Sanchez's Government Breaks Deadlock with Catalonia Deal

Spain's government reached a deal with Catalan separatists to pass key economic measures, potentially smoothing the passage of the upcoming budget. The agreement excludes a contentious energy tax but includes pension increases, flood relief, and transport subsidies, overcoming legislative gridlock amidst a complex political landscape.

Spain's minority government, led by Socialist Prime Minister Pedro Sanchez, has struck a crucial deal with the Catalan separatist party Junts, securing support for significant economic legislation in parliament. This development represents a breakthrough in the impasse that raised concerns about the government's legislative capability.

The agreement, which excludes a proposed tax on energy companies, promises improvements such as increased pensions, financial relief for the Valencia region affected by recent floods, and an extension of public transport subsidies for six months. Such measures are part of a broader bill that faced rejection last week.

Despite the deal, Sanchez's administration continues to navigate a challenging political environment, balancing concessions to various parties like the hard-left Podemos and center-right Junts. The arrangement comes with the backdrop of Junts leader Carles Puigdemont's demand for resolving a "trust crisis" with the government.

(With inputs from agencies.)