Spain prepares economic support plan amid energy price spike

MADRID — Spain’s government is readying a package of emergency economic measures worth 6 billion euros ($6.6 billion) in direct aid and tax breaks and 10 billion euros ($11 billion) in loans for families and businesses affected by the fallout from Russia’s invasion of Ukraine, Prime Minister Pedro Sánchez said today.

The emergency plan aims to “protect economic growth and jobs” and is to be unveiled after the government’s weekly Cabinet meeting Tuesday, Sánchez said in a speech to a business conference in Madrid.

“This emergency plan in response to the war (in Ukraine) includes a set of measures that will protect economic sectors and Spaniards who are being most affected,” Sánchez said.

Like the rest of Europe, Spain has been struggling since last year with soaring energy prices, with households and businesses struggling to pay electricity bills. Since Russia invaded Ukraine last month, oil prices have spiked, and Spain’s transport and farm sectors have demanded help with crippling gasoline prices.

As the war has worsened an energy crunch in Europe, many other countries also have passed support packages.

The EU’s 27 leaders last Friday reached an energy compromise, including a special dispensation for Spain and Portugal because they have weathered exceptional price surges.

Sánchez said his center-left Socialist-led government plans “exceptional, temporary measures,” including price caps for natural gas, that will “significantly and immediately” push down electricity prices.

The measures, intended to remain in place through June 30, will be assessed by European Union authorities before being enacted to ensure they don’t provide an unfair advantage.

Among other measures, the government is to provide an across-the-board discount of 0.20 euros ($0.22) per liter of gas, with the government meeting three-fourths of that cost and gas companies the rest, Sánchez said in a preview of the plan.

Labor law changes also are planned, he said, allowing Spanish companies to be more flexible in their response to energy price difficulties while avoiding layoffs.

For households, over the next three months, rent increases will be limited to a maximum of 2%.

Also, people on benefits will get a 15% increase over the coming three months. More households will be allowed access to subsidized electricity prices, adding another 600,000 homes to the 2 million already receiving the benefit.