The times are clear and are already counted. This Friday the Government will approve a first decree-law with the first economic response measures to the war in Iran. And Congress will vote on it next Thursday.
What is to be defined is the content of that decree-law. And it will not be, they assure from Moncloa, until the last moment.
Housing
It is the main political dispute. Sumar and the rest of the left-wing partners do not conceive leaving out measures such as the anti-eviction moratorium or limitations on rental prices, either with caps as in the war in Ukraine, or with the ‘freezing’ of rents by automatically renewing contracts.
On the contrary, PP and Junts veto the inclusion of measures and threaten to overturn the decree-law. They have already done so with the omnibus twice this year. And the PSOE defends prioritizing the search for consensus to avoid a repeal.
Warns that there is no majority for what the partners want, who even so insist for the rest of the parties to show their true colors. An intermediate path could be to approve a specific decree-law with housing measures, which would distance the risk of repeal.
Transport and agri-food
The main effect of the war, currently, is the rise in prices at gas stations and fertilizers. The latter have become more expensive by between 40% and 50%.
The Government fears, especially, that the price increase will end up affecting the rest of the value chain and, ultimately, final prices. If the energy escalation ends up in the shopping basket, the crisis will end up being one of prices. Avoiding it is the main priority of the Executive, which focuses efforts on transporters and the agri-food sector.
The plan will include measures to lower their energy bill and the main bet is to reduce its taxation. It remains to be seen if there will be cost compensations in the form of aid, but the Executive acknowledges the European Commission's reluctance to relax its limits on direct aid.
A generalized bonus like the 20 cents per liter one is ruled out, approved in the last crisis, due to its budgetary impact, its regressive nature and the management complications with gas stations.
Energy bill and protection to households and businesses
The Government's approach to contain electricity prices in homes and businesses is tax-related. It was the one chosen during the last crisis and the budgetary impact would be limited, as it would be offset by higher prices.
The reduction, in any case, would be more reduced at first. If there is a reduction of the VAT applied to the electricity and gas bill, it will not be at 0% or 5%. In addition to VAT, reductions were also applied to the special tax on electricity.
And the suppression of the so-called generation tax is taken for granted, by which the generating power companies are taxed at 7% and which PP and Junts demand to abolish.
In the case of industry, a toll reduction is also foreseen for the most dependent sectors on the cost of energy. Pending was the 80% reduction that fell last year, first with the omnibus decree-law and then with the blackouts decree-law.
The anti-crisis plan will recover the prohibition of supply cuts, one of the measures of the repealed ‘social shield’ and the social bonus discounts. The Executive was working on a reform of these bonuses to limit their concession to situations of need and, predictably, will take the opportunity to carry it out.
Among the requested measures is the ‘freezing’ of the regulated gas tariff TUR (Last Resort Tariff), which must be updated in the coming days.
Renewables, decarbonization and electrification
In addition to conjunctural support measures, the Executive will approve structural measures, a part of the decree-law in which it will take the opportunity to incorporate a good part of its agenda in energy matters, especially in renewable matters. Facilities in project processing are expected.
The two omnibus decree-laws that Congress repealed included a range of tax bonuses to incentivize the purchase of electric vehicles, the installation of charging points, and aerothermal equipment. Also for energy efficiency actions.
It is foreseeable that the Government will recover, if not expand, those measures, as well as those that remained ‘hanging’ after the repeal of the ‘anti-blackout’ decree-law. The Executive was able to approve some via regulation but others require the rank of law and remain pending.
The Executive was finalizing, for example, a regulation with regulation on self-consumption and energy communities, which could be included as part of the structural reforms.
Energy price caps
Recovering the Iberian exception will not be in the Government's first response. It requires authorization from the Commission and is not contemplated, as no price peaks like those experienced after the war in Ukraine broke out are detected.
The Executive insists that the situation is not comparable and that, furthermore, Spain has gained autonomy regarding the gas variable thanks to the greater weight of renewables. Not so in terms of interconnections. The Iberian Peninsula continues to be an island, but in better conditions.
Protection in businesses
Out of focus, but ready for approval, are all labor protection measures deployed in previous crises and that have been recurrently recovered. They are focused on the search for alternatives to dismissal, which is limited and made more expensive by prohibiting dismissal for objective reasons related to the crisis.
Along with this, the conditionality of the aid received for maintaining jobs or the flexibility mechanisms within companies, with bonuses and incentives for ERTEs. The limitation of the decree-law's tax bill is one of the conditioning factors that works against deploying these instruments in all their intensity. The Minister of Economy has been emphasizing that, at least for now, no impacts are detected in the labor market.
Shopping basket
The VAT reduction demanded by the PP is ruled out, inasmuch as price increases are not yet observed in supermarkets. The Government wants to limit the scope of this first response, without ruling out a measure that was already adopted in the last crisis. No, for now.
More discards
Despite ‘buying’ part of the PP’s recipes –tax cuts on energy bills, for example--, the Government rules out generalized tax cuts like those it proposes for personal income tax.
Neither recover taxes or specific levies that finance the measures. Treasury understands that they would not enjoy support in the Chamber, due to Junts' veto.