The Spanish government has reached a deal with unions and trade groups to extend its furlough program until February 28 next year.
The current job-saving scheme will be replaced in November with a new plan that gives employers more benefits if they provide training to workers, according a Labour Ministry statement.
Meanwhile, the Bank of Spain expects inflation to peak in November before easing back below the European Central Bank 2% target next year.
The central bank raised its forecasts to 2.1% in 2021 and 1.7% in 2022 from a previous 1.9% and 1.2% respectively. The spike in inflation, driven mostly by record high electricity prices, will likely be transitory, although the bank didn’t rule out more entrenched price pressures stemming from demands for steeper wage hikes.
The Bank of Spain also adjusted its economic growth outlook for this year as relaxation of pandemic restrictions fired up private consumption in the euro area’s fourth-biggest economy.