Business Over Tapas (Nº 184)

Editorial:

The main news this week, the re-election of Mariano Rajoy, was nevertheless shared with the surprise that Pedro Sánchez provided, by refusing to either change his ‘no means no’ mantra, or to go against the command of his party, deciding instead to resign his seat in the parliament with the avowed intention of presenting himself as a candidate for the open position of Party Secretary. But for this, they will need a Congress, which the caretaker leadership is apparently in no hurry to celebrate. What will happen to the PSOE now? Besides Pedro’s departure – possibly a brief one – sixteen PSOE deputies refused to abstain in the second vote, souring both the agreements made by the PSOE and its caretaker leadership.

Will the PSOE disappear in a manner reminiscent of the Pasok in Greece, where an accommodation a few years back allowing the right wing to govern brought the party abruptly down from 35% to just 5% support of the electorate? Is there room for a new, fresh, centre-left group, or would support bleed towards the Podemos?

Mariano Rajoy has a minority government, and some difficult calls to make to protect the economy. Will his current ‘allies’ allow Rajoy space for the sour medicine he must prescribe for the country?

Housing:

At least a hundred town halls in the Madrid region are issuing irregular building licences, says El País here. The process is to use the honorific (but unqualified) ‘town architect’.

From Mark Stücklin’s Spanish Property Insight: ‘40% of Barcelona holiday rentals are illegal and drive up prices for locals finds new study’.

‘An expat couple have been given 30 days to vacate their dream holiday home after the town hall sold it at auction without them knowing. British pensioners Adrian and Margo Campbell have been ordered to hand their two-bed home over to their Spanish neighbour in Tozar, Granada, after she bought it at auction...’. Found at The Olive Press.

An interesting editorial from Mark Stücklin begins: ‘As I predicted, Brexit is turning out to be bad news for the property market on the Costa del Sol, where the British have been the biggest group of buyers for many years. I was in Marbella speaking at a conference on the property market organised by Tinsa (Spain’s leading appraisal company), HolaBank (part of CaixaBank, specialising in banking services for foreigners in Spain), and the Observatorio Inmobiliaria trade magazine, in collaboration with the Malaga Lawyer’s Association. I gave a presentation on trends in foreign demand before and after Brexit, and had the chance to speak with a good number of lawyers and agents who work with foreign clients. Most told me that Brexit has had a significant negative impact on their business, which I already knew from a survey I have carried out in the last couple of weeks.... Again, we can see that uncertainty is bad for business.

Finance:

Unemployment in Spain has fallen to 18.9%, its lowest level seen since 2009. Other figures at El Español here.

Telefónica reports a net profit in the first nine months of 2016 of 2,225 million euros, says Media-Tics here.

An excerpt from an article in The Corner titled ‘Spain Inflation Could Rise To 2% In 2017’ notes that ‘...But in spite of higher inflation and the fact that Spanish prices may reach the same level as those in the Eurozone as a whole from time to time in 2017, (the Spanish think-tank) Funcas believes that Spain will maintain its competitiveness in exports and imports next year...’.

‘The Spanish food and drink industry could be facing lower revenues, fewer exports and smaller profits as a result of the Brexit vote. ... According to the Trade Secretary’s Office, in 2015 Spain exported food and drinks to Britain worth over €3.5 billion, making it the second-most-important export sector after the auto industry. ... But this growth could be substantially slowed down by Britain’s decision to leave the European Union...’.From an article found at El País in English (Thanks David).

‘Have sympathy for those on a fixed sterling income, whether they be pensioners or working, because their real income in Spain has dropped by more than 17% since the Brexit vote or even a little before. For pensioners, who have saved for a relaxed retirement in the sun, they at least probably won’t have a mortgage to pay, but there will be health bills or private policies and other fixed costs...’. Story at The Olive Press here.

For bad news about the Spanish economy, we can look no further than Wolf Street. Here, we read about the parlous state of Spain’s fourth largest bank: ‘...While Spain’s bad bankers play for time, Banco Popular, Spain’s fourth biggest bank, is planning to spin off its own bad bank early next year, with around €6 billion euros in toxic assets. The listing is a last-ditch attempt to clean up its books by reducing its exposure to property assets. Given that Banco Popular is, pound for pound, the largest owner of toxic assets in Spain as well as the country’s worst performing bank (according to the ECB’s latest stress test), it’s a big ask...’.

Politics:

From The Guardian: ‘Mariano Rajoy has been sworn in for a second term as Spain’s prime minister after winning a confidence vote in parliament to end the country’s 10-month spell without a government. The leader of the conservative People’s party (PP) secured the necessary simple majority in Saturday’s vote but will face a battle to govern in a deeply divided congress of deputies and amid the proliferation of corruption scandals that have engulfed his party...’. More in a similar vein from the BBC...

Mariano Rajoy will reveal his list of ministers today Thursday, says ABC. ‘Nobody knows nothing’, they say in the Moncloa; but the expectation is a number of changes from the previous line-up. Without doubt, the newspaper notes, the minority Government will need to move carefully and clearly.

‘Did you watch the investiture of Mariano Rajoy on the television’, asks Jordi Évole (Spanish TV star interviewer). ‘Well, I saw some of it, I saw the vote’, says Pedro Sánchez. He adds, ‘I respect those who abstained as much as I respect those who voted against (16 voted against the party whip). Because, in the end, it was a dilemma: unnecessarily caused by the caretaker directorate...’. An article and video (taken from Salvados) at El Huff Post here, suggesting, at the same time, that the possible restructuring of the PSOE could be a long way off... whether led – perhaps improbably – by Sánchez or by a more acceptable leader. El País, for one, certainly hopes that the next leader is not Sánchez...

An opinion piece speaks of Pyrrhus, the King of Epirus, who once said ‘another victory like that one and I’ll be going home alone’. Then, a little later, along came Susana Díaz...

In the Andalusian government, the two forces of Podemos and Ciudadanos have obliged the PSOE to accept changes in the election system for the region. This boils down to more deputies (from 109 to 130) for the Junta de Andalucía, yet arguably less of them from the smaller provinces of Almería, Granada, Huelva and Córdoba. The idea is to bring the number of citizens per deputy more in line with, for example, Catalonia. The complicated negotiations are at an early stage, and Público has the report here.

Catalonia:

Headline from Ara in English: ‘TSJC President: Catalan language shouldn’t be compulsory for judges. The Catalan Government calls for an end to the "linguistic emergency" in the justice system’. Naturally, it would be considered a plus by the Catalonians if the judge handed down his sentence in Catalán...

Brexit:

José Chulví, the PSOE mayor of Jávea (Alicante) has proposed a motion in his town hall:

1. To urge the governments of Spain and the United Kingdom to begin negotiations as soon as possible to reach an agreement that respects the social and political rights of British citizens in Spain and Spanish citizens in the UK, just as they were at the beginning of this process.

2. To urge the government of the Generalitat Valenciana to guarantee social coverage to British citizens just as they have been, in those matters within its competence: Health, Education, Social Services ...

3. To forward this agreement immediately to the governments of Spain and Valencia, as well as the UK embassy in Spain.

The full text here.

‘Since 24 June, much has been made of the “bargaining chip” status of EU citizens living and working in the UK. When the conversation turns to the other side of the coin – the 1.2 million British citizens living in an EU state – the mind jumps to those retired in Spain. But what about British millennial expats, most of whose age group voted to remain, and their burgeoning lives abroad?...’. From The Guardian here.

Media:

An alarming article appears in El Salmón Contracorriente on who controls the Spanish media and why is it useful to do so.

Conspiracy Theory:

According to La Información, a secret meeting was held a few days before Pedro Sánchez fell from his post as secretary of the PSOE. Present were Felipe González, Juan Luis Cebrián (president of the Grupo Prisa and editor of El País and the Radio Ser) together with three business leaders from the Ibex. With additional information from the secret service (CNI). The fear was that Sánchez was planning an alternative to Rajoy, with support for the PSOE from Podemos and the independents.

Economics:

Further Comments on Brexit and Europe

by Andrew Brociner

One cannot help but think that the recent events in Europe have led to a regression instead of a progression. The EU was set up to avoid the consequences of WWII and to live in peace. Now, with immigration, xenophobia has taken hold and sparked the emergence of the far right in numerous European countries, some of which are close to winning elections. Europe is ironically going back to the very point it was set up to avoid. The Berlin Wall was torn down in 1989 to much celebration and a unity of East and West, but recently, wire fences are being put up all along Europe's borders. Schengen was supposed to be about borders without controls, which should be an integral part of a monetary system with free movement of capital and labour, but this feature unfortunately has always been too arbitrarily decided by each individual country. And now the situation has degenerated to an absurd point. Whereas the vision of Europe was unity, there is now division. Where it sought solidarity, there is racism. Where it wanted open economies, we are seeing isolationism. It seems that the EU, like so many things, had its logical rise, peak and now descent.

That the EU made a great deal of progress for decades is evident from looking at its history. The 1980s saw much progress on different fronts, such as on the economy, equality and on the environment. But perhaps its greatest period of activity was the period around monetary union: the 1990s saw the Maastricht Treaty, Schengen, and then at the beginning of 2000, the adoption of the euro. It seemed that the European project was proceeding more and more in the direction of closer integration, with a free flow of goods, services, capital, and people. In fact, many young people also studied in different countries, sponsored by the EU. Adding to the original six members, three joined in the 1970s (of which the UK was one, in 1973), three more in the 1980s (Greece, Spain and Portugal), a further three in the 1990s, twelve in the 2000s, and only one since 2010.

But more recently, there have been many strains the system has had to cope with, such as the austerity measures, low growth and high unemployment, and the migrant crisis. Many people watched as the Greek debt tragedy unfolded thinking that if it were to exit, the system could unravel. But if Greece was not to be the first, the UK has cast its vote and the process of disintegration might have begun. It depends on how much unity can be galvanized in the face of the issues it faces, such as immigration, low economic growth and austerity, to stem the tide against it. It will be very much a test to see if it can gather the resources to move ahead, or it will see its breaking point.

Various:

Spain’s wealthiest 100 people have a combined fortune equivalent to 18% of the country’s gross domestic product, says Público here, adding that Amancio Ortega is as rich (at 71,000 million euros) as the combined wealth of the next 24 millionaires that follow him...

Murcia’s ‘second’ airport, the Corvera airport designed to serve, among other attractions, the still unfinished ParamountTheme Park, is costing the Region some eight million euros a year to keep it mothballed. The airport was completed in 2012 but has never been opened. It is located a short distance away from the San Javier airport, which is the official airport for Murcia (a one-province region). The story at La Crónica del Pajarito here.

Indeed, talking of Murcia, the province’s second city is Cartagena. The city has a long and peculiar history of seeking independence (it was even at war with the rest of Spain in 1873) and it particularly has a long-term grudge against the City of Murcia. Now the mayor of Cartagena is on record as saying ‘we will now be working flat out to join another community – Almería or Alicante, or else to be by ourselves, because with bad friends like that, we don’t want to live with them a moment longer’. Blimey!

Andalucía is putting through a new law to try and combat corpulence. This will include obliging bars to give a free glass of water to clients, while restaurants will be made to offer different sized portions to their customers! Apparently, 18.7% of the Andalusians have not been following the famous Dieta Mediterranea, and, perhaps as a consequence of this, are classed as obese! The story at Ideal here.

What’s going on in Palomares, the village where the bombs fell in 1966? Well, nothing apparently. Spain and the USA signed a document a year ago to begin cleaning up the remaining pockets of radiation, but, alas, nothing more has been heard on the issue, says a photo-report at El País here.

A town in Valencia is forcing all dog-owners to have their pets’ DNA taken and stored to then test against any dog-droppings the council may subsequently find. The BBC reports.

The Canadians, thanks to the new CETA trade agreement with Europe, will apparently be able to commercialise their citrus products (regardless of where they may have come from originally) under the name of ‘Valencia Orange’. Report at Primavera Valenciana here.

‘Tesla to set up its Spain headquarters in Barcelona. The pioneering electric car maker will sell imported vehicles from a dealership in Catalonia’. Story at El País in English.

How green is your car? Expect a sticker in the mail says David Jackson here.

Do you use and trust recommendations in TripAdvisor? Should you? An investigation into the service at The Olive Press here.

Letters

Hi Lenox

Re the item (BoT 183) regarding the German woman who allegedly told her children not to speak German while in the UK.

I do find these accounts very hard to believe and do wonder if by spreading them some powers within the EU feel they could be to some advantage by alienating the people of the EU against the British. You may remember Mr Holland stated that "Britain must not benefit from leaving the EU." could we add; "by fair means or foul!" The facts do not back up these claims. In a recent report from the police commission they state that during this year reported racist incidents have actually fallen.

This sort of tabloid news goes alongside the Spanish media claims that the majority of illegal drugs and money laundering in Europe emanates from Gibraltar (And the band played "believe it if you like!").

Britain like all countries has its racist element but I would argue that it is far more tolerant than many countries. As a famous American comedian put it - "Yes the British are racist, but they ain’t very good at it!"

Regards, John C.

Hi Lenox - I just came back from England where I was told several times not to mention Brexit. Apparently we have to "get over it and move on" – no doubt to those broad and sunny uplands. So it's good to find BoT still tackling the issue.

Oh, and many congrats to Maura Hillen!

Un saludo, Jake

Finally:

A popular oddity from Kinder Malo, called ‘La Ley de Eddie Murphy’, over at YouTube.