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Date Published: 13/07/2022

ARCHIVED - Spanish stock market falls after new tax announced for big banks and energy companies

ARCHIVED ARTICLE

Investors’ trust in Spain’s big banks has dropped after the government decreed a new tax on their profits yesterday

<span style='color:#780948'>ARCHIVED</span> - Spanish stock market falls after new tax announced for big banks and energy companies

Big banks have suffered sharp falls on Spain’s stock market after a new tax on their profits was announced as part of emergency crisis measures by the government to mitigate the worst effects of the cost-of-living crisis for ordinary people living in Spain.

The IBEX 35 closed on Tuesday July 12 in the red after Spain’s President Pedro Sánchez stated during a speech in the State of the Nation Debate that he would introduce an extraordinary tax for financial institutions and large energy companies that would last for the next two years and raise 7 billion euros for the Treasury.

At the close of trading, the banking sector index was down 4.63%, with Caixabank falling 8.63%, the biggest fall on the stock exchange and the main index of the national market.

Sánchez’s speech on the first day of the State of the Nation Debate did not go down well with investors, who have rushed to sell their shares in the banks for fear of losing profits.

As for the big energy companies, the oil company Repsol has taken the worst hit, with a sharp fall of 5.4% at the close of trading. The solar energy company Solaria also suffered significant losses with a fall of 4.2%, but the other listed energy companies saw more modest losses: Endesa lost 1.1%, Naturgy 1% and Enagás 0.9%, while Acciona lost 0.8% and Iberdrola 0.5%.

Losses among electricity and gas companies were much more moderate, most likely because the government had already stated weeks ago its intention to introduce a tax on the profits of these companies.

The socialist president said yesterday that the government “will not tolerate companies or individuals taking advantage of the crisis to amass greater wealth at the expense of the majority”.

He also called on large companies to channel their extra profits to workers and consumers and not to the salaries of top managers: “The dividends and profits of large financial institutions in 2021 and 2022 are extraordinary,” he claimed.

However, the large electricity companies via the Association of Electricity Companies (Aelec) have countered that the crisis is actually reducing their profits.

Emergency economic measures to halt the cost-of-living crisis

As well as taxing big banks and energy companies, the measures announced yesterday include making some public transport free between September 1 and December 31, unblocking more public housing for those in need and more subsidies for renewable energy, plus changes to health and education.

See all the new anti-crisis measures in Spain

Image: Archive

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