Spain approves €5 billion aid package to cushion Middle East conflict impact

Spain's parliament on Thursday approved a government decree aimed at cushioning the economic impact of the Middle East conflict, including cuts to VAT on electricity, gas, and fuel. According to EFE, the decree, which mobilizes more than €5 billion (over $5.7 billion), was validated by the lower house with 175 votes in favor, 33 against, and 141 abstentions.

Measures included

The package includes a reduction in VAT on energy products, lower hydrocarbon taxes for gasoline and diesel, and the suspension of certain electricity-related taxes. It also includes a 20-cent-per-liter fuel subsidy for professionals and extends social electricity support measures through the end of the year.

Government rationale

Economy Minister Carlos Cuerpo said in the report that the plan aims to "protect and prepare," addressing immediate economic pressures while strengthening energy sovereignty. The measures received broad backing from government allies, although some called for further expansion. Lawmakers from ERC, Junts, and the Basque Nationalist Party supported the decree while highlighting the need for additional steps on energy transition and economic protection.

Opposition response

Opposition reactions were mixed, according to the report. The far-right Vox voted against the decree, while the conservative Popular Party abstained, arguing the measures were insufficient and delayed. Podemos also abstained, saying it did not want to block the initiative despite concerns over its effectiveness.

Next steps

The decree will now be processed as a bill, allowing for amendments during parliamentary debate. The approval comes as Spain, like much of Europe, faces economic pressure from the US-Israeli war with Iran, which has pushed oil prices above $116 per barrel and disrupted global energy markets.