The government’s move to reduce the VAT on electricity from 10% to 5% has become a focal point for the business lobby, who argue that tax relief on energy is a direct lever to support growth. In a session charged with strategy and critique, the chair of the CEOE framed the tax cut as a way to energize the economy, a message echoed at the close of the business plenary by Antonio Garamendi. Industry leaders pressed the Executive to deliver an income policy that would help temper inflation, while asking for clarity on how pension spending would be funded and what novel adjustments might be on the table for civil servant pay in the coming period.
Garamendi began by outlining a challenging macroeconomic backdrop: persistent inflation, a sizable deficit, and a high national debt. With the winding down of pandemic-era emergency measures, business associations have sharpened their rhetoric against further public spending and any tax increases. The aim is to shield the economy from additional pressure and to preserve competitiveness in both domestic and international markets.
Within this heated policy environment, United We Can urged a widening of the corporate tax for energy firms, signaling a clear message to Yolanda Díaz, the second vice-president and government leader. The tone suggested vigilance against over-indulging the tax system, while also recognizing that large corporations operate with a global footprint and could contemplate relocating headquarters to avoid higher levies. The warning underscored the sensitivity of corporate strategy to fiscal policy and the potential for cross-border adjustments.
Negotiations between employers and unions on wage adjustments have been temporarily paused as inflation persists. Garamendi criticized the Government for not taking a stronger role in steering a broad, multi-issue agreement beyond salary raises alone. He called for a renewed debate on retirement policy and the introduction of a new sustainability factor aimed at curbing long-run spending. He stressed that reducing minimum pensions is not the objective; rather, the focus is on ensuring the pension system remains solvent as demographic and economic pressures change.
On the fiscal front, Garamendi pressed the Treasury for early clarification of next year’s civil servant pay increase, seeing it as a reference point for the broader bargaining process. In response, the CSIF union mobilized affiliates to gather in front of the ministry led by Maria Jesus Montero, demanding a transparent, negotiable framework for public sector compensation. Observers worry that rising consumer prices could push the government to enact measures to temper the CPI without granting sizable salary increases for public workers. Last year’s modest 2% rise in pay contrasted with a CPI around 3.2%, and current trends show the CPI remaining elevated, complicating the path for public-sector wage talks.