The Spanish parliament on Thursday (3 December) approved by a large majority the new state budget bill for 2021, which gathered the support of 11 political parties, including Catalan and Basque separatists, EFE reports.
Spain’s budget proposed public investment valued at €239 billion on top of the first €27 billion tranche provided by the EU’s coronavirus recovery fund. A crucial triumph for the minority, left-leaning coalition, analysts said.
The state budget, with a strong emphasis on social policies to help ease the difficult economic situation created by the coronavirus pandemic, is the result of complex negotiations mainly between the two members of the progressive government coalition forged by the socialist PSOE and the left-wing Unidas-Podemos (United We Can).
Spain’s socialist Prime Minister, Pedro Sanchez, proposed a boost in public spending to overcome the deep wounds caused by the coronavirus, as well as a tax hike on corporations.
‘Spain says goodbye to another era’
Spain’s 2021 State budget has thus successfully completed its first legal step in parliament (Congreso de los Diputados).
The budget now heads to the senate for debate, before returning to the lower house of congress for final approval on 29 December, something considered purely a formal step.
After the voting, MPs from the socialist party PSOE, Unidas Podemos and other small left-wing parties applauded Budget Minister María Jesús Montero for this success.
For his part, Sanchez tweeted that the “innovative” budget would address “the worst crisis in a century.”
“Spain says goodbye to another era and moves forward dedicated to a future of progress. Thanks to all who have stepped up to move the country forward,” Sánchez stressed, according to EFE.
A ‘political price’ to pay?
Political analysts consider that with this huge political leap, Spain’s executive coalition has secured a stable 4-year legislature, even though not everyone is happy with the alliances that the government had to forge in order to obtain the necessary support.
The Centre-right Partido Popular (PP), liberal-centrist Ciudadanos (Citizens) and far-right Vox, accused Sánchez of preferring to negotiate with parties such as Catalan separatists of Esquerra Republicana de Catalunya (ERC, Republican Left of Catalonia), or pro-independence Basque EH-Bildu (Euskal Herria Bildu), rather than themselves.
But not only did the PSOE, Unidas Podemos, ERC or Bildu voted in favour of the budget – or major sections of it – other small and heterogeneous formations also joined in, such as the moderate nationalist Basque party PNV, Catalan separatists of PDeCAT, or center-left nationalists of Nueva Canarias (New Canary/Islands), the regional party Teruel Existe or the Cantabrian Regionalist Party (PRC) .
The current Spanish budget was drawn up by the conservative PP government in 2018, shortly before it was ousted in a no-confidence vote tabled by Sánchez.
However, the prime minister’s bid to pass his government’s budget plan had flopped in 2019, forcing fresh elections.
A crisis budget in critical times
The coronavirus decimated one of Spain’s most important sectors – tourism – which accounts for some 12.5% of the country’s annual GDP.
Around 746,000 Spanish workers remain on the government furlough scheme, according to the latest data from the country’s social security department.
The emergency benefit scheme, first established when much of the country’s industry shut down during the first COVID-19 wave, has cost the state over €13 billion between April and October.
The number of registered unemployed workers in Spain sits at around 3.8 million, according to government data.
Spain’s economy could shrink as much as 12.8% this year, according to the International Monetary Fund’s Economic Outlook in October.
[Edited by Daniel Eck and Frédéric Simon]