Pedro Sánchez announces urgent measures to address the impact of the war in the Middle East, including tax cuts on electricity and fuel and aid for the most affected sectors

The president stressed that the 80 measures in response to the conflict's impact will take effect tomorrow and will exceed €5 billion, benefiting 20 million households and 3 million businesses across the country.

Moncloa Palace, Madrid

The President of the Government of Spain, Pedro Sánchez, appears before the media after the extraordinary Council of Ministers (Pool Moncloa / Fernando Calvo)

The Council of Ministers, in an extraordinary meeting, approved a Royal Decree-Law adopting urgent measures in response to the impact of the conflict in the Middle East. These 80 measures aim to immediately mitigate the impact on households and businesses and accelerate electrification and the deployment of renewable energy to structurally reduce dependence on fossil fuels. At a press conference at the Moncloa Palace, the President of the Government of Spain, Pedro Sánchez, announced that the Royal Decree-Law will come into effect tomorrow and will exceed €5 billion, benefiting the country's three million businesses and 20 million households. The measures "will not prevent the effects of this illegal war from reaching Spain, but at least they will make them less devastating and somewhat more bearable," he stated.

Therefore, the president emphasised that, in addition to the cost in lives of the war, these first months of conflict "will cost Spaniards 5 billion euros, money that we could be allocating to scholarships, healthcare, or social services." In this regard, he pointed out that "political leaders who remain silent and do not clearly reject this war must explain that Spaniards will have to contribute 5 billion euros with their taxes to protect the productive sector and the most vulnerable people."

"Spain, the country with the strongest social and economic safety net in the EU"

Sánchez stressed that when these measures come into effect tomorrow, "Spain will become the country with the strongest social and economic safety net in the entire EU" in response to this illegal war, which we do not condone. He also stated that the measures "will remain in place for as long as necessary, and if circumstances require it because the severity of the crisis worsens, we will extend them, because this is not a closed plan." "If more economic resources are needed from the central government, they will be allocated," he concluded.

The President of the Government of Spain, Pedro Sánchez, appears before the media after the extraordinary Council of Ministers| Pool Moncloa / Fernando Calvo

Faced with a global outlook "fraught with uncertainty" as a result of this war, Pedro Sánchez stressed that "Spaniards can be certain of three things." The first is that "our country is better prepared to face this crisis"; Secondly, the government "will mobilise all necessary resources to protect citizens and help SMEs, our primary sector, and Spanish industry." Finally, he asserted that "we will emerge stronger from this crisis," as we have from previous ones. He reiterated his demand for "an immediate end to the conflict" in the Middle East, "respect for international law," and reaffirmed his "No to war" stance, which is no longer just Spain's cry, but a cry filled with pride and truth that the entire world is embracing.

The President of the Government of Spain explained that the Comprehensive Response Plan includes two main pillars: the first, a short-term measure to "create a social safety net to protect the most vulnerable households and economic sectors," and the second, more structural and strategic, with measures aimed at boosting energy sovereignty and making Spain "an increasingly resilient country in the face of external crises." To complement all these measures, the Council of Ministers has approved a second Royal Decree-Law establishing a temporary freeze on rental prices, similar to that applied by the government in previous crises to address the housing emergency. This decree-law will be negotiated with parliamentary groups.

Tax measures: reduction in fuel taxes and electricity bills

With regard to the short-term measures, the government detailed a "drastic reduction" in energy taxes, lowering electricity taxes by up to 60%. Specifically, the Royal Decree-Law includes a reduction in VAT on fuels, electricity, natural gas, briquettes, and pellets from 21% to 10%, while also freezing the maximum sale price of butane and propane. The VAT rate is being lowered to 10%, and taxes affecting the price of petrol and diesel are being reduced to the minimum allowed by the European directive. This will translate into an effective price reduction of up to 30 cents per litre, depending on the fuel, representing a saving of approximately 20 euros per tank for an average car, he explained.

Specifically, the regulation includes a reduction to the minimum permitted level of the hydrocarbon tax rate and, for the most affected sectors, including hauliers, farmers, livestock breeders, and fishermen, a subsidy of 20 cents per litre of professional diesel used in their activities is established. The aid will be disbursed by the Tax Agency and the corresponding regional administrations in the Basque Country and Navarre. In addition, equivalent aid will be provided for the purchase of fertilisers so that "these vital sectors can weather this crisis and to contain the prices of basic goods as much as possible," he noted.

The President of the Government of Spain, Pedro Sánchez, appears before the media after the extraordinary Council of Ministers| Pool Moncloa / Fernando Calvo

To ensure that the aid is not misused and to prevent abuses, the National Markets and Competition Commission (CNMC) will be given new supervisory and sanctioning powers so that it "prosecutes and, if necessary, severely punishes any company that takes advantage of this crisis or state aid to enrich itself." "Every euro of this plan comes from the taxpayers' efforts and must be returned to them in full. A responsible government and the competent authorities cannot tolerate some people trying to profit from this crisis out of pure greed."

"Within the electricity bill, in addition to the VAT reduction, there is a temporary suspension of the Tax on the Value of Electricity Production (IVPEE), at 7%, and a reduction of the Special Tax on Electricity (IEE) from 5% to the minimum rate of 0.5%, set by the European Union.

Similarly, a 15% income tax deduction is planned for the purchase of electric and plug-in vehicles, along with other incentives for self-consumption, heat pumps, and energy-efficient building renovations.

Corporate Income Tax includes accelerated depreciation for investments in renewables that replace fossil fuel equipment. Municipalities are also authorised to grant property tax (IBI) rebates of up to 50% for those who have installed systems for the thermal or electrical use of renewable energy, along with rebates of up to 95% for the construction and installation of these systems.

Social safety net: social electricity tariff, ban on service cut-offs, and reduced tolls for energy-intensive industries

The package of measures extends the social safety net deployed by the Government throughout 2026. This includes the extraordinary discounts of the social electricity tariff, or bono social eléctrico, (42.5% for vulnerable households and 57.5% for severely vulnerable households), an increase in the minimum thermal social allowance to €50, and a ban on cutting off basic utilities (water and energy) to vulnerable households.

It also includes an 80% reduction in electricity transmission and distribution tolls for all energy-intensive industries. "We are going to help these industries save around €200 million and thus preserve their competitiveness, their activity, and hundreds of thousands of jobs," the President of the Government of Spain emphasised. Likewise, energy supply contracts are being made more flexible by law, allowing both companies and the self-employed to adapt their terms more easily and without additional costs. To facilitate access to financing, the ICO-MAPA-SAECA credit line for subsidised loans to the agri-food and fisheries sectors is being increased by €300 million.

Energy transition: electrification and a boost for renewables

The second pillar of the response package contains structural and strategic measures aimed at boosting energy sovereignty and making Spain "increasingly resilient to these types of external crises," through the promotion of decarbonisation, the electrification of homes and industry, and the acceleration of the deployment of renewables and energy storage. Among the range of actions, the president highlighted the entry into force of a massive package of income tax deductions for the installation of solar panels, charging points, and heat pumps; the implementation of new subsidies for building climate control; and the streamlining of renewable energy installations.

Thus, the regulation strengthens self-consumption, extending the maximum distance between generation and consumption from 2 to 5 km, and enabling local authorities to promote new energy models and communities. It also increases electricity storage capacity through batteries and the declaration of public utility for pumped hydropower, and promotes renewable energy with attention to social and territorial integration criteria.

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• Aid from the Immediate Response, Reconstruction and Relaunching Plan

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