Pedro Sánchez announces 16 billion euros for new War Response Plan

He made this announcement at the third 'Generation of Opportunities' meeting, held in Madrid, where he detailed that the plan will protect families, workers and displaced persons; it will include measures to support the economic and business fabric and will be aimed at areas such as transport, cybersecurity and energy. This package of measures will cost around 6 billion euros, and will include 10 billion euros in ICO loans and last until 30 June.

"No one is protected from this war. We cannot promise that the effects of the war on our economy and therefore on our lives will not be felt. But what we can promise that the Government of Spain will do its utmost to mitigate its effects as much as possible. And we can also promise that we will distribute the sacrifices in a balanced manner, so that no sector, and even less so the most vulnerable groups, feel neglected or abandoned to their fate", said the head of the Executive.

Foto: Pool Moncloa/Fernando CalvoFirstly, to mitigate the impact of higher fuel prices on households, the Council of Ministers will approve a minimum relief of 20 cents on each litre of fuel until 30 June. The Government will apply a reduction of 15 cents and the oil companies a minimum of 5 cents. To protect workers and companies, Pedro Sánchez has explained that the Executive is going to take measures to protect employment, avoiding dismissals. In addition, companies will be able to make use of internal flexibility measures, such as the ERTEs.

In housing, and exceptionally, rent price reviews over the next three months will be limited to 2%, in order to avoid high rises that could be detrimental to tenant families. In addition, the Government will increase the amount of the minimum basic income by 15% for three months. With the aim of limiting the consequences of the Ukrainian invasion on the electricity bills of the most vulnerable, more than 600,000 additional families will be able to benefit from the social electricity voucher, thus reaching 1.9 million households.

In addition, the Government will extend the fiscal measures linked to electricity bills until 30 June. Thus, the VAT rate will remain at 10% for small consumers, the special tax on electricity will remain at the minimum of 0.5% and the suspension of the tax on electricity generation will be extended.

Most affected sectors

To shield the economic impact of the war on the productive fabric, Sánchez has advanced that the Government will approve a new line of ICO guarantee loans for 10 billion euros to cover the liquidity needs caused by the temporary increase in the cost of energy and fuel. In addition, the maturity of ICO guaranteed loans and the grace period for the most affected sectors will be extended.

In this sense, the head of the Executive has asserted that the Government is going to approve an "major aid package" of 362 million euros for agriculture and livestock, and another of some 68 million euros for fishing. As for energy-intensive industry, 80% of tolls will be covered and CO2 offset will be increased to the maximum, while direct aid to the sector will be reinforced, in what will be a package of measures that will exceed 500 million euros.

Foto: Pool Moncloa/Fernando CalvoIn addition, the president has valued the agreement with the main associations of the transport sector, which will mean an injection of more than 1 billion euros, through the fuel rebate and the creation of a fund of 450 million euros in direct aid to freight and passenger transport companies, depending on the type of vehicle. The amounts will be 1,250 euros per lorry, 900 euros per coach, 500 euros per van and 300 euros per light vehicle. Sánchez also stressed that the Executive will reduce the deadline for the return of the tax on hydrocarbons from three months to one month in order to increase liquidity for professionals, and will approve a law that allows hauliers to "work with a fair price", as has been done with farmers and livestock farmers in the Food Chain Law.

The event, organised by Europa Press and McKinsey & Company, was also attended by the First Vice-President of the Government of Spain and Minister for the Economy and Digital Transformation, Nadia Calviño; the Second Vice-President of the Government of Spain and Minister for Work and Social Economy, Yolanda Díaz; the Third Vice-President of the Government of Spain and Minister for Ecological Transition and Demographic Challenge, Teresa Ribera; the Minister for Treasury and Public Function, María Jesús Montero; the Minister for Transport, Mobility and Urban Agenda, Raquel Sánchez; the Minister for the Presidency, Parliamentary Relations and Democratic Memory, Félix Bolaños, and the Minister for Territorial Policy and Government Spokesperson, Isabel Rodríguez.

Iberian derogation

The war "is causing a rise in energy prices that is pushing up the costs that households and companies have to pay; as well as the increase in the price of raw materials and food exported by Russia and Ukraine", explained Sánchez, who recalled that Spain has been leading the request for regulatory changes and urgent measures to the European Commission for months, with proposals such as the centralised purchase of gas.

Foto: Pool Moncloa/Fernando CalvoThe president of the Government of Spain has welcomed the fact that the European Council is considering the possibility of Spain and Portugal being able to adopt exceptional and time-limited measures to reduce electricity prices. Pedro Sánchez said that both countries will this week present an "exceptional and temporary" measure to the European Commission to set a benchmark price for gas used for electricity production.

"I am convinced that the approval by the European Commission will take place in a very short period of time and the next day it will be approved in the Official State Gazette, with immediate effects on the electricity bills of our fellow citizens", said the head of the Executive.

Recovery of activity and employment

The aim of the measures, Sánchez explained, is to preserve the economic and employment recovery that Spain had already begun, after registering economic growth of 5.1% in 2021 and reaching 20.2 million employed people. "We are on the verge of recovering - in just two years - to a pre-pandemic GDP level. 840,000 jobs were created, the highest number since 2005. And we are back above 20 million workers, with unemployment continuing to fall. And with unparalleled levels of fixed-term contracts", he added.

The president of the Government of Spain added that the war also came at a time when Spain was overcoming the pandemic and had one of the best vaccination and infection rates in Europe. He announced that the Government will today launch the new Disease Surveillance and Control Strategy, with the consensus of the regional governments, and the European Centre for Disease Control.

Reception of refugees

"The most terrible thing about war is the suffering of innocent human beings. Thousands of deaths, millions of refugees, economic hardship and destruction," he said. Spain has activated the Temporary Protection Directive and, as the president of the Government of Spain has announced, will allocate 1.2 billion euros in 2022 for the reception of refugees out of the 17 billion provided by the European Commission, after simplifying the procedures of the reception system and setting up three centres in Madrid, Barcelona and Alicante, to be followed shortly by a fourth in Malaga. Spain has also responded to NATO's call by reinforcing its eastern flank and has sent military hardware to Ukraine bilaterally.

European patriotism

Foto: Pool Moncloa/Fernando Calvo"Europe has responded immediately and has responded united", stressed Sánchez, who highlighted the sanctions approved against Russia and the disbursement by the EU of a large part of the 1.2 billion euros in aid to Ukraine. "We are proud to be Europeans because we have built the most advanced civic community in history, the one that has taken humanist principles the furthest, the one founded on the values of freedom and justice. And that is European patriotism. A patriotism based on principles and values with a clear universal vocation. A European patriotism that is deployed through a forceful and also united response to the colossal challenges that a pandemic or an invasion and a war on European soil represent for our societies," he stressed.

The president defended the fact that the Government has met with the affected agents, regional governments and parliamentary groups to approve the action plan. "In little more than two years, Spain, as well as Europe, has been hit by the worst global health calamity recorded in the last century; by several disasters, in our case natural ones, including even a volcanic eruption on the island of La Palma. And now for a war on Europe's doorstep. And the question we must therefore ask ourselves is the following: What more needs to happen for us to respond together, what more needs to happen for us to put aside our quarrels and sectarianism and join forces? This is the policy that the Government will roll out: the policy of unity, the policy of determination and the policy of justice. Because we are going to act with justice, we are going to act with determination and we are going to act in search of unity", he concluded.

Non official translation