Pedro Sánchez in Parliament last week. / EDUARDO PARRA/EP

PM announces windfall tax on banks and free local train passes

Pedro Sánchez shored up support for his government from minority left-wing and nationalist parties in this week's State of the Nation debate


Prime Minister Pedro Sánchez unveiled a raft of new give-and-take measures this week aimed at softening the blow of inflation. The announcements came as part of a State of the Nation debate in the Congreso chamber.

The PM's left-wing allies in his multi-party coalition and friendly nationalist parties rallied round in support of the government despite tensions between them in recent weeks and amid signs they would be looking for more radical concessions from Sánchez in the future in order to maintain their support for him.

Sánchez admitted difficult times lie ahead but said he would do everything to defend "the social majority" and would take difficult decisions that Spain "needs to be taken".

The new measures include an extra two-year tax on banks, which will raise around 1.5 billion euros a year, in addition to the tax already announced on major electric, gas and fuel companies on their extraordinary profits in 2022 and 2023. "This government will not allow a lot of people to suffer for the benefit of a few others," Sánchez said.

Bank shares plunged on the news and the government has promised to try to stop banks passing the tax onto customers with higher fees - and so defeating the purpose - although experts said this would be hard to do.

The government is also to give a 100% discount on Renfe rail travel passes for local Cercanías services and on medium distance trains. Until now, the discount has been 50%, but it has been increased to encourage people to use public transport.

Sánchez also announced that students over the age of 16 who already get a grant will now receive an extra 100 euros, payable between September and December this year.

Even though July is normally sweltering, people in Spain have had to cope with exceptionally high temperatures this week. Red weather warnings were activated again for large parts of the country including Andalucía. The province of Malaga, however, remained cooler.

In Ourense, in the northwestern region of Galicia, temperature boards were showing as high as 49 degrees on Tuesday and some northern regions were having the hottest July weather for 50 years.

Emergency services advised vulnerable people to avoid leaving the house.

The unusual heatwave has been caused by a high pressure centred over the British Isles and forecasters said it would start to move away again from this Saturday.