Council of Ministers

The Government of Spain approves the National Response Plan for the consequences of the war in Ukraine

Council of Ministers - 29.3.2022

Moncloa Palace, Madrid

The Council of Ministers has approved the Royal Decree-Law adopting urgent measures within the framework of the National Plan of response to the economic and social consequences of the war in Ukraine.

The First Vice-President of the Government of Spain and Minister for Economic Affairs and Digital Transformation, Nadia Calviño, has stated that the situation is serious and that the Government is acting accordingly, "with responsibility and empathy", and is offering a coordinated response at European level "based on unity, determination and solidarity".

The Plan includes mobilising16 billion euros of public resources, 6 billion in direct aid and tax rebates, and 10 billion through a new line of guarantees managed through the ICO.

Calviño summarised the eight specific objectives to "fairly distribute the effects of the war and preserve as much as possible the path of growth and job creation already started in 2021": to lower the price of gas, electricity and fuels, helping in particular the most vulnerable groups; to support the most affected sectors and companies, particularly SMEs and the self-employed; to strengthen price stability; to guarantee supplies; to protect financial stability; to accelerate the deployment of the Recovery, Transformation and Resilience Plan; to boost energy efficiency and to strengthen cybersecurity.

Aid to families, workers, displaced persons and refugees

Foto: Pool Moncloa/Borja Puig de la BellacasaThe Second Vice-President and Minister for Employment and Social Economy, Yolanda Díaz, reiterated that the measures approved protect families, workers and the productive fabric and will allow us to "emerge together" from this crisis caused by the war as we did from the pandemic.

Díaz has advocated maintaining employment, reminding employers that dismissal is unnecessary because they can make use of the ERTES mechanism through which public resources are used to pay salaries and social security contributions: "In crises, when there are social protection mechanisms, as is the case in our country, there is no need to lay off workers," he said.

The minister explained that incorporated as a new item is any dismissal occurring for reasons related to the increase in energy prices being considered unjustified.

Furthermore, to reduce the impact of inflation, the regulation includes a 15% revaluation of the Minimum Living Income and an extraordinary deadline of the annual updating of the income from housing rental contracts until 30 June 2022. Unless otherwise agreed, it may not exceed the variation of the Competitiveness Guarantee Index (GCI), which currently stands at 2%.

The Second Vice-President also referred to two procedures to be put in place to protect the victims of the war in Ukraine. First, a procedure to prevent women from falling into the hands of trafficking networks or to get them out of them "quickly and efficiently"; and second, to design a system for families to take in refugees, in agreement with the autonomous communities.

Support for the economic and business fabric

Foto: Pool Moncloa/Borja Puig de la BellacasaNadia Calviño has listed some of the most affected sectors that will receive direct aid. There will be 362 million euros for agriculture and livestock, 68 million euros for the fisheries sector, over 500 million euros in aid to large electricity consumers, and 125 million euros for the intensive gas industry.

With regard to the measures aimed at guaranteeing the liquidity of companies and the self-employed, Calviño explained that the 10,000 million euros to be managed by the ICO may be granted until 31 December 2022 and will have a grace period of 12 months.

In addition, the Code of Best Practices applicable to all outstanding guarantees corresponding to COVID loans is made more flexible, so that a turnover in 2020 no longer needs to be more than 30% less than in 2019 to be eligible for an extension of the maturity period. Likewise, a 6-month grace period is enabled at the request of debtors in the most affected sectors, and financial institutions are obliged to maintain working capital lines for all customers.

Making the transport sector attractive

The transport sector will be the main beneficiary of the minimum bonus of 20 cents per litre of fuel, and freight and passenger transport companies will also receive 450 million euros in direct aid.

Other measures are the reduction to one month of the deadline for the tax on hydrocarbons refund, and an additional 80% rebate on the ship tax and the goods tax on maritime lines connecting the mainland and ports outside the mainland belonging to the state-owned port system.

Cybersecurity

To be able to respond adequately to the increased risk arising from the current geopolitical context, the government has also approved the National Cybersecurity Plan with an investment of more than 1.2 billion euros and the transposition into national legislation of European regulations on integrity and security related to the deployment of 5G.

Energy actions

Foto: Pool Moncloa/Borja Puig de la BellacasaThe third Vice-President of the Government of Spain and Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera, has maintained that the government wants to reduce or contain energy prices to prevent an inflationary spiral and ensure supply and energy autonomy to avoid the volatility of international markets and to accelerate the energy transition.

The dimension of the impact of energy goes beyond the most vulnerable groups, which is why the provisions adapted today "are also designed for the middle classes, workers, SMEs and the self-employed", said Ribera.

To this end, Teresa Ribera recalled that the European Council of 24 and 25 March agreed that Spain and Portugal will be able to apply a temporary and extraordinary mechanism to reduce the impact of the price of natural gas on the configuration of the wholesale electricity market.

According to the Vice-President, in addition to promoting this coordinated response in Europe, the government has today agreed on various instruments and the Royal Decree-Law with urgent measures to respond to the situation.

Gasoline rebate and extension of tax breaks

Teresa Ribera stressed that the extraordinary tax treatment that electricity has received since last summer has been extended until 30 June, with a 10% reduction in VAT, the suspension of the 7% tax on generation and a 0.5% reduction in the special electricity tax.

He also referred to the minimum bonus of 20 cents on each litre of fuel until 30 June, announced yesterday by the President of the Government. The Executive will apply a reduction of 15 cents and the oil companies a minimum of 5 cents.

Promotion of renewables

The third vice-president stressed that the special system enjoyed by plants producing renewable energy is being updated so that they do not receive more resources than they are entitled to under current legislation. This measure will free up 1.8 billion euros to reduce the fixed part of households' electricity bills.

She added that renewable generation plants will be able to sell their electricity outside the wholesale market from 1 January 2023, which will facilitate greater liquidity of electricity "at reasonable and cheap prices for industrial operators or traders whose purpose is to sell electricity to households".

Teresa Ribera stressed that the processing of projects of up to 7 megawatts of wind energy and up to 150 megawatts of photovoltaic energy will be accelerated. In addition, the Water Law will be modified to allow the deployment of floating photovoltaic energy and self-consumption will be facilitated.

The regulation also contemplates the possibility of installing plants dedicated to electricity storage that operate alone, in isolation, giving the system flexibility and coverage.

Electro-intensive industry

The third vice-president explained that the Plan envisages an 80% reduction in the tolls paid by the electricity-intensive industry for the use of electricity transmission and distribution networks, for an amount equivalent to 250 million euros. In addition, it includes an increase in the allocation to compensate indirect CO2 costs to the beneficiary industries. It also includes specific aid for sectors where gas consumption per final product is particularly high.

Strengthening of the Social Electricity Voucher.

Teresa Ribera emphasised that the Social Electricity Voucher is being made more flexible and will benefit not only families but also people living together in the same household, and will be automatically renewed for the next two years. In addition, it will automatically include all Minimum Living Income beneficiaries.

Last, the prohibition on increasing the gas bill by more than 5% per quarter for consumers who have contracted the Last Resort Tariff is being extended.

Other agreements

The Council of Ministers has approved the distribution of 2.415 million euros for theimplementation of the Annual Employment Policy Plan 202 by the Regional Governments. To this amount, allocated in the 2022 State Budget, will be added another 383.4 million from the European funds of the Recovery and Resilience Mechanism. The distribution is to be ratified at the Sectoral Conference on 6 April.

Vice-president Yolanda Díaz stressed that this investment will allow for the transformation of active employment policies, with special emphasis on young people and women.

Díaz also referred to the Government's agreement reached today according to which travel agencies will be able to benefit from The RED Mechanism for Employment Flexibilisation and Stabilisation provided for in article 47 bis of the Workers' Statute. These companies will be able to apply for the application of a temporary reduction of working hours and suspension of employment contracts, among other benefits, until 31 December this year.

Last, ahead of tomorrow's celebration of Domestic Workers' Day, Díaz announced that Spain will soon ratify Convention 189 of the International Labour Organisation (ILO) on decent work for domestic workers.

Non official translation