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Tuesday, August 9, 2022

New anti-crisis package…

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The economic crisis affects the whole of society, but not only hits the weakest in a very special way, but also the middle class. This Saturday, the government announced an effective package to try to protect itself against both the rise in energy prices and inflation that shows no signs of abating, with a direct impact on families’ economies and their real perception of one Loss of wealth (or impoverishment) that has no internal or domestic reasons, given the good growth of the Spanish economy, although it is beginning to suffer the scratches of the crisis. The new policy framework extends the measures funded in March to December and maintains the fuel rebate alongside the extension of the electricity consumption social bonus. But it adds new measures such as the 200-euro compensation check for families with fewer resources (below an income of 14,000 euros a year if they don’t receive the minimum subsistence income) to partially alleviate the deterioration in their economic conditions caused by inflation . In this way, and starting from already known measures such as the 15% increase in the minimum essential income and non-contributory pensions, the government is proposing an income protection system for which, taking into account the two decrees, it is providing a total of around 15 billion euros, equivalent to 1% of GDP .

Lowering the electricity tax from 10% to 5%, which affects everyone, regardless of income, will have less of an impact. Although the goal is to reduce the final price paid by consumers, experience shows that this type of discount is quickly absorbed by the market. This has largely happened with the fuel bonus, as the National Market and Competition Commission has just found. It could not be otherwise, since the measures taken to lower the inflation bill are almost always and above all palliative. The only structural way to encourage greater resilience in the face of rising energy prices is to encourage savings, e.g. B. Measures to make transport subscriptions cheaper, and redesign the energy market to prevent companies from exploiting the situation to increase their benefits. The extraordinary tax on electricity companies, postponed until 2023 but retroactive to 2022, would try to compensate for this situation and should be urgently approved in a separate law. At the same time, the gas cap is an insurance policy to avoid future unjustified increases in electricity prices. Beneath these spots, however, flaws in our energy markets persist. As the European Commission has pointed out, perhaps the time has come for deep reform.

With all these measures, Spain is directing its economic policy towards the poorest and impoverished. However, and everything indicates that this could be the case, the worsening of the situation in the autumn with possible embargoes on Russian gas and oil could mean that the package adopted yesterday will become insufficient and new aid measures will become necessary. Our budgetary situation and the increase in national debt do not allow much joy in public spending. The decisions taken must be designed in such a way that they are aware that measures that are beneficial in the short term against the crisis can be counterproductive in the medium and long term.

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Source elpais.com

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