Spanish government ‘optimistic’ about budget deal, redesign of windfall tax Reuters via biedexmarkets.com

Economy Minister Carlos Cuerpo expressed optimism about reaching a budget agreement with other political parties while working on the redesign of economic measures, such as the current windfall tax on large energy companies. The minority coalition government of Socialist Prime Minister Pedro Sanchez is dependent on unstable support from Catalan nationalist and other regional parties. Despite this, the minister believes an agreement can be reached soon.

Cuerpo expressed confidence that the positive growth rate of 0.6% achieved in the final quarter of 2023 and some positive labour data should allow the government to meet its 2% economic growth forecast for 2024, and he expected the central bank to revise upwards its outlook for output in 2024. The next phase is focused on deciding whether the windfall tax on energy companies and banks should become permanent, and if so, how to recalibrate or rephrase them. These discussions will take place in parallel to the ongoing budget negotiations.

On the issue of Caixabank, Cuerpo said he saw potential to increase the value of the state holding in the lender before further selling stakes, and did not rule out extending the deadline beyond 2025. Regarding the Saudi Arabian telecoms company STC’s 4.9% stake in Telefonica, Cuerpo said the government would analyze any request from STC to exercise voting rights over the remaining 5% it holds in financial instruments that give it “economic exposure” to the company. The government had previously said it would buy a stake of up to 10% in Telefonica to counterbalance the STC move.

Finally, Cuerpo addressed the controversy around the lower deposit rates offered by Spanish banks, saying that the government had tasked the anti-trust watchdog to investigate whether there was a “lack of competition.” Cuerpo hoped for a response in the coming months.

($1 = 0.9154 euros)