Government, unions and business leaders sign deal to reactivate Spanish economy

The Spanish government, business leaders and unions met today in La Moncloa prime ministerial palace to sign a deal to reactivate the economy and create employment in the wake of the coronavirus crisis, which has left more than 28,000 official victims in Spain and has devastated the economy.

The signing ceremony, led by Prime Minister Pedro Sánchez, took place in the gardens of La Moncloa after an extraordinary Cabinet meeting, at which ministers approved a number of economic measures, including financing the digital transformation of firms and assistance for the country’s ailing tourism sector.

When Spain can agree, Spain gains in hope and its future. We are going to develop an adequate framework for remote working and a deal for industry

Spanish Prime Minister Pedro Sánchez

“These agreements are a message of confidence for our European partners and the rest of the world,” said Sánchez. “When Spain can agree, Spain gains in hope and its future. We are going to develop an adequate framework for remote working and a deal for industry,” he added.

The Cabinet today approved a Royal Decree of urgent measures “to support the reactivation of the economy and employment, aimed at strengthening and accelerating the recovery that has already begun after the crisis caused by Covid-19,” a press release read.

Among the measures is a plan to back €40 billion of loans aimed at the digital transformation of companies and adapting them to sustainable processes, as well as a €10 billion fund to shore up companies outside the financial sector that have been affected by the pandemic.

Under this scheme the government would acquire interests in these companies, and as such could receive “dividends, interest and capital gains,” which would, according to the press release, “be deposited in the public treasury.”

The government’s press release made clear that these funds would not go to banks or other financial institutions, as was the case during the Great Recession after the 2008 financial crash. Instead, the firms that can benefit are those considered strategic for a number of reasons, such as their “social and economic impact, their relevance for security, the health of citizens, infrastructures, communications or their contribution to the proper working of the markets.”

Tourism

The Cabinet today also approved a Royal Decree containing measures that include a moratorium on mortgage payments on tourist properties that have been affected by the economic situation caused by the coronavirus crisis.

The moratorium will be available for the self-employed and corporate entities based in Spain who are facing financial difficulties, and will involve a period of 12 months when they can opt to repay just the interest on their loans, and not the capital. Anyone who is renting a commercial premises will also be able to enjoy the payment relief, via the landlord, who will have to apply for it and then pass on the benefits to their tenant.

The government also approved today a financing plan for the digitalization of, and innovation in, the tourist sector. The plan involves a line of soft loans totaling €216 million for 2020 for projects that promote the digitalization of tourist companies and destinations, as well as those focused on the internationalization of the sector.

Another of the plans approved is aimed at developing rural and inland destinations for tourists. The aim is to benefit 260 different sites, with funding of €23 million in 2020 and €30 million in 2021 and 2022.

The tourism sector said it considered the measures approved today to be a step forward in terms of executing the plans already announced by the government, but that there was nothing new in what was announced. The sector is calling for the government’s ERTE furlough scheme to be extended for tourist businesses, so that the highest number of companies possible can survive.

Help for the automobile sector

Also on Friday, the Cabinet approved its so-called Plan Renove 2020, a €250-million subsidy scheme for the purchase of new vehicles, as well as second-hand vehicles that were first registered this year. Applicants will be able to apply for subsidies ranging from €300 to €4,000, depending on the type of vehicle and the beneficiary.

The scheme will be available until June 2021, or until the funds run out, and will be welcomed by manufacturers and showrooms alike, whose sales have been severely affected by the coronavirus crisis.

The government has argued that the plan will also serve to modernize Spain’s aging fleet of vehicles, and thus reduce pollution levels.

No press conference

In a practically unprecedented move, the government canceled the usual press conference that follows the weekly Cabinet meeting, a tradition that has been respected for 40 years. Instead, just camera crews and photographers were permitted to attend the signing ceremony.

This format is being resorted to with increasing regularity by the Sánchez government, in particular for events involving unions and business associations, and also in the case of some international visits. A number of presidents from important countries have traveled to Madrid without the traditional joint press conference taking place.

Until today, however, the post-Cabinet meeting press conference had never been canceled. The meetings with the press are usually hosted by the government’s spokesperson, María Jesús Montero.

With reporting by Carlos E. Cué, Íñigo de Barrón and Dani Cordero.

English version by Simon Hunter.