Spain Approves Massive €5bn Anti-Crisis Decree Amid Middle East Tensions and Fuel Price Surge

The Congress of Deputies of Spain has approved the government's anti-crisis decree aimed at tackling the economic repercussions of the U.S. and Israeli conflict with Iran. The document passed by a narrow margin, with 175 votes in favour. At the last moment, the government secured support from the BNG (Galician Nationalist Bloc), while the PP (People's Party of Spain) abstained from voting.

Representatives of the far-right Vox party voted against the measure, while the ruling PSOE (Spanish Socialist Workers' Party), the left-wing Sumar bloc, and several regional forces supported the initiative.

Economic Measures

The approved decree includes a comprehensive package of 80 fiscal, social, and economic measures to combat rising energy and fuel prices. It provides for a reduction of VAT on fuel to 10% and a cut in excise duties, which is expected to save consumers up to 30 cents per litre—approximately 20 euros for a full tank.

In addition, the total tax burden on electricity is set to decrease by about 60%: VAT is reduced to 10%, the tax on electricity production is suspended, and the special electricity tax is slashed from 5.11% to 0.5%. VAT on gas, pellets, and firewood is also lowered to 10%, and the prices of butane and propane have been temporarily capped.

The decree also includes an 80% discount on electricity fees for energy-intensive industries and extends extraordinary social bonus discounts for electricity throughout the year.

A separate block of measures provides direct support to the sectors most affected by the price surge. Transport companies, farmers, livestock breeders, and fishermen will receive compensation—including fuel subsidies of 20 cents per litre and aid for purchasing fertilisers.

Structural initiatives are also part of the plan, such as tax deductions for installing solar panels and electric vehicle charging stations, alongside incentives for energy self-consumption.

For businesses, the "post-COVID" moratorium on accounting for losses is extended to prevent company liquidations. Furthermore, companies receiving state support are prohibited from dismissing employees for "objective reasons." Additionally, firms with more than 200 employees are now required to provide more efficient alternative commuting options for their staff.

Previously, Prime Minister Pedro Sánchez announced that 5 billion euros would be mobilised as part of the response plan to the Middle East crisis to "protect citizens and assist small and medium-sized enterprises, the primary sector, and, of course, industry."

Extension of Rental Agreements

Beyond the economic steps mentioned above, the approved document includes a two-year extension for rental agreements expiring before the end of 2027. However, this measure could be overturned in the coming weeks, as the Junts party, which initially supported the decree, has indicated it will oppose it in the final vote.

Currently, thousands of tenants are rushing to secure their rental extensions while the measure remains in force. Tenants have begun mass-sending official notifications (burofax) to landlords requesting the extension. The Confederation of Tenants' Unions launched a dedicated website, poderinquilino.org, which saw nearly 230,000 visitors in a single day as users downloaded the necessary forms.

Nevertheless, the unions admit there are no guarantees that these extensions will remain valid if the decree is eventually repealed.