Business Over Tapas (Apr. 25^th)

Editorial:

The Foreign Resident is being hard hit, what with the Worldwide Asset Declaration (to be declared on a complicated and all-inclusive form by April 30th) and now the new rule coming in about apartment-rentals. How many realtors sold apartments to prospective buyers on the strength of their rental abilities? How many more wealthy would-be settlers from the North of Europe, already worried about inadvertently acquiring an 'illegal home' in Spain, will worry further about not being able to let it out to help recoup their investment? In the larger picture, The Spanish Government, which has been jostled into this foolishness by the Hotel Industry, is going against precisely its own conservative supporters with this short-sighted plan.

Housing:

The banks may not be lending, the mortgage-payers may be getting tossed into the street, houses may not be selling and Europeans might be getting the wind up about settling in Spain, but the National Statistic Agency, the INE, has just published a study that, as of the end of 2011, there were the nice round figure of 3,443,365 empty homes across the country - 13.7% of the nation's entire collection of houses.
By province, the region with the highest percentage of empty homes is Orense, with 22.7% of its entire housing lying empty and unloved. Almería, in joint 4th place with Toledo and La Coruña, is at a heady 18.6% –  no wonder they want to knock down... the inhabited ones!

From The Wall Street Journal: Andalucía decree stops evictions in move that could complicate efforts by the country and banks to unwind properties.

'MÁLAGA, Spain—Facing a bank eviction, Pepi Cáceres began to pack up her family’s belongings to move when they were spared at the last minute by a decree by the leftist leadership of Andalucía, Spain’s largest autonomous region.

Defying the conservative central government in Madrid, Andalucía this month implemented measures that will temporarily stop evictions and penalize banks and real-estate firms for holding hundreds of thousands of vacant properties. It favours people hurt by Spain’s recession over the interests of the country’s lenders, including many that have received government bailouts.

Whether the action will stand up in court is still in question. But authorities in Andalucía may have complicated a massive sell-off of Spain’s problem real-estate assets, highlighting the obstacles facing efforts by financial institutions in Europe’s hardest hit countries to take tough actions. While most recognize evictions as a necessary feature of housing finance, in regions getting clobbered by high unemployment such actions seem draconian to some'...

Almería was the province where most houses were built during the 'Bubble' - It was the 'Spanish champion of the brick, according to the latest statistical data, with an increase of 45%'. Says La Voz de Almería. 'With the latest details from the National Institute of statistics (INE) in hand, it turns out that Almería was the champion of the Great Spanish Housing Bubble: the Spanish province with the largest relative growth in the number of homes built between 2001 and 2011 with an increase of 45.4%. Even with the slowdown following the 2008 crisis, the figure is still spectacular.

Almería is followed at a distance by Guadalajara, which managed to grow an increase of 37% (thanks to the so-called AVE effect), Toledo (36%) and in fourth place Almería's neighbour Murcia, the land of adverts for Polaris and the endless golf courses, with 31%'...

From the Tourist Site O2B comes a harsh version of the new plan to limit short-term renting property to tourists. A strong criticism of this from Reader 'Deak' is in the Letters below. The article is titled: 'The Government will limit the renting of private households to tourists'.

The Spanish Confederation of hotels and tourist accommodation (Cehat) has estimated at 200,000 undeclared dwellings that are rented in Spain to tourists, entering into direct competition with hotels.

The Government wants to regulate such practices, a task that it will undertake in the future 'Ley de Medidas de Flexibilización y Fomento del Mercado del Alquiler', as the law will be called. 

The new regulations will prohibit short-term rentals by individual owners, establishing a minimum period of one month.

Cehat explains that these homes are marketed over the Internet and that they mainly attract foreign tourists.

On the other side of the argument, owners of apartments totally oppose the new measure, since, they say, this violates the freedom of choice for tourists.

UK Government offers nuggets of advice to Spanish property buyers: A new video created by the UK Government’s Foreign and Commonwealth Office (FCO) is a must-see for anyone considering buying property in Spain.

'The 15-minute film, featuring Málaga’s very own British consul Stephen Jones, offers invaluable advice spanning finance, healthcare and culture plus practical and language considerations. Doing proper research and resisting the urge to plunge in head first seem to be the main thrust of the advice.

'We would always advise that someone start looking some 18-24 months beforehand,' says lawyer Stefano Lucatello. 'You should be visiting websites, reading magazines, and also visiting exhibitions where you can pick up a lot of information which is free and up to date'.

'One of the most important things is to completely research the destination you’re intending to go to,' agrees Stephen Jones, Málaga’s British consul.

'Go online, look at forums, look at the online newspapers. Talk to people that are already out there. Join in the forums and ask the questions you want to know'... (From Terra Meridiana)

BRITISH FAMILY TAKE CASE TO EUROPEAN COURT OF HUMAN RIGHTS

AUAN, 24th April 2013 (Full Statement).        After months of preparation, since the case was first announced, a British family from Albox have today formally taken Spain to the European Court of Human Rights in Strasbourg on the basis that Spain, and in this specific case, the Junta de Andalucía, does not respect their human right to property.

The claimants, who for the moment wish to remain anonymous due to ill health, are represented by the lawyer Gerardo Vazquez and supported by the property owners associations AUAN, SOHA and AUN.

Maura Hillen, President of AUAN states: “We believe that this claim is the first of many such claims against Spain for not respecting the fundamental right to private property. This couple’s case is particularly acute. Their house has planning permission granted by the town hall but the regional government challenged it on the basis that the house risked creating an urban nucleus. What the administration gives with one hand it takes away with the other. Citizens should not be expected to suffer the consequences of disputes between two branches of the same administration”. She added “It would be funny if it were not so tragic – this house is surrounded by other houses constructed without planning permission. These houses, without planning permission, are at no risk of demolition because the government failed to act against them in time but the most legal house with planning permissions has a demolition order!”

Mrs Hillen summarised the complaint of the British family in this case “They say that the Spanish system has failed them, as it has failed thousands of other people who are affected by these planning issues. They say that the Spanish state does not sufficiently respect the right to property established in the European Convention of Human Rights, that there is no clarity in the Spanish legal system and that to demolish their house would be an arbitrary and disproportionate measure which would not achieve anything. They also claim that the demolition of their property would be a de facto expropriation without any guarantee of compensation”.

The couple’s lawyer, Gerardo Vazquez, is collaborating with the UK based solicitor, Jonathan Hoggett, and a specialist in Human Rights Law, Dr. Jose Luis Bazán. Like Sr. Vazquez, they are convinced of the material justice of the complaint.

Asked if this case is like that of Mr & Mrs Prior, Mrs Hillen said “It is very similar, except that the Priors are living in their garage some years after their property was demolished and have yet to receive adequate compensation. The claimants in this new case do not want this to happen again”.

To try to improve the situation going forward, Mrs. Hillen states that AUAN is trying to promote legislative changes at a state level whereby the Ley de Suelo (State Land Law) would adopt measures to expressly recognise the fundamental right to property in a manner that is more consistent with the international obligations of this country. Maura explains “There are precedents; such changes have been made in Cantabria”. She added “It is a shame that politicians will not deal with those affected when trying to resolve these problems and as a result laws that do not take account of social reality are condemned to failure. I hope that the Development Commission of the Congress of Deputies, the Ministry of Development or anyone has the courtesy to recognise that we exist, that we have made proposals, and that they dedicate some time to consider what we have to say because we live with these problems every day.”

“We are the consumers of the Spanish brand (La 'Marca España'), a brand that the government wants to develop, and we say that the brand has some shortcomings that require fixing” she concluded.

Finance:

From Thursday's El Huffington Post: 'In Spain there are now 6,202,700 people unemployed, a figure that represents a new historical record, according to the 'Encuesta de Población Activa' (EPA) –  a quarterly survey carried out by the INE. Unemployment in Spain now stands at 27.16% an increase with respect to the previous EPA by 237,400 people.

The EPA is considered more reliable than the data regarding registered unemployment, since this last indicator has only those enrolled in the offices of the public service of State employment (SEPE), which doesn't carry all of those people who are out of work. The latest data of the registered unemployment figures (a figure much preferred by this and any government) comes from March, when there were 5,035,000 registered as looking for work'.

Analysts with the Unicaja Banking Group foresee employment in Andalucía falling even further by the end of 2013 to reach the staggering percentage of those in search of work at 36.7% (almost ten points higher than the Spanish average). Málaga will be saved in some small way this year, says the regional bank, with investment and jobs from the foreigners.

'The Statistical Office of the European Union, Eurostat, has certified that the deficit of Spain in 2012 was 10.6% of GDP, taking into account the received aid to restructure financial institutions. Excluding these grants, the deficit at the end of the last financial year stood at 7%, six tenths above what the Government had announced.

Spain was the country in the EU with the largest deficit in 2012 if one takes into account the loan received to recapitalize the banking sector. A defecit of 10.6%  is well above the 3.7% average across the euro zone and the 4% of the whole of the 27 Member States. The shortfall comes to 37,782 million euros.

Regarding public debt, Spain was running at the end of 2012 with 84.2%, still below the average of the euro-zone (90.6%) and the EU (85.3%). However, Spain is the country that most increased its indebtedness in the final quarter of the year, adding 6.8% of GDP equivalent to more than 66,000 million euros. In total from 2009 until the end of last year Spain increased its national debt by 318,791 million euros, according to the official Eurostat figures'...   More at El Mundo.

'No banker in the dock after four years of crisis and 55 billion in bailouts', leads an article in El Boletín. 'The financial crisis has obliged around 100 councillors and managers of the different banking institutions so far to sit on the accused bench in court – some of them as well-known to the public as the former Minister of economy and former manager of the IMF, Rodrigo Rato. However, to date, there has never been a single indictment.
'In the Palace, things go slowly' goes the Spanish saying, and in this case there seems to be very delicate issues to be resolved, with numerous political implications while at the same time causing an ever increasing social alarm, taking into account also that the financial crisis has forced the FROB – the restructuring fund provided by Brussels – to inject more than 39,000 million euros into Spain's banking system, in addition to the 13,869 million which the State already lent to the Cajas so that they could undertake their mergers'...
But wait - A headline in the Europa Press: 'The Ecuadorian Government will promote a class action lawsuit in Spain against "corrupt" banksters'. Continues:
'The Minister of Foreign Affairs of Ecuador, Ricardo Patiño, announced today that his government will sign a joint legal action in Spain joining 80 cases of Ecuadorians suffering from usurious small print in their mortgages issued by "corrupt" bankers 'who have sought to harm our citizens'...

As the AVE remains as Spain's signature, proof of the country's push towards modernity and, in a sense, not just keeping up, but staying ahead of the Joneses, we read in Urbanismo Patas Arriba that around one in four AVE trains have just one passenger to enjoy the view (as it hurtles past): 'The massive State wastage in the AVE is clear and has been recognized even in Europe. It is not acceptable that a medium sized country in number of inhabitants and with a weak economy should be the leader in this system of passenger transport; in addition to its huge territorial and social cost, it doesn't serve as a transporter of goods, something that seems shameful given possible alternatives... ...23% of the routes out of a total of 206 connections that are exploited between the 22 lines of the fast train active in 2012, have been what could be described as 'one-person AVE routes'. According to data provided by Renfe, on 48 routes of the 206 for which the operator offered schedules and sold tickets, there travelled one or less passengers a day'...

The President of the Community of Madrid, Ignacio González, has signed an agreement to change the name of the Nº 2 Metro line to Línea Vodaphone. The emblematic underground station of Sol will also suffer the indignity of a name-change for the next three years, it will be called Estación Vodaphone Sol!

It only remains to ask, when are they going to change the name of this country?

World Asset Declaration:

From  El País: Foreign residents live these days with a 'considerable uncertainty and anxiety' thanks to the new requirement to declare their assets, bank accounts and shares of companies in their countries of origin before April 30. If they don't fill out their information properly, according to the website of the Ministry of Finance, they face a minimum penalty of 10,000 euros, and other five thousand for each error or omission. "They just want to get money, it's unfair because we already pay our taxes both here and there," says an indignant Charles Svodoba, a Canadian who has lived for the last 13 years in Benissa, and is known for his struggle against urban planning abuses (with the AUN).

350,000 Britons resident in the Valencian Community have finally begun to organize themselves. On the one hand, they have collected more than 1,000 signatures against this measure which has been submitted to the European Parliament, and the British Embassy has now taken an interest in the case and issued a few days ago a note, published in the English-language media across Spain, which warned about the 'severe punishment' to be imposed on violators. Against this background, sources at the British Embassy explained to El País that they have recommended to the nationals to seek professional advice as the embassies or consulates 'are not able to help in personal consultations or give detailed information on taxation in Spain.'

Excerpt From Sur in English:  'In (a few day's) time anyone who lives in Spain for more than 183 days per tax year - and is, therefore, almost always categorised as being a ‘tax resident of Spain’ - and who has overseas assets worth more than 50,000 euros in any single asset class, should have declared them to the Spanish tax authorities.

Those offshore assets (that exceed 50,000 euros) that must be reported to the tax office, popularly referred to as ‘Hacienda’, via the 720 tax form before 30th April, include bank accounts, property, investments, annuities and assets in trust, amongst others.

The initiative, which is set to become an annual obligation from now on, is an attempt to cut tax evasion, according to government officials. Failure to comply could see the tax resident receive hefty penalties.

Speaking exclusively to SUR in English on this issue, José María Mollinedo, the Secretary General of GESTHA, an 8,000-strong collective of taxation specialists within ‘Hacienda’ says: “We believe that this will significantly reduce fraud.

“This is because, together with the tough sanctions that will be issued for any omissions on the 720 form, a modification to the IRPF and corporation tax acts has been approved, allowing Hacienda to hand down a serious infringement penalty of 150 per cent on the value of any capital gains that are not justified and which are then detected.”'...

A forum called British Expats has a thread on the World Asset Declaration, with over 1,050 posts as of Wednesday afternoon...

Tax Havens:

From 'The Hidden Money': an investigation by Truthout: 'Recent revelations of hidden money by the International Consortium of Investigative Journalists (ICIJ) have embarrassed governments, large and small, and exposed many rich businesses and individuals. They used places like Lichtenstein, the British Virgin Islands, the Cayman Islands, Switzerland and, of course, Cyprus. Those countries' private banks wanted the money much as their governments wanted the revenue benefits of hidden money inflows. The rich around the world took advantage of those banks' services to launder money with some illegality attached to it, to evade or avoid taxes, to hide business deals from government scrutiny, and so on.

Reasonable estimates, based on ICIJ and other reports, suggest that many trillions of dollars sit in such hidden money accounts. It follows that debates in most countries about rates of taxation are missing the point. Many among the rich long ago found ways to avoid taxes, whatever the rates. They just needed and used that one "loophole" in the tax law that allows them to hide their money (or "offshore" it) in either personal or corporate accounts or both'...

Spanish prosecutors file scores of tax evasion cases based on documents taken from HSBC – Hervé Falciani’s list includes tycoons, ex-soccer players and a suspected doping doctor. 'From real estate moguls and former soccer players, to doctors and decorators, there are 659 Spanish names contained in a database taken from HSBC by former employee Hervé Falciani and given to the Spanish authorities, who have since opened tax investigations into these alleged holders of Swiss bank accounts.

The treasury said it hopes to collect some 260 million euros in back taxes once it settles these cases.

Banco Santander chairman Emilio Botín, along with members of his family, is perhaps the most famous Spaniard who popped up on Falciani’s list. Botín maintained that he never knew that a Swiss account existed because it belonged to his father, who opened it some time during the Spanish Civil War. Nonetheless, he agreed before the High Court to make a 200-million euro payment to the Treasury to settle back taxes and charges against the family were dropped.

According to a case search by EL PAÍS, there are scores of investigations before different courts across the country against people who reportedly appear in Falciani’s database. They include Manuel La Hernández, a prominent businessman; art dealer Miguel Fernández-Braso Fernandez; former soccer player Gustavo Dario Crnko; Dr Eufemiano Fuentes Rodríguez, the sports physician who is facing charges in the anti-doping “Operation Puerto” case; and Anne-Marie Abadie, the owner of an interior decorating firm'.  From El País in English.

'Almost 100% of the companies of the Ibex-35, in particular 91%, are based in tax havens. They are not there for the exotic locations, but because they carry out their operations there and pay less taxes, a much needed advantage in this time of crisis'... begins an indignant article in Gara.

Politics:

'SIGNING ON the local town hall ‘Padrón’ is “absolutely vital” for ex-pats hoping to make a success of their lives in Spain, it was claimed this week.

British Vice-Consul Lloyd Milen described joining the town hall list as “a free insurance policy” because it allowed people to access public services in their local community.

Mr Milen was in Calpe on Tuesday – along with Dutch Consul Eric Durieux and Belgian Consul Dominique Schoofs - for the launch of the Marina Alta town’s campaign to get residents to sign the town census.

The registration campaign is being conducted in English, Dutch, Belgian and German with posters of Uncle Sam under the banner headline: “I Want You”.

Publicity material reminds residents that increasing numbers of people on the Padrón increased the number of public services offered to the community and the economic help received from central government'... From The Round Town News.

Essay:

Let’s make the future our present By Javier Solana, Former High Representative for Common Foreign and Security Policy:

Our future is more Europe, more union, more integration, more collaboration and more solidarity. During such uncertain times as the present ones, doubts or scepticism may arise. However, the position of Spain in the world over the coming years, our progress and development, will be conditioned fundamentally by the type of Europe we are capable of building alongside our partners. This is the only possible option in order to play an influential role in a world which has changed immensely over the past few years and which continues to advance towards a scenario of balances of power.

In this context, Spain clearly needs Europe, but no less than what Europe needs Spain. We are facing up to a crisis, the solution of which is generating tough challenges, but we cannot forget the extraordinary development experienced by our country over the past twenty years, which has been mainly caused by our integration in Europe. Nowadays, Spain is a fundamental partner which has developed strengths on which to support our economic recovery.

Strengths such as the ever-increasing number of Spanish international companies, some of which even occupy positions of global leadership, whereas this was unthinkable just a few years ago, or the personalities within the Spanish civil society which are global benchmarks in many different scopes. The base for our recovery and progress entails continuing to be competitive, becoming more productive, innovative and global. To do so, we must invest in education, entrepreneurship, innovation, and in educating citizens with a completely open and international mentality.

All this shall be achieved with more Europe, of course, but also by internally generating the necessary consensus, uniting forces in favour of the country’s general interests. The union of forces between those companies and leading brands, the benchmarks of society, the Government and the political strengths, within the framework of a strategic public-private alliance, is the key behind us overcoming the current challenges and enabling us to make the future become our present.

The union of forces for obtaining a sustainable economy, which can once again create jobs and opportunities for our younger generation, which allows us to create more international companies and brands, and which facilitates the contribution of solutions and answers for the challenges of a global world. We have the bases for this; therefore, the image of Marca España and our future must be supported and driven by these same strengths. Thus, we have reasons to be optimistic.  Javier Solana 'Let's Make the Future our Present'

Various:

Unsurprisingly, the number of foreigners living in Spain has fallen in the past twelve months, according to figures released by the INE on Monday. These figures are both frightfully exact and, of course, utterly wrong. The first reason, because the INE is a government auditing agency, and the second, because a large number of foreigners living here neglect to inscribe themselves on the town hall registers, the padrón.
What we can tell is that, both the migrant workers and the residential tourists have fallen in numbers: because – variously – there is less work, less work paid in 'black' money, more competition in agriculture from Morocco, the scandal of 'viviendas ilegales', the unwelcome obligations apparent with the World Asset Declaration and the remarkable falling pound.
Here are some figures:
The number of foreigners has fallen from 5,736,258 (January 1st 2012) to 5,520,133 one year later. Romanians remain in first position with 868,635 spread across Spain, followed by Moroccans with 787,013, Britons with 383,093 and Ecuadorians at 262,223. Other Europeans include Italians at 192,147, Germans at 181,320 and the French, 117,497 citizens.
The average age of a Briton resident in Spain is 52 years old (Romanians are 31.5 and Moroccans are a youthful 28.2). There are 724,181 foreigners living in Andalucía, 859,203 in the Comunidad Valenciana and well over a million in Catalonia and just under a million in Madrid.

Curiously, as we note the numbers of foreigners who have left Spain, another formula for their reduction has been largely ignored – naturalization. The Justice Minister Alberto Ruiz-Gallardón has issued a statement on Tuesday to say that 280,000 foreigners have been awarded Spanish citizenship since the beginning of last year and another 120,000 will have had their papers approved (or rejected) by the end of June.

'Spain's science policy needs a U-turn' Nature warns in a recent article that Spain is losing its way in scientific research.  'In 2009, Spanish biochemist Joan Guinovart argued that Spain was wrecking its science “for the cost of six Ronaldos”. The country was about to begin a rush of science budget cuts that have not stopped since. Guinovart, then president of the Confederation of Scientific Societies of Spain (COSCE), meant that the austerity that hurt science so much was a little saving for the overall state's budget: equivalent to the cost of hiring a bunch of football players.

Since then, the spending cuts have increased by several 'Ronaldos', and Spanish science is now in a critical state. The government of Mariano Rajoy is still on time to fulfil its promises to place research and development as a priority, but this requires a U-turn in its science policy.

After a decade of increases in science funding, Spain started to cut its research and development spending in 2010, when Zapatero was in charge. Since then, investment in science has reduced each year and the government has cut its total investment by 39% from the level of 2009. The combination of austerity and recession made the percentage of gross domestic product (GDP) invested in science fall for the first time in 2011, down to 1.33%. In the same year, the number of people devoted to science was 3.1% less than in 2010, a possible sign of a brain drain'...

'...for years soccer has been run disastrously, money has been squandered on exorbitant transfers, there is an ocean of extremely dubious commission payments, and the tax office and other authorities have largely allowed clubs to act with impunity. At present, the total debt of Liga clubs with the tax agency stands at 690 million euros'... Excerpt from an interesting article in El País in English about the 'Sordid life of Spain's soccer clubs'. Since 2004, '19 of the 42 clubs in Spain's top two divisions have gone into receivership'.

From Yahoo! News comes the story of the equine victims of Spain's crisis: 'The southern Spanish region of Andalucía, famed for flamenco and Moorish castles, is also home to a legendary breed of horses that carried conquistadors into battle in the Americas, featured in Hollywood epics and more recently became trophy acquisitions for Spaniards during a giddy economic boom.

On his grassy ranch in the territory's heartland, 73-year-old Francisco Mesa breeds these "Pura Raza Española" — Pure Spanish Breed — horses with a passion that comes from years of pampering the elegant beasts known for their intelligence and affection for humans. He enters a muddy pen and is immediately surrounded by mares and foals who nuzzle him with tenderness, oblivious of their almost certain fate: the slaughterhouse'...

 The Spanish Economy

By Andrew Brociner

What’s Wrong with this Picture?, Part II

Last time, we looked back at the Spanish growth rate and found that while the country experienced a substantial rise in its standard of living, its GDP per capita ratio was just average for the EU. And second, while it experienced higher growth, its rate of productivity remained low. This week, we attempt to answer these questions as they are anomalous for a healthy growth situation.

To answer the first question, we turn to something known in economics as the wealth effect, whereby people feel richer simply by having assets, such as a house, which goes up in value. This is certainly what happened in Spain during the boom. The “effect” is that, without any tangible change in their income, people feel wealthier and so spend more. There is, therefore, a rise in consumption. But, in Spain, people went further. People who felt wealthy took out loans to fuel ever more consumption domestically and of imports. Also, they took out mortgages, often of 100% or even more of the value of the property and so became heavily indebted. Then, as we know, the boom when bust, growth fell, unemployment rose, and people now have a very hard time paying back their loans. People in Spain got very indebted during those boom years as we can see in the graph below.

A country’s indebtedness can be seen by its current account and, as shown in the chart, Spaniards kept on consuming and increasing their debt right to the end of the boom, with a current account deficit which was -10% of GDP in 2007 and much the same in 2008. Spain relied increasingly on borrowing from foreigners to go on consuming foreign goods during the boom and so Spain’s position as a net debtor with the rest of the world rose significantly during those years.

So that is how Spain was able to enjoy such a rise in its standard of living. It was not in the healthy and more usual way of enjoying a high GDP per capita, but by borrowing heavily.

And now we turn to the second question, about labour productivity. Recall that the population in Spain grew, between 1999 and 2007, from 40 million to 46 million, as can be seen on the graph below, which is a huge increase in such a short space of time.

By comparison, Spain’s population during the 90s remained almost constant, around 39 million for the entire decade, and given the weak fertility rate in Spain, we can infer that almost all of that significant increase in the population came from immigration. We can see that this is the case in the next graph.

So, fuelling the growth rate in Spain was the massive rise in immigration, rather than growth in labour productivity. It was, in fact, thanks to foreigners that growth rose in Spain.

So, the answer to these two questions does not bode well for future growth in Spain. First, Spain has to pay down its debt and this could take quite some time. And second, it has to make great improvements in its productivity if it is to have sustainable growth in the future. This is all the more so if it is to rely on the one glimmer of hope to pull itself out of its current economic crisis, which is through exports – the only component of its GDP which shows any sign of life. It cannot count any more either on another housing boom, of mammoth proportions, as it experienced in the last decade, with the concomitant, massive immigration to fuel a sector which was responsible for its growth. It must, if it is to be competitive to increase exports, raise its labour productivity and lower its labour costs.

Furthermore, productivity will also suffer due to the massive unemployment among the young. This is a result, as we have seen, of Spain’s large discrepancy between protected and unprotected jobs, with inevitably, the young bearing the burden of lay-offs as they have the unprotected jobs. Also in this area, Spain must do more to dismantle this discrepancy in its labour market. It so happens that the young contribute relatively more to a country’s productivity, through innovation, than the old. Therefore, now that so many young Spaniards are leaving Spain to seek work elsewhere, they are, in effect, removing much of the productivity with them. The effect, therefore, of this emigration will have significant consequences for productivity and therefore the growth prospects in the long run in Spain.   

Letters

Below is reported yet another ill thought-out piece of really stupid legislation that we understand may be coming our way!!

(From Think Spain) 'RESTRICTIONS on letting property to holidaymakers in a bid to appease the hotel industry could cost around 150,000 people their livelihood.

The government is about to approve legislation which will mean private property let to tourists will no longer be covered by the State Law of Urban Rentals (LAU), and will instead be subject to regional government law or industry regulations.

This potentially opens the door to thousands, if not millions of holiday properties which are currently legal ceasing to be so...

...The central government says the omnipresence and proliferation of private villas and apartments being let – largely over the internet – is creating 'intrusion' and 'disproportionate competition' for the 'traditional tourism industry'...

How can a country be governed with justice when a small lobby (hotels) can exercise such knee-jerk power over a whole economy?

This area - at least Denia, Jávea & Teulada-Moraira - does not have a lot of hotels - one could guess at possibly 600 rooms and, with a few exceptions, they are all in the *** (3) star category. A rough guess shows more than 4000 villas in the area (accommodating, say, 20,000 people every week of high season).

Please also bear in mind:-

a) People who choose a villa for their holidays do NOT go to hotels. Such people seek their own pool and privacy for their families. Spain is very famous for its villas.  Apart from package tours in certain well-defined areas it is not famous for its hotels and certainly not in this area.

b) Most people do not want to spend 2-3 weeks in an hotel !  Nor could they afford the extras for food/drink.

d) If they cannot find a villa in Spain they will go to another country.

e) The damage to our increasingly excellent catering/restaurant business will be simply terrible.

f) The whole economy will suffer (bookings for 2013 are already very bad) and in particular hire car businesses will suffer along with the supermarkets and other retail outlets.  Unemployment will increase.

g) The property market will be hit further - there are already enough people leaving Spain right now and others are giving up residency prior to leaving.  I would suggest this has caused enough damage already?

This rental issue is to collect tax from those who rent out their properties -

NOT TO STOP TOURISTS COMING HERE ALTOGETHER !!!

Total madness.

Not clever.  No, not at all clever.

Deak

There we are – I knew the Hacienda would/should have been ahead of the game.....

Xbox 720 to be revealed on 21 May said the Microsoft Press Release.....

(Microsoft has finally announced the date on which its next generation games console will be unveiled. A launch event at the Xbox campus in May will be followed by more revelations at the E3 games conference in June)

Well what fun..... We Ex-pats resident in Spain have been playing the 720 game for quite a few weeks now. For those that have been on Planet Mars – that’s the number of the Overseas Asset Declaration form we all must fill out if we’ve been prudent enough to salt away a house or an asset in the UK worth more than 40 Grand in GBPs. You won’t be reading this Business over Tapas unless that will be the case I imagine.

I thought I’d got it sorted weeks ago, but apparently the form (which one cannot do oneself) defeats even the most battle hardened Spanish Gestor! The one I used to use when I was  in “white business" threw the towel at me and suggested I forgot about it all, as most of his Spanish pals with a bob or two in Andorra or Switzerland seem to have decided to do.

So I found another Gestor – who proved herself to be a “detail man” - I am just writing this to get away for a moment from listing the 50 or so individual elements of a bond, with name of each investment fund – its name – its business identity verified by Interpol – Its VAT number – its inside leg measurement – its verbal sewage discharge license...

Ah Well... 

Aled

Finally:

The BBC has the last word this week, with a story and a video about a small yet perfectly expressed protest in a bank in Spain.