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Business over Tapas (Nº 205)
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Business over Tapas (Nº 205)

By Lenox Napier and Andrew Brociner – Sent by José Antonio Sierra.

21ABR17.- A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners: With Lenox Napier and Andrew Brociner. Consultant: José Antonio Sierra. For subscriptions and other information about this site, go to businessovertapas.com - email: businessovertapas@gmail.com - ***Now with Facebook Page (Like!)*** Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access. Business over Tapas and its writers are not responsible for unauthorised copying or other improper use of this material.

Editorial:

Mariano Rajoy will testify as a witness in the Gürtel Case, says El Mundo here. The President will be asked about his time as general secretary of the PP in 2003 and 2004 to explain his understanding of the improper party funding during that period when Luis Bárcenas was the treasurer. It is not very good to have the president of a country being grilled by the judges, as PP sources tell LaSexta TV here (video) saying ‘it’s terrible for his image’. El País in English says that the anti-corruption public prosecutor loyally complains that ‘...testimony from the prime minister “would not be relevant.”...’. Rajoy would be interrogated as ‘the leader of the PP, not as the head of the Government’, a nicety which would allow him to be examined in his office, rather than at the Supreme Court.

Important news as this undoubtedly is – it hasn’t made the headlines on the state-owned television for some reason, says El Español here. In all, the Partido Popular evidently remains as a party mired in corruption.

Housing:

El País says that ‘Foreign buyers are boosting the market of holiday homes, following a decade of crisis’. The article however notes that British buyers are hesitant following Brexit.

From the cheerfully upbeat Ein News comes ‘Sales transactions for Luxury Property in Spain rose by 31% in 2016 with a reported price increase of 4%, signalling the significant recent uptick in demand for high-end Spanish properties. Spain's economy has recovered strongly since the Eurozone crisis and in 2016, Spain's GDP growth of 2.6% exceeded that of both the UK (1.9%) and Germany (1.5%) and is expected to remain well ahead of the Eurozone average over the next three years...’.

‘Thousands’ of Britons are going through Spanish lawyers to claim back deposits on never-built homes. El Independiente says that, following positive rulings from the Spanish Supreme Court, some 100,000 Brits (quoting the British press) were scammed during the ‘boom’ years, and they are now seeking around 5,000 million euros in damages, much of this from Spanish banks, particularly (says the article) ‘Abanca, la CAM, Banco Sabadell, Bankia, Popular (Banco de Andalucía), Cajasol, Banco Pastor…’.

Tourism:

From Eye on Spain: ‘Once again, Spain has been voted the world's top tourism destination, way above Australia, the US and Italy. The Travel and Tourism Competitiveness Index 2017, drawn up by the World Economic Forum, covers 136 countries, and Spain beats the other 135 with a total of 5.43 points. Its nearest rival is France, with 5.32, followed by Germany with 5.28, and these top three countries have kept their positions from last year...’.

‘Spain has shattered forecasts for Easter tourism figures this year. Industry experts say the numbers were helped by the weather, which encouraged last-minute planners to make the most of the sunshine. The strong results were not exclusive to the usual coastal hotspots as cities and rural enclaves also saw a soar in visitors...’. From The Olive Press here.

While things were wonderful for the hotels during the Easter break, Preferente looks at the threat from ‘el intrusionísmo’ – a concept that translates as anyone else breaking into the business through ‘unfair competition’ or ‘competencia desleal’ . This refers to short-term rentals which, in the Madrid Region, have ‘doubled in an uncontrolled fashion to 20,000 units in just one year’. Illegal offers, apparently, ‘provide a negative effect on jobs, security and income’, says Gabriel García, president of the Madrid hotel association the AEHM, who wants the Madrid government to ‘safeguard the rights of consumers and give them security’.

Madrid is preparing to limit short-term rentals with Airbnb and its imitators and to create a special tax. Story at El Confidencial here.

‘The Balearic regional government (Govern) has approved a draft new law regulating tourist rentals on all the islands, containing some sensible measures. Known locally as the Proyecto de ley de Alquiler Turístico, the draft law envisages giving the community of owners in every building the right to decide if they want to allow holiday rentals in their building or not. A simple majority vote will be needed to approve holiday rentals. Owners will also need independent water and electricity meters to get a holiday-rental licence...’. A report from Mark Stücklin at Spanish Property Insight here.

From Wolf Street: ‘Barcelona, Europe’s most visited non-capital city (at least officially speaking), is now so saturated with tourists that even the tourists are complaining. In a recent study by the City Council, 40% of the tourists surveyed thought that prices in the city were too high, while 59% believed that the streets and tourist hotspots were too crowded. They’ve got a point. In 2015 the city, with a total permanent population of 1.7 million, drew 8.9 million visitors, 6.5% more than the year before and a five-fold increase from 1990. And that’s just those who stayed in hotels. Airbnb hosts provided accommodation for a further 900,000 visitors. By 2016 that number had climbed to 1.25 million...’. Too much of a good thing?

While itself rather more in favour of crowds of wealthy visitors, Agent Travel admits that 49% of Barcelonans would like to see a limit to tourism, but 47.5% want to see more!

In all, Spanish tourism could die of its own success, says El Diario in an analysis here. The Government estimates 83 million foreign tourists for 2017 (up from 75 million last year). Add to this, of course, all of the national ones who take a vacación or two to the coast, or their pueblo each year. Too many? Can we live our lives around them? Are they saving our economy? Spanish experts in the field now start to say that it’s not the number of visitors, so much as how much they spend. Well, quite.

Seniors:

A paper called ‘Swedish retirement migrants to Spain and their service providers’. This paper pays special attention to a) the local market that Swedish gerontomigration has generated, b) the relations among all the actors that have a role in the provision of goods and services for Swedish/Scandinavian retirement migrants, and c) the strategies that retirement migrants develop to obtain care provision when dependency needs appear. The study by the OEG is in pdf format is here.

Finance:

Spain appears to be doing rather better than expected. From El País in English: ‘The IMF raises Spain’s 2017 growth forecast to 2.6% as global economy recovers. New estimate three-tenths of a point above January figure but fund says more labour reform needed’. A longer version, in El País, includes a graphic on how other nations are faring.

Shares in the struggling Banco Popular took a beating last week, dropping 25% of their value. El Diario reports.

Written by bankers and lawyers perhaps, but there’s always Andorra, amiably forgotten. From No More Tax (sic) comes: ‘Living in Andorra. If you want to hide from the taxman, there aren’t many options within Europe. One of the options is the not readily accessible but very discreet Principality of Andorra. This self-willed nation is hidden high up in the Pyrenees mountains. Andorra has been doing its own thing for centuries without paying too much attention to other countries...’. More here.

‘Spain has been urged to contribute more to ending the global reliance on carbon-emitting power sources such as coal and oil. The European Climate Foundation said Spain was falling behind other countries in terms of switching to low-carbon sources like renewables and nuclear...’. Story at The Olive Press.

The five towns with the highest unemployment in Spain are all in Cádiz. They are Barbate, Arcos de la Frontera, Vejer de la Frontera, Chipiona and Medina Sidonia. The highest is Barbate at 45.5% unemployment. El Español visits the towns in question.

Politics:

The subject of the search for a new PSOE leader occupies much of Spanish opinion at present. El Español says that 70% of party supporters, while perhaps preferring the ousted leader Pedro Sánchez, think that the winner will be Susana Díaz. The primaries will be held on May 21st. Pedro Sánchez currently has 43% support, Susana Díaz has 29% and Paxti López has 15.5%. In all, there are seven candidates. El Mundo reports Sánchez as warning party supporters that ‘If Susana wins, we shall be the third force in Spanish politics’. That’s to say, behind the PP and Podemos. Susana Díaz of course, has the support of Felipe Gonzalez and the majority of ‘the Barons’.

Podemos has taken a leaf out of the Hazme Oir (a far-right Christian group that recently drove a bus around Madrid and other capital cities painted with a warning against the public acceptance of transsexuals). The Podemos bus is painted up with the leading political fraudsters including Aznar, Bárcenas, Pujol and Felipe González. A clever promotion or a silly ruse – El Español thinks it’s a campaign that does no good for Podemos.

From The Local: The Basque separatist group ETA said on Sunday it would consult its members on "future decisions" following its unilateral disarmament, a Basque newspaper reported. In a statement issued on Basque "homeland day," ETA said it had entered a phase in which it would take "decisions from among all its members for moving forward," the daily Gara reported. "ETA will examine the path that has been travelled and will take future decisions with responsibility," the statement said. On April 8th, ETA said it had completely and unilaterally disarmed...’.

From David Jackson: ‘In all the general election excitement in the UK, one vital question has been overlooked by the pundits – what’s going to happen with the visit of the Spanish Royal family to the UK? The election is on June 8, and King Felipe is supposed to be visiting on June 6-7. He and his family can still meet the Queen of course but with purdah in force across the UK government, he won’t be able to meet any politicians...’. According to The Gibraltar Chronicle however, the visit will go ahead.

The well-respected political cartoonist ‘Forges’ (real name Antonio Fraguas) has written an article that’s gone viral this week – it talks of the ‘mediocrity’ in today’s Spanish society. It hits the nail on the head. Read it here.

Corruption:

The arrest was made on Wednesday of the previous president of the Madrid Region, Ignacio González, one of 12 people held over shady financial activities at the region’s water company la Canal de Isabél II. ‘González, who served as regional premier with the Popular Party (PP) between 2012 and 2015, is the latest politician to be ensnared in a case that has been dogging the conservative party for some time...’. More at El País in English here. The editor and director of La Razón (a right-wing daily) are also under investigation. More here.

The Gürtel accused – Bárcenas, Yáñez, Correa and Crespo may have their Swiss accounts blocked, but news from El Mundo says that they have increased their stakes by over eight million euros since 2012. They now have some 50 million euros in blocked accounts thanks to wise investments and bank interest. LaSexta provides video.

El Mundo reveals that Rodrigo Rato stashed seven million euros abroad while he was vice-president of Spain.

Catalonia:

The vice-president of Catalonia, and leader of the coalition Esquerra Republicana, Oriol Junqueras, said on Tuesday that if the region wasn’t allowed by the Spanish government to hold a referendum in June on independence, that there was a strong possibility of enabling a unilateral declaration of independence in its place. El País reports here. Sunday is La Diada de Sant Jordi, Catalonia’s saint’s day (St George is also celebrated in England).

Brexit:

‘Theresa May has announced she would like to hold a snap general election on Thursday June 8. In an unexpected speech outside 10 Downing Street on Tuesday morning, the prime minister said she will tomorrow ask parliament to allow her to go to the country. “We need a general election and we need one now,” she said...’. From The Huff Post UK. ‘Crush the Saboteurs’, says The Daily Mail ominously on Wednesday (picture here). But first, there are the two-tier French elections (see below with Andrew Brociner).

‘The British government has confirmed that long-term expats outside of the United Kingdom—those who have lived abroad for more than 15 years—will not be allowed to vote in the June 8 general election announced by Theresa May on Tuesday morning. The British Embassy in Madrid, in a reply to questions from The Spain Report about the implications of the Prime Minister's statement, said: “We remain committed to changing the law to enfranchise all British ex-pats, but unfortunately there is not sufficient time to implement this for this general election”...’. From The Spain Report.

From The Economist: ‘Can Britons keep their EU citizenship after Brexit? Though many would like to, it looks both legally and politically unlikely’. An interesting article throws cold water on the Plan B.

‘End of an idyll: how the sun went down on Britain’s retirement dream’. The Guardian considers how it may no longer be viable to move to ‘somewhere abroad’.

Lenox’s piece on his blog: ‘Britons in Spain face the Brexit’. Here en castellano.

The French Elections

by Andrew Brociner

The French elections are now only three days away and this will represent another test for Europe.

The front runners are Emmanuel Macron, a centrist, and Marine Le Pen, representing the far-right. These two candidates are expected to advance to the second round elections in May and from what the polls suggest, in the runoff, Macron should win.

This is what the polls say, but for a start, there are eleven candidates and none of the front runners have an overwhelming lead. In fact, Jean-Luc Mélenchon, a far-left candidate, is now closing in on them. And there is still François Fillon, the Republican candidate, although mired in corruption, representing the status quo. The polls show Macron is expected to get 24%, Le Pen 23%, Fillon 19.5% and Mélenchon 18%. It is clearly a tight race. Moreover, about one third of voters still remain undecided, which in theory leaves the field wide open. Also, polls are notoriously unreliable, with recent election results only confirming this.

Le Pen is not only anti-EU but anti-euro as well. If elected, she would have a referendum on both. It has always been one of the strategies of Le Front National to use immigrants as scapegoats, claiming they are taking jobs away from the French, but now also, they can blame France's problems on the EU or the euro. Le Pen, after trying to be in league with anyone she could for support, such as referring to any economist who is against the euro, as if by some axiomatic association, as endorsing her views, or siding with recent populist or far-right candidates in other countries, such as in Austria or the Netherlands, but also in the US, is now pulling out all the stops, plainly declaring an end to immigration. The recent wave of terrorist attacks in France plays well into her xenophobic hand and accordingly, she wants to close the frontiers. Le Pen has cast her net of support wide, at once trying to soften the image of her father's party, but also appealing to her core supporters.

Mélenchon too is populist, is anti-capitalist, and sides himself with communists. He is clearly on the other side of the political spectrum compared to the Front National. The fact too that now a far-left candidate, whose policies are radically different from the mainstream, with, for instance a top tax rate of 90%, is emerging from the frays, which completes the panorama of the whole political spectrum being represented, is evidence that the same thing is happening in France as in other countries, the same in fact, as happened in the US, with people shunning the establishment and backing parties which divide rather than unify the population.

Indeed, note that this election will not be between the traditional two parties, the Socialists and the Republicans. Holland will not run and the candidate chosen to represent the Socialists is too low in the opinion polls. This, by itself, is a huge change from past elections when the Socialist party was enormously popular, going back to the fourteen year reign of Mitterrand. The Republicans chose Fillon, eschewing Sarkozy, which is understandable, but also Juppé, a very capable candidate, and will now have a difficult task of making it to the second round. The front runner who emerges, Macron, a young investment banker who founded his own centrist party, has never stood for election. If this sounds like déjà vu, it is. Another familiar theme is putting the French first, and this is just what Le Pen vows, giving social services, such as welfare and housing, to the French before the foreigners. A fake news story in Algeria has Le Pen planning to build a wall around France and having Algeria pay for it. It is really a sign of the times that elections are repeating themselves in different countries, with the exact same elements like the political establishment falling out of favour, radically different populist parties dividing opinion, the popularity of the far right, and even an unelected front runner.

Various:

Ferrero (the Nutella people) and Bimbo have joined forces to create a pro-palm oil lobby. Expect adverts showing the caring side of producing the sweet oily additive. More here.

The emptiest province in Spain is without doubt Huesca, with just 10 people to the square kilometre says the local radio here.

Loneliness, that ‘First World complaint’, affects more and more Spaniards these days, according to El Confidencial here. Over three million Spaniards live alone.

See Spain:

The amazing photos of 1960’s Barcelona: found in an envelope.

An estimated 22,000 flamingos have arrived at Andalucia's Fuente de Piedra (Antequera, Málaga), says The Olive Press here. Don’t forget your camera!

From Eye on Spain: ‘A forgotten motorsport treasure - Spain's oldest race track. It is unknown to many, including car lovers. The circuit of Terramar (in Sant Pere de Ribes, Barcelona province) is the third oldest in Europe after Brooklands adn Monza, ahead even of the legendary Le Mans, and the first in Spain...’.

Letters

Dear Lenox,

You have published two letters from Brexit supporters in BoT recently so I thought you might like to receive a letter from a Remainer.

I am somewhat baffled as to why anyone with an interest in Spain, be it as a permanent resident, a part timer who spends part of the year in Spain or a holiday home owner would have decided to vote (or support if ineligible to vote) to leave the EU. There is little doubt that Brexit will make the lives of British nationals residing in EU member states far more difficult and the deal we do eventually end up with is not going to be anything like as good as the one we have now. You can forget the arrangement we had pre-EU, things have moved on, the EU27 currently hold all the cards and now that Article 50 has been triggered, the power has shifted from the UK to the EU27. We are in uncharted territory and there are no guarantees that things like reciprocal health care agreements and pension rights will be protected. Freedom of movement enabled many people to move to another EU member state with ease and without many of the barriers previously encountered.

British nationals living in EU member states are very concerned about the consequences of Brexit and how it will affect their future but looking at the overall picture, that is the thin end of a very big wedge. The loss of passporting for financial services and membership of the single market and the customs union are far more impacting and will affect far more people in terms of companies relocating to other members states (already started) the subsequent job losses and tax revenue. The single market and the customs union are vital to the success of the financial service and manufacturing sectors and these institutions will pile pressure on the government to retain membership of the single market but if May presses ahead regardless with this act of self harm, Brexit itself could self destruct.

It is impossible for anyone to know the full consequences of Brexit and nobody knows what kind of Brexit we are looking at. Worst case scenario is a hard Brexit, best case scenario is a ‘Norway’ type deal with membership of the EEA which would be the best outcome for the UK economy and British nationals living in EU member states.

Voting to leave the EU was one hell of a gamble and one which is unlikely to pay off, was it worth taking that risk? We have only scratched the surface so far and the consequences of leaving the EU were not discussed in anything like enough depth during the shambolic referendum campaign. The EU is far from perfect and needs to reform but the uncertainty we face now is far worse. Successive UK governments have used the EU as a scapegoat to push through unpopular legislation. They make a pretence of opposing EU directives but not only do they support them, they gold plate them.

So what is the great prize at the end of the Brexit process? We now know that immigration will not decrease significantly and we will simply shift from having EU workers to non-EU workers but that’s about it. We now have years of protracted and contentious negotiations with the UK government scratching around for a few tin-pot deals in dubious places in a desperate attempt to replace the single market. The EU27 have not been sitting around twiddling their thumbs for the past 10 months, they have been working out their strategy and are united in their quest to capitalise on Brexit which they will. They will play hardball and who can blame them?

I think Euro-scepticism is partly a generational thing and my parents both voted to Leave the EU whereas my partner and I both voted to Remain. That said, if the UK does opt for a hard Brexit and pulls up the drawbridge, I feel we need a parting of the ways and those who voted to Remain in the EU should be given the option of Associate EU Citizenship as proposed by Guy Verhofstadt – if you voted/supported Remain please email him direct to show your support for this scheme.

So after years of endless complaining about all things EU and a deeply flawed referendum campaign, the UK is a divided country that could well break up. One look at the comments section on any UK newspaper illustrates just how bitter and divided people have become. I have zero confidence in May and her hapless side-kicks to negotiate a good deal for the UK and if relations between the UK and the EU27 continue to deteriorate, the UK (or perhaps England and Wales) is heading into a very turbulent, isolated and uncertain future.

We now have another general election on 8 June which brings yet more uncertainty. A Conservative win is highly likely but will it mean that May can take a softer and far more workable line on Brexit and finally rid herself of the Brexit ultras in her cabinet? Or will it just mean she has more power to push ahead with hard Brexit?

Brexiteers, rejoice if you wish but don’t expect me to join you because I don’t share your ideology or your vision for the future.

The only certainty is uncertainty.

Regards, JG

Finally:

‘How we dream’ – the new song from the BBVA. Banking can be musical, we think...?

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