• Thu. Sep 28th, 2023

Spain has announced a €10 billion aid package to combat increasing costs

ByJosh Taylor

Dec 29, 2022

Spain approved 10 billion euros ($10.65 billion) in inflation-fighting measures in its third large package this year, increasing total aid to 45 billion euros ($48 billion) since early 2022.
Spain, like the rest of Europe, has been dealing with a rising cost of living, which has been compounded by the impact of the Ukraine war on energy costs.
According to Prime Minister Pedro Sanchez, the package revealed on Tuesday includes a one-time bonus of 200 euros ($213) for about 4.2 million people with annual earnings up to 27,000 euros ($28,800) and the prolongation of tax breaks for energy bills until the first half of next year.
It comes on the heels of similar announcements in March and June, which included direct help, tax breaks, soft loans, and rental limits. The restrictions, together with a negotiated deal with the European Union to regulate gas costs for power production, have had some success.
In November, 12-month inflation fell to 6.7 percent, the lowest rate in the EU’s 27-country union.
Slowing inflation has been supported by a dramatic drop in power costs, which fell 22.4 percent year on year in November.
However, food costs have continued to hurt Spaniards’ wallets, rising 15% year on year in October and November.
The government said that it will reduce the value added tax (VAT) on basic items such as bread, cheese, milk, fruits and vegetables, and cereals from 4% to 0%.
Sanchez said that the VAT on pasta and cooking oils will be cut in half to 5%.
Sanchez also announced 12-month renewals for commuter rail subsidies and rental rise caps.
A discount on the price of gasoline for consumers will be eliminated, with the exception of the haulage industry.
He claimed that the aid supplied thus far has contributed to Spain’s excellent economic growth this year, which he estimated at more than 5%, exceeding the government’s earlier expectation of 4.4 percent.

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