THE Spain extended today a host of measures designed to help citizens cope with high costs of living also in 2024although the inflation is slowing down.

Like other European countries, Spain is facing a cost-of-living crisis in the wake of the Covid-19 pandemic, exacerbated by the impact the Ukraine war has had on energy prices.

“This new phase will help consolidate the progress made over the past five years,” Prime Minister Pedro Sanchez, who won a new term in office in November, told a news conference after the cabinet approved the new package.

Sanchez said gross domestic product is expected to grow by nearly 2.5 percent this year. The government’s previous forecast was for GDP growth of 2.4%.

Pensions will rise by 3.8% in 2024 to offset average inflation as it has played out over the past year, Sanchez added. According to an announcement by the Ministry of Social Security, this increase will have an estimated cost of 7.3 billion euros.

The measures include extending the subsidy on public transport for minors and young people to all regular users and extending the VAT reduction on essential items such as fruit and vegetables, pasta and cooking oils.

A controversial tax on energy companies’ so-called windfall profits, which generated around 3 billion euros in 2023, has undergone some changes to allow companies to partially offset the 1.2% tax if they invest in renewable energy projects.

A similar tax on banks will remain unchanged in 2024 following a deal between Sanchez’s Socialists and the junior coalition partner, the leftist Sumar.

Some measures will be phased out.

VAT on energy bills, which fell to 5% during 2023, will slowly return to 21%, Sanchez said. The 21% VAT rate on gas bills will be reinstated in April, according to a Budget Ministry source.

The tax on electricity will rise to 10% for 2024, the government said in a statement.