The Spanish government has announced a far-reaching package of economic measures following its final cabinet meeting of 2024. These reforms aim to boost economic growth, address pressing social challenges, and modernize key sectors of the economy. Extending into 2025, the initiatives include discounted public transport, housing regulations, fiscal adjustments, and strengthened social protections.
Public Transport Discounts
Public transport subsidies, which have been in place since 2022, have been extended for an additional six months, lasting until 30 June 2025. This program has already contributed to a 13% rise in public transport usage, demonstrating its popularity and effectiveness.
From 1 July 2025, a new scheme will be implemented:
- A nationwide Cercanías season ticket priced at €20.
- Regional transport discounts of at least 40%.
- Special fares for youth aged 15–26 at just €10 and free transport for children under 15.
The central government will allocate €1.47 billion annually to this program, while regional administrations will contribute €420 million. Extending the subsidies for another six months will incur an additional cost of €750 million, which will directly impact the public deficit.
Tax Adjustments
The government has taken a balanced approach to taxation, prioritizing relief for consumers while addressing fiscal sustainability:
- IVA Sales Tax on Staple Foods: Temporarily reduced rates for staple items like bread, eggs, and olive oil will revert to normal levels on 1 January 2025. Super-reduced rates of 4% will apply to staple goods, while pasta and seed oils will return to a reduced rate of 10%.
- Diesel Tax: Plans to increase diesel tax, which was expected to generate an additional €1.5 billion annually, have been delayed. Negotiations with Brussels are ongoing, with the tax potentially taking effect in April 2025.
Housing and Rental Reforms
To address soaring housing prices, the government introduced a regulatory framework for short-term rentals:
- A one-stop shop for tourist and temporary rentals will be launched on 2 January 2025 and become fully operational on 1 July 2025. This system includes mandatory registration and identification numbers for rental properties advertised on online platforms.
- Public sector housing initiatives have been bolstered, with the public land corporation (SEPES) integrating state-owned properties to expand affordable housing.
Strengthened Social Protections
The government has extended measures to support vulnerable households, particularly in managing utility costs:
- From January 2025, vulnerable consumers will receive a 50% discount on electricity bills, reducing to 35% by 2026.
- Severely vulnerable consumers will see discounts starting at 65%, stabilizing at 50% by 2026.
These discounts represent an improvement over pre-crisis levels, ensuring long-term support for the most affected households.
Economic Growth and Fiscal Management
Prime Minister Pedro Sánchez highlighted Spain’s robust economic performance in 2024:
- Job Creation: 400,000 new jobs were created, with significant growth in consultancy and technology sectors.
- European Funds: Of the €79.8 billion allocated by Brussels, €44 billion has been spent to modernize industries and enhance Spain’s productive capacity.
- Fiscal Projections: The public deficit is projected to drop to 1.8% of GDP by 2027, though the Bank of Spain estimates it could remain at 2.7% without additional fiscal adjustments.
Protecting Strategic Industries
The government has extended its anti-opposition shield to restrict foreign takeovers of Spanish companies in strategic sectors such as defense, telecommunications, and healthcare. These measures, effective until 2026, require foreign entities acquiring stakes of 10% or more to obtain authorization from the Spanish government.
