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Spain unveils €9 billion plan to tackle Ukraine fallout

The national aid plan will help the country weather the ongoing fallout of the conflict in Ukraine.

Published: 25 June 2022 16:35 CEST

Spain unveils €9 billion plan to tackle Ukraine fallout

Pedro Sánchez arrives at the press conference at Moncloa Palace to announce the new direct aid plan worth €9 billion. Photo: JAVIER SORIANO/AFP

Spain’s government on Saturday unveiled a €9 billion national aid plan to help the country weather the ongoing fallout of the conflict in Ukraine.

Prime Minister Pedro Sánchez unveiled the package in Madrid which comes on the heels of a €6 billion injection in March for a scheme worth €15 billion overall, or “more than one GDP percentage point”.

The government also extended other measures taken in March and set to end on June 30 by another six months till the end of the year. Those include reducing the price of a litre of petrol by 20 euro cents.

For the second time in less than a year, it also reduced value-added tax on electricity from 10 to 5 percent, a move already announced by Sánchez earlier this week.

It decided to hand out “direct aid of €200” to the self-employed and unemployed, and increase pensions and disability benefits by 15 percent.

The measures aim to help consumers deal with rising inflation, which hit 8.7 percent in May, its highest level in decades.

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Spain meets with UK govt to explore easing red tape on food trade

Spain’s Minister for Agriculture, Fisheries and Food, Luis Planas, this week met in London with his British counterpart, Steve Reed, with the aim of strengthening trade in agricultural goods and a view to the possible elimination of post-Brexit bureaucratic red tape.

This comes amid a wider political recalibration from the new Labour government, with Prime Minister Keir Starmer signalling his intention to reset relations with the EU where possible.

Agricultural goods, in particular border check rules, are an issue that has effectively been botched since the former Conservative government’s 2020 Brexit deal.

READ ALSO: What Labour’s UK election win means for Brits in Spain

The Spanish government, for its part, hopes this will help to increase its volume of food exports to the UK.

The UK is Spain’s fifth biggest destination for exports globally, and the first for exports outside the EU Internal Market. British imports of Spanish products in 2023 amounted to €4.82 billion, of which €2.1 billion were fruit and vegetables, followed by wine, citrus fruits, red fruits and olive oil.

A statement on Planas’ visit from La Moncloa asserted that “Spain plays a strategic role for the UK’s food security, as it is the UK’s main supplier of fresh produce.” Figures show that around a quarter of the vegetables imported by the UK come from Spain, and in the case of products such as lettuce, this figure rises to 80 percent.

Planas praised the “excellent collaboration” between Spain and the UK, something that has allowed the UK to remain one of the main markets for Spanish agri-food products after Brexit, despite the red tape and legal uncertainty, and stressed that this coordination will be further strengthened by the new Labour government.

Leaving the EU meant that Britain should have come up with new border rules on agri-food imports. However, red tape and bureaucratic backlogs have caused incidents on the border at times, something that can generate tensions between operators and damage trade relations.

The Conservative governments that oversaw Brexit negotiations with Brussels delayed implementing sanitary and phytosanitary border controls several times, something they were obliged to do by the trade agreement finally signed at the end of 2020.

This was due largely to the fact that the British government was not prepared for new customs rules and border inspections, but also to avoid price increases for British consumers. Last week the British press revealed that the new Labour government also plans to delay new customs controls on fresh fruit and vegetables until July 2025.

Speaking to Spanish news agency EFE, Planas stressed the importance of reaching an agreement on standards. The meeting also discussed the proposed implementation of the ‘Border Target Operating Model’, a new customs model using technology that will establish different categories of controls and ease border fluidity.

Planas highlighted the importance of both operators and governments being as clear as possible about these changes and their implementation time. As such, the Minister requested from the UK government “a courtesy warning” before any changes are made to controls on imports.

“My warning, in this case, is simply a demand for courtesy. If you are going to do something, let us know in good time,” the Minister told Spanish daily El País.

Planas meeting in London comes amid broader moves by the Labour government to try and reboot relations with Brussels. Writing exclusively for The Local, Foreign Secretary David Lammy declared recently that “it’s time to reset Britain’s relations with Europe.”

In recent months, Spain’s Prime Minister Pedro Sánchez suggested to Starmer the idea of a reciprocal youth mobility scheme between the two countries, something Downing St. has distanced itself from.

READ ALSO: Can Spain and the UK legally create a ‘free movement scheme’ for young people?

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