Spain moves to curb rising costs amid Middle East crisis

Spanish Prime Minister Pedro Sanchez on Friday announced a package of urgent measures aimed at shielding the country’s economy from the impact of the ongoing Middle East conflict and protecting consumers from rising costs.

The measures, valued at more than €5 billion ($5.75 billion), are set out in two decrees — one focused on supporting businesses and another targeting housing and rental affordability, News.Az reports, citing Xinhua.

Speaking to reporters, Sanchez acknowledged that the steps “won’t prevent the effects of this illegal war from reaching Spain,” but said they would help make them “less corrosive and somewhat more bearable.”

The emergency package includes a reduction in VAT from 21% to 10% on automotive fuels, electricity, and natural gas, alongside cuts to the special tax on hydrocarbons. The government will also temporarily suspend the tax on electricity generation.

In addition, authorities will introduce a 15% personal income tax deduction for the purchase of electric and plug-in vehicles. Further tax incentives will support energy efficiency upgrades, self-consumption systems, and heat pump installations.

“Extraordinary situations require extraordinary measures,” Sanchez said, noting that the decrees contain around 80 measures that will take effect once published in the Official State Gazette (BOE).

The policy response comes as the US-Israeli attacks on Iran, launched on February 28, continue to disrupt global energy markets. The conflict has pushed up oil and gas prices, increasing pressure on economies worldwide.

European energy markets have seen sharp volatility. The Dutch TTF benchmark — a key indicator for European gas prices — surged more than 30% to €70.7 per megawatt-hour before easing slightly, and has more than doubled compared to pre-conflict levels.

Oil prices have also climbed, with Brent crude rising above $116 per barrel in early trading, reflecting ongoing supply concerns linked to the conflict.

News.Az 

By Nijat Babayev