06/10/2021

Now the real budget negotiations begin

2 min
Pedro Sánchez and Gabriel Rufián in an image in the Congress

BarcelonaThe Socialists and Unidas Podemos have reached an agreement between them for the budget. This was thanks to the Socialists ditching one of their last taboos: the introduction of rent caps or forcing lower rents by law. In the end, the agreement seeks a balance between Unidas Podemos's interventionist position (along the lines of the law passed by Catalan Parliament) and the Socialists, more supportive of tax incentives and direct aid to rebalance the market. On the one hand, therefore, it will force companies who let out over 10 properties to lower the price of rents in saturated areas; on the other hand, individual landlords letting out over 10 homes will be forced to freeze the rent and may receive bonuses if they bring it down. This intervention in the market is complemented by direct aid: young people aged between 18 and 35 will receive a €250 voucher per month to pay the rent.

These are two ambitious measures that seek, on the one hand, to help families who have difficulty paying rent, especially in big cities, and on the other to encourage the emancipation of young people, which in Spain is currently one of the most delayed in Europe due to job insecurity, high prices and the endemic lack of public housing. Before the housing law is approved, however, the cabinet will give the draft budget the green light, which will include a rise in corporate tax to 15%, another of Podemos's demands.

Even so, the two parties only have a total of 155 seats, and will need 21 get the measures through the Spanish Parliament. This means they will require the support of some, or all, Catalan pro-independence parties. Therefore, now is when the real negotiation of the budgets begins and when ERC, Junts and PDECat (the CUP has already said it won't lend its support) have to play their negotiating cards well to obtain benefits for Catalonia and achieve their political objectives. The lever of the budgets is the most powerful weapon that parliamentary groups have to condition the government's action, and there are things that are basic for the future of Catalonia, such as the management of NextGeneration reconstruction funds that have to be put on the table. And in the same way that Unidas Podemos has linked its support for the budget to the approval of the housing law, sovereigntist parties would have to achieve, among other things, the protection of the Catalan school model from interference by the judiciary and the protection of the Catalan language in the future audiovisual law.

However, past experience shows that one of the classics of budgetary negotiation, investments, requires some guarantee or safeguard clause to ensure that what is agreed is fulfilled. After Aena gave up on expanding El Prat airport, pressure must be exerted for the railway connection of the entire Catalan airport system (Girona, Barcelona, Reus) and for the definitive push for the Mediterranean Corridor. There is a lot of work to be done. And the game is just beginning.

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