MADRID — Prime Minister Pedro Sánchez on Thursday overcame the first in a long line of obstacles to get Spains 2019 budget off the ground — and managed to build a launchpad for an early ballot if it doesnt.
The leader of Spains minority Socialist (PSOE) government and the head of the far-left Podemos, Pablo Iglesias, signed a budget deal which, if it fails to win parliamentary approval and triggers an early election, will serve both parties as a campaign platform.
The 50-page agreement, which needs the backing of Basque and Catalan nationalists to get through parliament, includes significant hikes in taxes and on welfare items such as paternity leave and higher pensions — and an increase in the minimum wage from €736 a month to €900.
“Its urgent to reverse the scars of austerity, sew the social divide, reduce inequality, precariousness and poverty,” the text states, blaming the previous conservative administration of Mariano Rajoy for “seven years of cutbacks and suffocation.”
Finance Minister María Jesús Montero told reporters the plan should help “protect the most vulnerable people” and improve the welfare state, while respecting Spains budget stability commitments with Brussels.
Pablo Iglesias, leader of Spanish leftists Podemos signed a budget deal that could eventually serve as a campaign platform | Oscar Del Pozo/AFP via Getty Images
Next Monday, Spain is due to send the European Commission its budget outline, based on the agreement between the Socialists and Podemos. Madrid will then need to come up with a detailed budget law to present to the parliament, where amendments could be added before it is voted on.
Sánchez and his ministers have raised the possibility of calling an early election if the budget doesnt get backing from Congress. The Spanish leaders mandate expires in 2020, but he can call a snap election whenever he wants before then.
Catalonia is likely to become the biggest obstacle to getting the budget passed. The regions pro-independence president, Quim Torra, threatened last week to oppose all the Socialists parliamentary initiatives if Sánchez doesnt come up with a plan for a vote on independence by next month — something Madrid has already rejected. However, it is not clear how much control Torra has over various pro-independence groups.
Asked how likely it is that the Catalan secessionists would back the budget, Finance Minister Montero said: “Were optimistic.”
The liberal Ciudadanos attempted to undermine the credibility of the plan by arguing that it still needs the seal of Catalan separatists.
Sánchez, who controls just 84 seats in the 250-member Congress, is attempting to corner the conservative opposition with an active social agenda and international profile. This has led to several coordination mistakes among government departments and significant U-turns, but his Socialists are now in the lead in most polls.
Iglesias, however, has been steadily falling in polls since Sánchez seized power in June — thanks to the backing of Podemos and that of Catalan and Basque nationalists. Iglesias is now aiming to boost his credentials as a constructive and serious partner of the government, as well as trying to take credit for its social measures. “No one in this country can imagine the PSOE approving a budget like this if it hadnt been for us,” he told a TV show on Thursday.
The conservative Popular Party went on the attack after the budget plan was unveiled. “Either the European Commission takes down this budget or this budget takes down Spain,” party leader Pablo Casado told reporters, describing the plan as “impossible, irresponsible and suicidal.”
The liberal Ciudadanos attempted to undermine the credibility of the plan by arguing that it still needs the seal of Catalan separatists. “Torra is still missing from the photo,” said lawmaker Toni Roldán in Congress.
The agreement between the Socialists and Podemos foresees a rise in corporate and personal income taxes — the latter for those earning over €130,000 a year — as well as the creation of a new charge on financial transactions.
The document doesnt state by how much the government plans to increase its revenue with those measures and there were conflicting statements about the issue on Thursday. Finance Minister Montero said revenue will rise by €5.6 billion, while Iglesias put it at about €7 billion.