Spain has announced a €5 billion energy relief package aimed at cushioning the economic impact of the ongoing Middle East conflict, as rising fuel prices continue to strain households and businesses. Prime Minister Pedro Sánchez said the government has approved a set of 80 measures to address surging energy costs, warning that the war could significantly affect the Spanish economy.
“The war will cost Spaniards €5 billion,” Sánchez said, adding that additional support could be introduced if necessary.
The package is expected to benefit around 20 million households and 3 million companies, with a focus on reducing energy costs and limiting inflation.
Key measures include a reduction in value-added tax (VAT) on fuel from 21% to 10%, along with cuts in excise duties on hydrocarbons. VAT on natural gas will also be lowered to 10%, while prices of butane and propane will be capped.
The government said the tax cuts could reduce fuel prices by around €0.30 per litre in some cases.
Electricity costs are also targeted under the plan. VAT on electricity and gas will be reduced to 10%, and a 5% indirect levy included in consumer bills will also be lowered. Additionally, the tax on electricity production will be temporarily suspended to prevent higher costs from being passed on to consumers.
The package includes strengthened social protections, such as expanded subsidies for vulnerable households and a ban on cutting off energy or water supplies to those most at risk.
However, housing-related measures, including rent caps and mortgage relief, have not been included at this stage.
The plan still requires approval from Spain’s parliament but is intended to mitigate the energy shock and contain inflationary pressures caused by the global crisis.
