By: Sebastián Mariz, CEO of Influence Spain
Pedro Sánchez has presented his legislative and regulatory agenda for 2022. The equinox of his 4-year term. With 368 legislative initiatives, the main focus of his ambitious policy agenda for this year, is on economic recovery, by creating the right legislative framework to make efficient use of the 144 billion euros in EU reconstruction funds earmarked for Spain, and to try to generate strong, expected growth following the first waves of the pandemic. This has not yet reached its full potential.
Spanish regulatory agenda for 2022
While many of the legislative initiatives on the agenda are royal decrees and/or laws transposing European Union directives into national legislation, many also reflect the Prime Minister’s (PM) goal of transforming Spain’s economy into what his party and coalition partner consider a more sustainable and social one. Key laws in the pipeline include:
- A new law on sustainable mobility.
- New rules on the management of State owned highways and toll roads.
- A new housing law and building rules.
- A new law on employment and higher minimum wages.
- New rules governing universities, education, science and research.
- New rules on foreign direct investment (FDI) and the Government’s power to veto deals involving strategic Spanish companies.
- A new framework law on industry, to allow Spain’s industry to adapt to the circular economy, the climate change plan adopted in 2021, and the Fit for 55 objectives.
- New marine protection rules governing fishing off Spain’s waters, offshore renewable energy plants, as well as marine transport through Spain’s waters and to and from Spanish ports.
- Financing mechanisms for climate change projects and CO2 sinks.
- New powers to the stock market regulator and the national competition authority.
- Creation of a new centralized public healthcare centre for the centralized acquisition of certain strategic healthcare treatments and product.
- New rules on access to treatments and services covered under the national public healthcare system and intended to guarantee equal access across Spain.
- A new law on social services and family policy.
- New rules on online gambling.
- Adoption of a new rules on refugee centres and the services provided to refugees.
Weak economic growth, which continues to hover around the 5% range, has had a marked impact on the PM’s popularity and that of his coalition. While official polls still put Pedro Sánchez and his socialist party in the lead with 28.5% of the votes, the conservatives are not far behind at 21.5% and the far-right has consolidated its third place at 14.7%. If elections were held today, Pedro Sánchez would most likely be able to form a new coalition very similar in nature, to the one in power today, and with the far-left Unidas Podemos party repeating as junior partner.
In light of growing voter discontent over the current economic situation and the Government’s handling of the pandemic and relations in the Parliament, both the PM and the opposition parties are in full pre-election campaign mode.
Regional elections in Castilla and León
Early elections this spring in certain regions including Castilla and Leon, and Andalucía will confirm whether or not a shift in voter tendency is truly underway. The conservatives are expected to win in both Andalucía and Castilla and León and to govern with a slim majority or with parliamentary support from the far-right Vox party. If these results are confirmed, they will consolidate Pablo Casado’s leadership of the conservative party, to the detriment of his main opponent and competitor, the Premier of Madrid, Isabel Ayuso. The liberal Ciudadanos party, a coalition partner in both regions, is expected to disappear off the map in both elections, sealing its expected fate at a national level.
Tensions in the coalition Government
Pedro Sánchez is also faced with growing tensions in both his Government coalition and with parliamentary supporters in the Basque country and Catalonia. A break in the coalition or withdrawl of parliamentary support from the Basques and Catalans is not expected, however, because all of the PM’s supporters fear doing so would favor the conservatives and could lead to a new coalition Government with the conservatives in power and the far-right as a junior partner. Such a result would prove detrimental to the interests of the communists, pro-independence parties and regionalist parties.
Under the current coalition Government, the regionalists have managed to obtain an ever greater transfer of powers from Madrid to the regions and the Spanish communist party is involved in setting Government policy for the first time since the end of the Spanish dictatorship in the 1970s.
The biggest challenge faced by the PM internally, and the biggest source of concern for the socialist party, are the ever growing aspirations of his Employment Minister, Yolanda Diaz, of becoming the new leader of Spain’s left and the political arm of the labor unions.
The PM’s staff and key members of the party remain divided over how to manage this situation. One side thinks the PM should initiate a smear campaign against her, while the other thinks the exact opposite and that the PM should help bolster her position, thus converting her into a much stronger and more stable leader of Spain’s far left, than the current leadership of Unidas Podemos.
Another challenge for Pedro Sánchez, is Spain’s huge public debt and public deficit, as well as high inflation figures. The public debt is expected to close this year at 116% of GDP and the deficit at 5.7%, with economic growth expanding by 5.6% and inflation levelling off at 2.1%. Any change in the European Union’s current relaxation of budget stability rules, would force the PM to implement deep cuts in public spending and social services, further eroding his popularity amongst voters and causing additional friction with his junior partner.
In order to avoid this, Pedro Sánchez is embarked on a strategy to consolidate and deepen relations with the new German Government of Olaf Scholz in which relations with the new German Finance Minister are crucial to guaranteeing that the European Union will refrain from demanding stricter adherence to stability rules until well into 2023 or even 2024.
The meeting held with the German Chancellor in Spain, on the 17th of January, forms part of this strategy, and confirmed that the German Chancellor and the Spanish PM share the same goals in terms of fiscal policy, and the economic, social and environmental priorities for Europe. Both leaders agreed to hosting a German-Spanish summit in Spain later this year.
As regards the European Union reconstruction funds, so far the Government has spent 91.4% of the total budgeted amount for Spain in 2021, or 22 billion euros of the 27 billion earmarked for 2021. Of this total amount, 11.2 billion euros correspond to projects presented by the regional governments.