The Russian invasion of Ukraine, which marks a year this Friday, has a strong economic cost for Spain, the most visible face of which is the record prices of electricity, fuel and food, which the government has tried to mitigate with aid worth a total of 45 billion euros.
The war, some 3,000 kilometers from Spain, has triggered an unprecedented energy crisis, in a continent, like Europe, dependent on Russian oil and gas, making energy more expensive, cereals like wheat , corn or barley, from Ukraine and Russia are big producers, and fertilizers.
After the records reached by gas and oil on the international markets, inflation in Spain began to escalate to reach 10.8% in July, a record in 38 years, due to this greater impact of the cost of oil. energy, which has moderated, and food, with prices still out of control.
The prices of more than half of the products that make up the basket in Spain continue to grow above 6%, according to the National Institute of Statistics (INE), and at the top are foods such as oil, sugar, flour and other cereals, milk or eggs, with increases of more than 20%, in the interannual rate, although the impact of the reduction in VAT was seen last month.
On the other hand, fuels became up to 40% more expensive in mid-2022, even if their price gradually moderated, a trend similar to that of electricity.
In an attempt to contain inflation, the European Central Bank (ECB), in line with the rest of the world’s central banks, raised interest rates again after eleven years without doing so, raising them in its latest revision il a few weeks ago at 3%, with further increases announced for the coming months, making mortgages more expensive.
SPAIN REDUCED THE PURCHASE OF CRUDE OIL FROM RUSSIA BUT INCREASED THAT OF GAS
To mitigate the rise in energy prices, Spain tried to reduce its dependence on Russia, which it achieved in the case of oil, but not in the case of gas, whose the purchase had to increase due to the diplomatic conflict between Algeria and Morocco, which meant the closure of the Algerian gas pipeline which carried gas to Spain.
In 2022, Spain increased its crude oil imports by 13.2%, increasing those from the United States, Mexico or Nigeria and reducing those from Russia by 73%, according to data from the Corporation for Strategic Reserves of Petroleum Products (Cores). ).
Regarding gas, the United States ended 2022 as the main supplier of natural gas to Spain, supplanting the historical leader, Algeria, but Russia remained the fourth supplier country (12% of the total), with an increase by 45%.
45,000 MILLION FOR FAMILIES AND THE MOST AFFECTED SECTORS
The government has tried to mitigate the impact of the energy crisis and high inflation caused by the Russian invasion of Ukraine on families and businesses, with tax cuts, direct handouts and reductions in public prizes, among other initiatives, with a total expenditure of 45,000 million euros.
Among the latest approved, highlights the abolition of VAT for basic foodstuffs (such as bread, milk, eggs, fruit and vegetables) and the reduction from 10% to 5% of oils and pastes, as well as a direct aid of 200 euros for modest families (less than 27,000 euros per year).
The aid is also focused on economic sectors affected by the crisis, such as farmers, due to the costs arising from the increase in the cost of fertilizers, the gas-intensive industry and the ceramics sector, in particular due to rising energy costs.
Another aid applied during 2022, the bonus of 20 cents per liter on the purchase of fuel, which since January has only been maintained for professional road transport.
Yes, free commuter and medium-distance train subscriptions continue in 2023, as well as reductions for urban and interurban public transport, the reduction of taxes on electricity and gas and the freezing of the maximum price of the bottle of butane.
Despite the impact of the war, when the economy had yet to recover from the pandemic, Spain exceeded expectations and grew by 5.5% in 2022, removing the risk of inflation, a growth that all forecasts maintain in 2023, although more moderate.