Spanish Prime Minister Pedro Sanchez has announced a sweeping package worth €5bn ($5.8 billion) aimed at cushioning the economic impact of the Middle East war, including a “drastic reduction” in energy-related taxes, AFP reports.

Speaking after an emergency cabinet meeting, the Socialist leader has said the 80-measure package was necessary to shield households and key sectors from surging costs.

“Extraordinary situations require extraordinary responses,” Sanchez said.

The package, set to take effect on Saturday following publication in the official gazette, includes cuts to value-added tax on gas and fuel expected to reduce pump prices by as much as €0.30 per litre, or roughly €20 per tank for the average car.

The government will also slash electricity taxes by 60 per cent, suspend a production tax and reduce the value-added tax on electricity to 10pc from 21pc.

Additional support includes a direct subsidy of €0.20 per litre of fuel for transport operators, farmers, ranchers and fishermen, along with equivalent aid for fertiliser purchases.

Sanchez has also announced a decree introducing a “temporary freeze” on rents nationwide, a measure that still requires parliamentary approval after tough negotiations with his coalition partner, the far-left Sumar party.

“Clearly, these measures will not prevent the effects of this illegal war from reaching Spain, but they will at least mitigate their impact and make them somewhat more bearable,” Sanchez has said.