Spain emerged as a standout country in the European Union in terms of the decrease in electricity prices for domestic use in 2023. Data released by Eurostat reveals that the price of energy consumed in households in Spain was 30% lower in the second half of 2023 compared to the same period in 2022, amidst the energy crisis. This decrease in prices led to stabilization after the turbulence experienced in 2022. Additionally, gas prices in Spain were in the middle range among EU countries, but the average price was 50% lower than the previous year.

With an average price of 25.17 euros per 100 kilowatts/hour, or 251 euros/MWh, Spain saw one of the largest drops in the price of electricity, surpassed only by Denmark (39% decrease) and Sweden (20% decrease). In 2022, the average price of electricity in Spain was 30.7 euros per 100 kilowatts/hour, while in 2021, before the energy crisis, it was 19.2 euros per 100 kW/h.

Although Spain experienced the second-largest decrease in electricity prices in the EU, in the second half of 2023 it ranked in the middle among the EU member states. The cheapest electricity prices were found in Hungary (11.3 euros), Bulgaria (11.9 euros), and Malta (12.8 euros), while Germany (40.2 euros), Ireland (37.9 euros), and Belgium (37.8 euros) had the highest prices.

In the EU as a whole, the price of electricity for domestic consumers fell in 13 out of the 27 countries in the second half of 2023 compared to the same period in 2022, including the summer with record-breaking prices. Non-domestic consumers also saw a decrease in prices, with 17 countries experiencing lower prices and a European average of -4.6% compared to the second half of 2022.

On the other hand, the countries with the highest increase in electricity prices were the Netherlands (86% more expensive), the Czech Republic (83%), Poland (35%), and Germany (20%).

In terms of gas prices, Eurostat data for the second half of 2023 indicates that the price of gas in Spain was half of the average price in 2022. Between June and December 2023, gas cost an average of 10.87 euros per 100 kilowatts/hour in Spain, while the annual average for 2022 was 24.9 euros. Spain’s gas prices were neither significantly high nor low, falling in the middle range. Lithuania experienced the highest increase in gas prices (68%), while Denmark saw the largest decrease (39%) during the same period.

The Government believes that Spain requires significant migration support to uphold its current welfare state amidst an aging population that will lead to increased expenses. The Executive acknowledges the estimate proposed by organizations such as the European Commission, IMF, and Airef, which suggests that Spain needs between 200,000 and 250,000 migrants annually until 2050 to sustain the welfare system.

During an informative breakfast hosted by Executive Forum, Minister of Inclusion, Social Security, and Migration, Elma Saiz, emphasized the perspective of migration as an “opportunity” rather than a challenge. Saiz highlighted the contribution of foreign workers to Social Security accounts, noting that they contribute 10% to the system’s income while only consuming 1% of the expenditure. This discrepancy is largely due to the demographic profile of migrants who are typically young individuals in their prime working years.

Saiz also emphasized recent immigration regulation reforms and reported that over the past year and a half, 300,000 work permits have been granted to migrants. Saiz intends to further modify immigration regulations and plans to present a reform proposal in the summer, building upon the work of his predecessor, Jose Luis Escrivá.

Saiz addressed the reported labor shortages faced by companies and highlighted the potential solutions that migration can provide. However, Second Vice President Yolanda Díaz and the unions do not consider the reported vacancies as a significant problem based on statistical data.

While acknowledging the need to increase employability and enhance working conditions for the unemployed, Saiz expressed that recruiting foreign workers within a framework of regular, orderly, and safe migration will also be a government priority.

Message of “tranquility” with pensions

The minister also fielded questions regarding the sustainability of the pension system, which was brought into question in the latest spending projections exercise published by the European Commission and prepared by the Ministry of Economy. The Aging Report identifies Spain as the country that will spend the highest proportion of its GDP on pensions in 2045 and 2070, particularly when the retirement of the baby boom generation places the system under increased stress.

The Commission’s projections hold significant importance as the pension reform approved by Escrivá last year included a closure clause in case spending projections deviated. Airef will certify the existence of such deviation through a report to be presented next year. However, the Commission’s spending projections form the basic assumptions underlying this report.

In response, the minister defended the decision to “revalue and give dignity to pensioners” despite the associated increase in public spending. Saiz also pointed out that the reform approved by Escriva incorporates income measures to counterbalance the spending increase. Saiz argued that Social Security income is growing at an annual rate exceeding 10% due to the significant growth in employment, thereby conveying a message of “calm.” He added that the Aging Report solely focuses on spending and urged consideration of the broader picture, mentioning ongoing efforts to strengthen the labor market.

Although Airef will not present its report until 2025, the independent tax authority has already anticipated that Spain will likely need to make adjustments to the system, amounting to approximately €12 billion in 2024, to comply with Brussels’ requirement of 0.8% of GDP. The final figures will become clear next year if the system closure clause is activated, as is expected.

A recent study conducted by the General Council of Economists of Spain (CGE) and the Registry of Tax Advisory Economists (REAF) reveals that middle-class families in Spain allocate approximately one third of their income to paying taxes. The study examines the tax bill of Spanish households, highlighting that personal income tax is the largest contributor to the tax burden. However, when considering other taxes such as VAT, social contributions, and IBI, the burden of personal income tax more than doubles.

According to the research, middle-class households in Spain bear an average personal income tax rate between 13.76% and 17.23%, depending on various factors such as the number of individuals in the household, the number of income earners, and the presence of dependent children. The progressive nature of personal income tax plays a role in this variation, with singles paying an average rate of almost 16% on an income of €20,798.7, resulting in a tax payment of €3,318.84. This burden increases disproportionately as income levels rise.

The structure of the household also affects the tax rate. For instance, a middle-class couple with a child, where only one adult earns income and they file their tax return jointly, has an average tax rate of 18.04%. However, if both parents work, the individual tax rate for each of them drops to 13.76%. The number of children also influences the average tax rate for upper-middle incomes more significantly than for medium and lower-middle incomes, as those in the latter categories are exempt from paying taxes initially.

In addition to the nuances of personal income tax, each region has specific tax regulations that can alter the tax burden. For example, Catalonia has the highest personal income tax payment for a single taxpayer without children, while the Canary Islands have the lowest payment, with a difference of €338. Madrid and the Canary Islands also have a higher regional tax quota, with the regional share representing approximately 47% due to additional tax relief.

However, personal income tax is not the sole taxation impacting households. Social contributions, VAT, special taxes on goods like alcohol, tobacco, and electricity, as well as IBI (property tax) and taxes on vehicles and garbage also contribute to the overall tax burden. When considering all these taxes together, the total tax burden for families is nearly double the initial personal income tax rates, amounting to an average rate of 31.71% to 35.35%.

Valentín Pich, President of the CGE, emphasizes the significance of understanding the effort required to pay taxes and urges citizens to be aware and attentive to the taxes they face throughout the year. Salvador Marín, Director of the CGE studies service, proposes using personal income tax to offset the tax burden for specific types of families through indirect taxes such as VAT or IBI. However, with Spain’s constant fiscal deficit, significant reforms may be challenging to implement.

Catalonia and the Basque Country concentrate four of the six additional actions to increase the supply of electricity between now and 2026 and respond to demands that were not foreseen in 2020 and that appear together with others already planned in the specific and urgent modification of the planning of the electrical network that the Government has just approved. In total, there will be 23 new actions to supply “new demands”, of which 17 already appeared in the first proposal made in December by the Ministry for the Ecological Transition that caused a wave of protests among regional governments, which were missing points. of electrical connection in their territories and accused the third vice president, Teresa Ribera, of harming their economic development. In the final version, six others are added, two in the Basque Country – in Álava and Santurce -, another two in Catalonia – in Tarragona and Girona – and the other two remaining in Castilla-La Mancha and Asturias, both governed by the PSOE.

These new six actions to increase the electrical distribution capacity of the network, from substations to consumers, appear in the resolution of the Secretary of State for Energy that details the decision made by the Council of Ministers last week to expand in a “punctual” and urgent manner the planning of the electrical network for the period 2020-2026, with the aim of making room for new electrical supplies for industrial or business projects that were not planned when it was approved four years ago.

Since a first Ecological Transition proposal was known in December of last year, regional governments, particularly the PP, have not stopped demanding greater access to the network in the short term, without having to wait for new planning, for the period from 2026 to 2030. But, for now, the news is that there will be six additional actions to respond to “new demands” due to the need to guarantee new supplies in the Basque Country, Catalonia and Castilla-La Mancha.. In the first two cases, they are communities that have held or are going to hold elections after the Council of Ministers approved the modification of the electrical grid, although the dissemination of their details has been difficult.. The BOE did not publish the agreement until this Wednesday, two weeks later, and without adding the annex detailing the locations of the new electricity demands.

Ribera has added the construction, expansion or adaptation of electrical substations in these six points to an initial proposal that included 64 actions after a public consultation to which the communities announced that they would present more than a hundred projects in need of electricity supply, such as data centers, which did not appear in Ribera's initial proposal but which have preferred not to give details. Only the Community of Madrid, the most belligerent, announced that it would request access to the electricity distribution network for 80 projects.

Catalonia and Basque Country

The first of the two additional actions to meet additional high power demands in the Basque Country is located in Álava, because “supply needs of this type of consumers have arisen in the Vitoria area” and two substations will be adapted for this purpose. electricity with a cost for the system of 10.4 million. The second action is located in Santurce, to respond to the new electrical demands that have arisen in the port of Bilbao, in this case without additional cost for the system.. Precisely, Cepsa has just expanded its agreement with the Port of Rotterdam to deliver renewable hydrogen to the Netherlands by ship from Bilbao, a project that joins another already announced, which will depart from the port of Algeciras, in the so-called Andalusian Valley of the Hydrogen, which will also have greater access to the electrical network, through two other actions that already appeared from the beginning in this modification of network planning, with actions in the areas of Huelva and Algeciras.

These two new actions bring those planned in the Basque Country to three, since the initial proposal already included the construction of a new substation and the expansion of the existing one in Arrigorriaga, in Bilbao, with an investment of 6.5 million for respond to the interconnection with France through the Bay of Biscay.

As for Catalonia, the substation in the El Serrallo neighborhood of Tarragona will be expanded to respond to a new demand for electricity that has arisen there, to which is added the reinforcement of a transformer in Castellón in the same action at a cost to Red Eléctrica de 9.4 million. In the Riudarenes area, in Girona, the Government plans to create a new electrical substation by 2026 and modify the planning that had already been approved to feed the Barcelona-French Border railway axis and respond to new consumers. A third, already planned, is added in the metropolitan area of Barcelona for an additional cost of 10 million, in addition to part of another in the “Northeast zone” with an investment of 84.6 million that works in the metropolitan area of Zaragoza, the Esquedas (Huesca) and Vandellós (Tarragona) area.

Another additional one is located in Castilla-La Mancha, to expand the Brazatortas electrical substation (Ciudad Real), with a cost variation for the system of 1.1 million euros. It is added to another in Talavera (Toledo), 2.7 million for a substation. The list of new developments closes with Asturias, “in the industrial centers of Avilés, Gijón and their respective surroundings”, where between 2024 and 2026 two new substations will be built and another four will be adapted or expanded at an additional cost of 2.9 million .

Four other exceptional performances in Galicia

Along with the new actions to increase the electricity supply in Álava, Bilbao, Girona, Tarragona, Ciudad Real and Asturias, the Government has included in the network planning until 2026 another 17 that were already included in the first proposal, also for respond to equally exceptional electrical demands that were not foreseen in 2020 and permitted by law to meet urgent needs for security of supply or allow the viability of critical facilities for the energy transition and the electrification of the economy. In total, it will involve an investment of 489 million, 168 million more than in the first proposal.

Among them, there will be greater access to the network for actions in the Andalusian Hydrogen Valley, in the areas of Huelva and Algeciras with a total investment of eight million, and in Sagunto, where Volkswagen is going to build an electric battery gigafactory, with a cost of 62.1 million. Also to expand the Algete substation, in the Community of Madrid, in this case at no additional cost, as is also the case with another action, in Palencia and Valladolid, to respond to new demands in Castilla y León. There is also no additional cost for the expansion of the substation in Río Caya, Extremadura.

Together with Catalonia and also with four new actions in the network already facing 2026, Galicia is the second most benefited community. A new substation will be built in Vigo with a planned investment of 72 million and another in As Pontes (A Coruña), where another existing substation will be expanded at a cost of 13 million to respond to the electricity demand in an area where last year closed a thermal power plant and, in its place, Endesa, EDP and Reganosa already have authorization for a large deployment of renewable projects. There will also be a new substation and another one will be expanded in the Ferrol area, with an additional cost of 20.3 million, and the substation in Meirama (A Coruña) will be expanded, where there was also a thermal power plant, already closed.

There will be another 6.9 million to expand a substation and build another in Piélagos (Cantabria), 7.6 million for a new substation in the port of Palma and another 1.1 million to expand and repower the Fausita electrical substation, in Murcia.. Beyond 2026, its president, Fernando López-Miras, celebrated a few days ago in a press conference with Ribera the willingness he perceives in the Ministry to accept other electricity supply proposals for the next period, from 2026 to 2030 in the Escombreras Valley, in the Mar Menor area. “In a very initial way, the news that the vice president has given us is very good,” he said then.

Along with these actions that respond to “new demands” for electricity, the total of 73 specific actions exceptionally included in the network planning for 2026 are completed with nine for storage and renewable generation, three to cover operating demands and 38 to meet needs that arise in the execution of current Planning.

The European justice system has dealt a blow to Spanish banks, definitively clarifying the controversy over the deadlines for claiming mortgage expenses. The Court of Justice of the European Union (CJEU) ruled that the limitation period for claiming these expenses should start from the moment a final ruling declares an abusive clause null and void.

Until now, there was uncertainty regarding when the statute of limitations began. Banks believed it started in 2019 when the Supreme Court ordered the reimbursement of these expenses to clients. However, the CJEU’s recent ruling states that the period to claim mortgage expenses does not commence until consumers become aware of the abusive nature of the contractual clause.

This decision opens the door for thousands of consumers to reclaim unlawfully charged amounts from banks. The European High Court’s ruling ensures that the statute of limitations does not begin until the nullity of their loans is declared, providing consumers with the opportunity to claim without fear of being accused of late or incorrect complaints.

The CJEU emphasizes that consumers should not be expected to perform legal research to determine the scope of published sentences. Therefore, regardless of the mortgage contract’s date, the term starts when each procedure concludes.

Estimations from ASUFIN suggest that around eight million consumers may have paid these abusive mortgage expenses, with an average amount of about 1,500 euros. Banks are now required to reimburse affected individuals for 50% of notary fees and the total cost of registration, management, and appraisal.

The CJEU’s ruling is based on a case brought by two consumers who requested reimbursement of opening costs after the contractual clauses were declared abusive. The mortgage loan was signed in 1999, and in 2017, the affected individuals sought the annulment of the clause through a Barcelona court. While the court ruled in their favor, the bank argued that the claim period had expired, but the CJEU’s decision invalidates this argument.

It is important to note that only individuals who signed or paid off their mortgages before June 2019 are eligible to claim mortgage expenses.