Spain’s parliament on Thursday approved the left-wing government’s budget for 2023 which includes record levels of welfare spending to help households grapple with soaring inflation.
Lawmakers voted through the plan with 187 votes in favour and 156 against in what will be the last budget presented by Prime Minister Pedro Sanchez’s government before a general election, which is due by the end of next year.
It was backed by Sanchez’s Socialists and hard-left junior coalition partner Podemos with the support of smaller regional parties including the Catalan separatist ERC in exchange for greater regional investment.
“This is the third budget we have approved with a large majority, a budget with historic levels of welfare spending,” Sanchez tweeted after the vote.
The budget still needs to be rubber-stamped by the Senate within the next month but its passage there is guaranteed given the support it has won from the government’s allies.
It outlines plans for a record spend of 198 billion euros ($206 billion) in 2023 that will mean higher pensions and public worker salaries, as well as increased funding for higher education and health.
It also extends free travel on commuter and medium-distance trains into 2023.
The travel scheme was introduced on September 1, with hundreds of thousands of people signing up for a measure initially slated to run until the year’s end in a bid to ease soaring costs.
Budget Minister Maria Jesus Montero said six out of every 10 euros in the budget will go towards social spending, the highest proportion allocated for that purpose in Spain’s history.
The budget will be partly financed by tax increases for high earners and cash from the European Union’s Covid-19 pandemic recovery fund.
Spain is due to receive 140 billion euros from the fund over six years, making it one of the main recipients.
The budget also includes a temporary windfall tax on banks and energy firms, which the government projects will raise a total of five billion euros in 2023 and 2024.
Driven by the war in Ukraine, inflation in Spain peaked at 10.8 percent in July, its highest level in 38 years, before moderately slowing to 7.3 percent in October — still well above normal levels.
The budget assumes Spain’s gross domestic product will grow by 2.1 percent in 2023, well above the 1.2 percent forecast by the International Monetary Fund.