The conflict in the Middle East has begun to rapidly shift to the Spanish economy. The first indicator is already visible: the Ministry of Economy has confirmed a rebound in inflation up to 3.3%, driven by rising energy costs. If this trend consolidates, the impact will be structural: pensions must be revalued according to the CPI, automatically increasing public spending in a context of growing fiscal pressure.
This effect is not minor. The updating of pensions based on inflation implies a sustained increase in the structural expenditure of the State, which, coupled with the rising cost of financing, can aggravate the public deficit and accelerate the accumulation of debt. All of this also occurs in a particularly delicate context: Spain continues to operate with State General Budgets extended since 2023, with no clear indications that new accounts can be approved in the short term.
Sources from the Bank of Spain warn that this absence of new budgets limits the Executive's capacity to adjust spending and respond precisely to the economic shock, increasing the risk of fiscal deviations and weakening the credibility of economic planning. In parallel, these same sources indicate that the rise in prices is already eroding the purchasing power of households, which face higher energy bills, higher transport costs, and a progressive increase in the cost of the shopping basket.
Double economic tension
The result is a scenario of double economic tension: on the one hand, public accounts deteriorate due to the increase in indexed spending -pensions, public salaries, benefits-; on the other hand, families see their consumption margin reduced. This combination, if prolonged, threatens to curb economic growth and consolidate a cycle of persistent inflation.
Sectors such as transport, the chemical industry, agriculture or logistics already show signs of vulnerability. External energy dependence turns Spain into an economy especially exposed to international price shocks, which translates into greater energy deficit, pressure on the trade balance and need for fiscal adjustments in the medium term.
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In this context, the economist and geopolitics expert Lorenzo Bernaldo de Quirós, in exclusive explanations to Democrata, warns that the package of measures approved by the Government presents important structural limitations. According to Bernaldo de Quirós, the decree is a generalist instrument that seeks to mitigate the effects of the conflict in the Middle East, but fails to focus resources on the most affected sectors and groups, which reduces its practical effectiveness.
In detail, the president of Freemarket Corporate Intelligence points out:
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The real effect of the measures on energy costs for households and businesses could be limited, given that many tax reductions do not directly translate into final prices.
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The lack of specific measures for strategic sectors such as transport, agriculture, and energy-intensive industry increases the country's structural vulnerability.
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The current budgetary situation, with accounts extended from 2023, limits the Executive's capacity to implement precise adjustments and may condition the fiscal sustainability of support in the medium term.
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The impact on household purchasing power, added to the obligation to revalue pensions according to the CPI, could generate an increase in structural spending and greater indebtedness.
Bernaldo de Quirós, based on energy market data, macroeconomic statistics, and institutional sources, such as the Bank of Spain and the International Energy Agency, insists that these measures, although necessary, are only a first step and must be complemented with more focused and temporary actions. As he explains to Democrata, "the risk is that there will be a dispersion of resources, reducing the positive impact on the hardest-hit sectors and limiting the plan's ability to contain inflation and pressure on public finances".
CEOE and Cepyme: rejection of intervention in housing
The main business organizations, CEOE and Cepyme, have also shown their deep concern over the inclusion of housing measures within the anti-crisis package. They consider that these initiatives, unrelated to the energy context, introduce legal uncertainty and constitute an interference in private property.
They warn that these measures discourage investment, reduce supply and will worsen access to housing, generating an effect contrary to what they seek. They also demand that public policies focus on the economic emergency and avoid interventionist approaches that have already demonstrated their ineffectiveness.
Meanwhile, the decree has generated an uneven response among the different economic sectors:
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Foment del Treball recognizes the speed of the governmental reaction, but considers that many measures do not respond to the real needs of the most affected sectors.
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ATA values the tax reductions on energy and fuels, although it insists that they are insufficient for self-employed workers in transport, agriculture or industry, where costs have skyrocketed.
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The road transport sector has warned of the “risk of collapse” due to the increase in fuel prices. After negotiations, the Government has committed to introducing adjustments in price review and in professional diesel refunds.
In the energy sector, the VAT reduction to 10% on basic supplies has opened a debate about its real effectiveness, especially in a context where prices remain marked by international volatility.
The warning of the Bank of Spain
The Bank of Spain introduces a key nuance: although the measures may have positive short-term effects, their design is too broad and not very selective. The institution warns that they are not sufficiently aimed at the most vulnerable groups, which reduces their redistributive capacity.
Furthermore, it recommends that future actions be temporary and focused, to avoid economic distortions and an unnecessary increase in structural public spending, which would end up impacting higher levels of debt.
Political tensions and focus of the package
The process of approving the decree has also evidenced political divisions. Some parliamentary partners have demanded price controls and a strengthening of the social shield, while the Government has avoided introducing structural reforms such as the deflation of the personal income tax.
This balance has given rise to a package that, according to various sources, incorporates elements of a political and ideological nature that go beyond the strictly economic response to the crisis.
The first symptoms
The impact of the conflict in the Middle East is already being felt in the Spanish economy and threatens to intensify. The first symptom has been the rise in inflation. Thus -point out the consulted experts-, the combination of rising inflation, increase in indexed public spending -especially on pensions-, absence of new budgets and pressure on the deficit and debt configures a particularly complex scenario.
For citizens, the consequence is direct: higher prices, lower purchasing power and lower savings capacity. For the State, the challenge involves containing the deterioration of public accounts without a clear budgetary margin and without fully updated fiscal tools.
In this context, consensus is limited. Experts like Lorenzo Bernaldo de Quirós and business organizations agree that the Government's response, although necessary, is incomplete. Thus, the key will be in its ability to adjust the measures -as already anticipated by the economic vice president, Carlos Cuerpo- and, focus them on the most affected sectors to prevent the energy shock from becoming a structural problem for the Spanish economy.