In a new vote of hearts attack, the Government will extend the measures of its anti-crisis plan that was approved by the Council of Ministers March 29 and confirmed by Congress April 28. Esquerra used the opportunity to punish the ‘case Pegasus.’ Pedro Sanchez, who had made it clear in Brussels on Tuesday that the Executive was considering keeping the aid up for three months more, due to the length of the conflict in Ukraine and the effect it is having on the increase in prices, and that today, it confirmed that it would do so before its parliamentary group.
He said that “we are the same government who faced the pandemic” at a meeting in the lower house. This was just one day after it was revealed that the year-on-year growth of the euro area’s inflation reached 8.1% in May. That is higher than the forecasts which had it at 7.7%.
Since weeks, there was talk of cancelling measures that involved 16,000 million euro in direct aid and ICO credit mobilization. This included the bonus of 20 Eurocs per liter of fuel refueled, tax reduction in electricity bill, maintenance of the tax cut, limitation of rental price increases to 2% or 15% increase in Minimum Vital Income. The Government was unsure whether any of these measures should be modified, and specifically the universality of fuel discounts.
Maria Jesus Montero (Minister of Finance) also confirmed that the Government intends to extend measures “that were already approved” for three more months. In an act signed at the Currency and Stamp Factory, the Treasury head stated that it would not only be for carriers. It would also extend existing measures and extend them for a comparable period. The anti-crisis plan costs 6,000 million euro. 1,200 million of these correspond to fuel discounts during the quarter.
According to government sources, the new royal decree law, which is currently being developed, will “substantially” be the same as the one that was previously in force. However, it is possible that something may be added. Moncloa says that they will analyze the situation to determine if there are any changes or improvements. Podemos played an important role in getting the Government into consideration measures such as those that affect the IMV, rents, and is now pushing to expand the package by adding a fund for municipalities, communities, that allows transport passes to go down to 10 euros.
The Government’s minority partner claims that the measures will remain in effect until the end. However, the socialist wing argues that due to the extraordinary nature of the situation and its high cost, it is reasonable that the extension and any subsequent ones be limited to three month.
A few months after the rule was implemented, many members of the government anticipated that the measure could be extended beyond the expiration of the current decree. Only a few days of respite was provided by the rise in energy costs, which ended at Easter. The price of electricity has remained high and fuels have continued to rise.
Nadia Calvino (economic vice president) had warned that the Executive would end the 20c per liter bonus – which was the star measure in the plan – if oil companies absorb that aid and maintain prices. She suggested that the decree could be extended, but that the subsidy should be adjusted to the most vulnerable. Calvino stated, “We need to evaluate the most efficient measures and if any of them reduce costs because operators raise prices and absorb this aid, then we will withhold it.” A week ago, the National Markets and Competition Commission ruled that no operators were profiting from the measure and boosting their profits by raising prices.
Prices will continue to rise in the second half of this year due to the economic, European, and war context. The Brent barrel rose 1% to a high of 117 dollars on Wednesday. The first aid package was around 105 dollars when the Executive approved it. On average, gasoline costs more than 2 euros per liter, while diesel prices are rising towards 1.90 euros. In the first case it is 18 cents higher than at April’s beginning, and in the second almost four cents higher than when the decree came into effect.
The Executive confirms the extension of the plan and clings on to the last burning nail that can reduce energy costs: the plan for limiting the price of gasoline in the market. The European Commission is still studying the “Iberian exceptionality”, for which Spain, Portugal and Portugal plan to cover this cost for one year. Sources in government claim that the Spanish-Portuguese proposal will be approved by Brussels “soon”, if not “in a matter of days”. Currently, electricity prices are above 200 euro/Mwh because they have not done so. The cap would bring it down to 130 to 140 euros/Mwh. This would lower the final electricity bill for the 10 million consumers on the regulated market by 15% to 20%, depending on the previous bills.
