Spain's upper house approves first full-year budget since 2016

MADRID (Reuters) - Spain's upper house of parliament on Tuesday approved the minority government's 2021 budget in fast-track mode, meaning the country will have a new full-year spending plan for the first time since 2016.

The senate, which voted down amendments that would have required sending the bill back to congress, completed the budget approval process in just under three months.

The budget, aimed at supporting an economic recovery after the COVID-19 pandemic, includes record spending on health and social care and a rise in infrastructure investment. It will also help to enable the distribution of billions of euros of European Union rescue funds.

The government plans to raise taxes on large companies and high earners to boost revenues by 6.8 billion euros in 2021, giving it more ammunition to spend its way out of recession.

Spain's tourism-dependent economy is set to contract a record 11.2% this year before rebounding a projected 7.2%-9.8% in 2021, while 3.9 million people are out of work. A government furlough scheme is supporting around another 750,000.

Various regional parties including Catalonia's pro-independence leftist Esquerra Republicana (ERC) sided with the Socialist-led coalition government to approve the bill in parliament.

Political instability had prevented previous governments from passing a full-year budget since 2016. The last spending plan approved by parliament in mid-2018 only applied to the second half of that year.

Analysts have said, however, the viability of ERC's longer-term support would be tested by the Feb. 14 Catalan regional elections.

(Reporting by Belen Carreno. Writing by Andrei Khalip. Editing by Jane Merriman)