Spain rolls out €5bn shock-absorber plan as Middle East war drives up energy costs

CAIRO - 21 MARCH 2026: Spain has approved a €5 billion package aimed at softening the hit from the Middle East conflict, as higher energy costs start feeding into bills, business costs and broader price pressure.

 

Prime Minister Pedro Sánchez said “extraordinary situations require extraordinary responses” as the cabinet signed off on the plan on Friday, according to Reuters. The package includes around 80 measures designed to protect vulnerable households, energy-intensive industries and other key sectors.

 

A large part of the plan focuses on electricity costs. Reuters reported Spain will cut the value-added tax (VAT) on electricity to 10%, and reduce electricity-related taxes by as much as 60%.

 

It also targets fuel costs, with measures that include support at the pump. Reuters reported the package includes fuel price discounts of up to 30 euro cents per litre, with a 20-cent fuel subsidy aimed at hard-hit sectors such as farming and transport.

 

The measures are meant to calm the domestic spillover from the energy shock linked to the conflict, but the plan still needs approval from Spain’s Congress, Reuters said.