MADRID (AP) -- Spain's Socialist minority government signed an agreement Thursday with an anti-austerity party to raise the country's minimum wage and increase taxes for the rich if the national budget for next year gets parliamentary approval.
Passing the 2019 budget is a key step for Prime Minister Pedro Sanchez's ambition to remain in office until the current legislative term ends in 2020. Failure to get the national spending plan passed by parliament in coming weeks would likely bring an early election.
Sanchez's Socialist party and the far-left Podemos, which signed the pact, will still need to enlist support from small and regional parties to pass the budget proposal in the 350-seat lower house of parliament. The other two major parties, the pro-business Ciudadanos and conservative Popular Party, have said they won't back it.
Under the pact, the monthly minimum wage would rise to 900 euros ($1,039) from 736 euros currently — the biggest ever annual hike, according to Finance Minister Maria Jesus Montero.
Meanwhile, the spending plan would increase taxes on the income and assets of wealthy families.
The government's budget proposals underscore its socialist credentials, government spokeswoman Isabel Celaa said after the weekly Cabinet meeting.
Montero, the finance minister, said the spending plan marks "a clear change of course" after years of public spending cuts following Europe's debt crisis, with the government seeking to rebuild public services.
"There will be no tax increases for the working class," she said, but large companies will see their taxes rise under the proposal.
The budget aims to help the less well-off, including retired people on low pensions, she said, while abiding by the fiscal consolidation demanded by membership of the euro currency.
Macroeconomic forecasts were due to be released Monday, when an extraordinary Cabinet meeting is scheduled to formally approve the budget proposal.