Spain's PM Tightens Grip On Power With Bank Tax Pledge, Approved Bills

After several setbacks in regional elections, Spanish Prime Minister Pedro Sanchez scored a rare legislative success as parliament passed three key bills late on Thursday, reinforcing his political strength despite galloping inflation, analysts said.

Coming on the back of his vow to slap extraordinary taxes on banks and power firms, which solidified support on the left, his stronger standing boosts Sanchez's chances to at least see out out his term through end-2023..

Sanchez, a Socialist, has governed since early 2020 in a minority coalition with the left-wing Unidas Podemos, having to rely on support of smaller groups, including left-leaning Catalan separatists and Basque nationalists.

"The government was clearly on a downward slope. We saw disaffection among the Socialist voters. And Sanchez has emerged from this week stronger... The coalition was coming apart at the seams and has received a boost to continue," said political scientist Ignacio Jurado.

Parliament approved an additional package of anti-inflation measures on Thursday night, including a tax cut on power bills, a new "Democratic Memory" bill to address the legacy of Francisco Franco's fascist dictatorship, and a judicial reform that aims to unblock appointments to the constitutional court.

The Socialists had appeared to be on the ropes after the conservative People's Party won a full majority in Andalusia - Spain's most populous region - in June regional elections.

In addition, soaring inflation, which hit 10.2% in June, was eroding support for the government and Sanchez's pledge to raise defence spending in line with Spain's NATO commitments had caused tensions with the junior allies.

But Tuesday's surprise announcement of a temporary banking tax in 2023-24 changed the picture.

"He has managed to capture his electorate's attention with the announcement, helped smooth out the edges with Unidas Podemos and united his parliamentary partners," said Pablo Simon, a political scientist at the Carlos III University.

Experts now see Sanchez's allies more inclined to get behind him when the government faces its next big test -- approving the 2023 budget in an autumn that will likely bring economic pain amid rampant inflation and uncertainty about Europe's energy supplies.