The government is moving toward approving a ministerial council decision, with a decree expected next week to broaden selected measures within the social shield designed to cushion the economic impact of the war in Ukraine. A path has already been cleared from the treasury side to curb inflation and address some of Brussels’ requirements. Among the subsidies tied to fuel that are not set to be renewed when they expire on December 31 are subsidies for transporters, livestock, and agriculture. This benefit has already been phased out and is now set at five cents per liter of fuel, as reported by Moncloa sources (Attribution: El Periódico de España).
The final wording of the decree remains under negotiation between the Treasury and the second vice president, led by Yolanda Díaz. The coalition’s minority partner pressed for extending most of the aid, while the socialist side proposes eliminating the fuel subsidy as well as the price cuts on electricity and basic goods. Europe’s demand to withdraw extraordinary incentives is noted, and the latest inflation data, particularly for electricity and fuels, is viewed with cautious optimism by officials (Attribution: El Periódico de España).
If fuel prices rise, transporters may transfer the costs to customers. The conflict in the Red Sea is contributing to higher prices for oil and natural gas, which could influence the broader price trajectory.
Government is preparing the path to remove subsidies: “The EU wants us to withdraw subsidies”
The administration is also not planning to approve new measures to combat rising prices. The Socialists are pushing to reduce the budget deficit to 3 percent and reintroduce fiscal rules, aiming to avoid extending the new anti-crisis aid. The latest decree extension mobilized a total of 3.8 billion euros in the second half of the year (Attribution: El Periódico de España).
The measures that will be extended for another six months include subsidies for public transport and travel discounts, including a free service for young people and the unemployed, and the VAT on electricity bills. Transport subsidies are already included in the budget, and the VAT cut announced by the prime minister in the investment speech will be extended under current terms, with the exception of meat and fish. The plan also calls for the elimination of the 4 percent VAT applied to all basic food items such as bread, flour, milk, cheese, eggs, fruits, vegetables, legumes, potatoes, and grains, while preserving the 10 percent reduction and a 5 percent rate on oil and pasta.
The suspension of evacuating vulnerable families remains among the measures to be extended in the first half of next year. The coalition’s goal is to connect autonomous communities with the administration to carry out evacuations in sensitive cases, while not removing the measure entirely. Landlords or owners would be entitled to compensation under temporary suspension provisions (Attribution: El Periódico de España).
Rentals
On housing, authorities plan steps to counter rising rents. The Board of Directors will set reference price indices between late December and early January, with key indices aligning to the declaration of distressed areas where rents or mortgages exceed 30 percent of income. The designation of these zones falls to autonomous communities, creating a potential weak point in the housing policy since some PP-led communities have indicated they will not participate. The Executive warns that homeowners in communities without a declared distressed area may lose eligibility for tax breaks included in the law (Attribution: El Periódico de España).
Housing Minister Isabel Rodríguez began a series of meetings with autonomous communities this week to advance the housing law. A Housing Sector Conference involving all autonomous communities is planned for the end of January, with the aim of expanding public stock to 184,000 homes in the upcoming period. Rent increases tied to CPI will be capped at 3% based on existing housing law. The omnibus decree, representing the final Council of Ministers session of the year, includes anti-inflation measures along with a revaluation of pensions according to CPI and adjustments for officials’ salaries (Attribution: El Periódico de España).