spain’s competition watchdog, the National Commission for Markets and Competition (CNMC), to strengthen transparency and monitoring of fuel prices and how they are passed on to the country’s roughly 12,000 petrol stations.
Cuerpo said fuel prices are one of the first economic effects citizens notice, as they directly affect both the cost of filling up a vehicle and the price of everyday goods due to higher transport and supply chain costs.
Although Deputy Prime Minister and Labour Minister Yolanda Díaz said earlier that the measures could be approved at next Tuesday’s cabinet meeting, Cuerpo declined to confirm a timeline.
‘The priority is to finalise the text as quickly as possible,’ he said, adding that the government is working at pace to complete the details of the plan.
Housing tensions resurface
Housing has once again become a source of tension between the two partners in Spain’s coalition government as PSOE and Sumar negotiate the economic measures intended to shield citizens from the impact of the conflict in the Middle East.
Sumar has made it clear that housing should be included in the new economic protection plan. Culture Minister Ernest Urtasun warned the PSOE that the issue cannot be left out of the upcoming measures.
Specifically, Sumar is calling for the extension of rental contracts due to expire this year. The measure was previously in place until December 2025 but was not renewed by the Socialists, who argued that the exceptional circumstances caused by the war in Ukraine had ended.
However, allies of Deputy Prime Minister Yolanda Diaz argue that the new international crisis has changed the context and that housing protections should again be part of the government’s response.
Social Rights Minister Pablo Bustinduy echoed that position, saying the government must intervene to protect people from the economic fallout of what he described as a war initiated by the United States and Israel.
According to Bustinduy, the government’s economic shield should include both energy protection and housing measures, such as extending all current rental contracts.
However, the Socialist wing of the government has so far cooled expectations about including housing policies in the decree.
Read more Andalucia news at the Spanish Eye.
