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Business Over Tapas (05th April 2014)

By Lenox Napier and Andrew Brociner

miércoles 22 de octubre de 2014, 11:21h

A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners:  with Lenox Napier and Andrew Brociner - For subscriptions and other information about this site, go to businessovertapas.com - email: [email protected]  

Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access.

Editorial:

As the enraged ecologists try to sue the panel of four judges who ruled the Carboneras hotel El Algarrobico to be built on private, buildable land, the main story remains elsewhere, with the 300,000 homes stretched across Andalucía who must anxiously wait under the axe of the Environment and Territorial Planning Council at the Junta de Andalucía. And wait some more. There's no High Court judges to help. Sorry.

Housing:

'Spanish banks burdened with as much as 40 billion euros of repossessed real estate are under increasing pressure to sell as prices fall and investors return to the market.

Property sales will increase as Spain’s economy recovers from a five-year economic slump and banks seek to reduce the costs of holding the properties, said Fernando Acuña, founder of Aura Real Estate Experts, a company that advises investors on real estate purchases from Spanish banks. The firm’s estimate of banks’ bad assets is more than double the amount disclosed by lenders so far and includes about 400,000 homes, plots of land and commercial real estate...'. From Bloomberg Business Week.

More from Bloomberg Business Week:  'Merlin Properties SA plans to become Spain’s largest real estate investment trust by selling shares to the public by the summer, a person with knowledge of the matter said. Merlin, a Madrid-based company managed by former directors of RREEF, will be more than double the size of Hispania Activos Inmobiliarios SA (HIS), an externally managed Spanish REIT that listed its shares earlier this month, said the person, who asked not to be named because the information is private. Hispania has a market value of about 530 million euros...'.

'The Ministry of Agriculture, Food, and the Environment (Magrama) has opened up a period of public consultation on detailed regulations required by the latest version of Spain’s Coastal Law, passed last May.

Spain’s controversial Ley de Costas, or Coastal Law, originally introduced in 1988, nationalised the entire coastline with the aim of protecting it for the public good. Reforms were introduced last year, amongst other things making it easier to refurbish homes in areas affected by the law...'. From Mark Stüklin's Spanish Property Insight.

The Olive Press continues with its useful 'Caveat Emptor, part 2: A short guide to buying a home in Spain'

'The full scope of Spain's evictions epidemic has been revealed in figures from the General Council of the Judiciary which show that 67,189 people lost their homes in 2013.
An average of 184 Spanish people were evicted from their homes every day last year after failing to keep up with their mortgage payments or falling foul of the Tenancies Act.
It is the first time that eviction figures from the Statistics Section of the Judiciary have been published, according to Spanish daily El País...'.From The Local.

Around a third of all the municipalities across Andalucía are working within the rules on 'regularizing' 'illegal homes', according to Europa Press. The Consejería de Medio Ambiente y Ordenación del Territorio de la Junta de Andalucía, to give its full title, is the organ which is in charge of granting homes their legality, which it has been famously loathe to do, while now encouraging a framework to give solution to some of these homes. The main opposition party in the Junta, the Partido Popular, meanwhile talks of 'less chatter, more action', with 'solutions' rather than 'an out-of-date planning system'.

The Junta's María Jesús Serrano is currently asking town halls for a list of 'irregular buildings', including those in the countryside or in small outlying hamlets – some of which may be legally assimilated. Homes which can't be legalised, nor yet should be demolished, must – says Secretary Serrano – be studied on a case-by-case basis 'to find the best solution available'. Following, of course, the law at all times: there won't be any amnesty insists Ms Serrano.  

The article adds: '...For the PP, the Consejería is “dazzled” with the current regulations, when "none of these laws have been of any use" either to the owners who bought in good faith "those who are denied both electricity and water" or to the families "anguished" by sentences of demolition on their homes who are waiting for a “real” solution...'.

A cheerful story at The Economic Voice: 'Record numbers of people hoping to purchase a property in Spain visited the Spain Buying Guide stand at the “A Place in the Sun Live!” exhibition at the weekend, confirming the market is firmly back on track and potential buyers thankfully are doing their homework.

Richard Way, Editor at The Overseas Guides Company said: “Our stand received more enquiries at the London event than at any other show we have exhibited at, and those people we spoke to seemed genuinely serious about buying their dream Spanish home...'.

Tourism:

'Foreign tourism continues to hit new highs in Spain. The nearly 6.2 million visitors from abroad who came to vacation in the country during the first two months of the year spent 6.084 billion euros, which is a 9.1% increase on the same period in 2013. The figure represents the highest seen for January and February over the last 10 years, according to data released on Thursday by the Industry, Energy and Tourism Ministry...'. Good news from El País in English (although it notes that individual daily spending by tourists fell by 2.2% to an average of 108€). One wonders how much of this 'tourist spend' actually stays in the countries of origin, between agencies, airlines, insurance and so on?

The no-doubt salubrious pastime known in Spanish as 'el pubcrawling' (sic) has been declared 'legal' in the merrie town of Calvià (Mallorca) by the ruling PP with the PSOE abstaining (I shouldn't be surprised to read that they were probably too pissed to vote). The 'practice' (says El Mundo primly) has been going on for years in Magaluf but is now reaching epidemic proportions.

It appears to be an organised 'group thing' in the Mallorca version of the activity, with a guide taking the drunken crew of tourists from one approved site to the next, money changing hands and no questions asked. From now, they'll need a licence to lead 'una excursión etílica', have a tax number and an alta in the seguridad social. And insurance, apparently. The newspaper says: 'In the pubcrawling, a guide leads dozens of young people to various bars in the streets of leisure (Sorry, Google translations can be fun sometimes). Tourists come in droves, consume quickly, and leave the premises in search of another place. In exchange, they pay a set amount to whosoever organizes the alcoholic excursion and then pay derisory prices for each drink consumed...'.

Talking of drinking, El Mundo runs an article today (Thursday) asking whether to raise the drinking age to 21! The PP representative in a mixed commission on drug use has made the suggestion. A survey by the newspaper shows 64% in favour! Children start 'drinking' (what, boozing or an occasional glass of tinto de verano?) at 13.7 years old. Gulp!

Finance:

'Spain reported Friday it had barely missed its deficit-cutting target for 2013, hailing the result as a significant achievement in a year of job-wrecking recession.

Spain's public deficit fell to the equivalent of 6.62% of total economic output in 2013 from 6.84 % in 2012, just failing to meet a 6.5% target, Budget Minister Cristóbal Montoro told a news conference...'. From Global Post.

From El País in English: 'Official unemployment figures fell 0.35% in March, representing the sixth consecutive month of decline. The total official number of jobless people in Spain now stands at 4,795,866.

Meanwhile, 83,984 people were added to the Social Security rolls, representing a monthly increase of 0.52%. This figure is taken to represent the formal workforce...'. At the same time, figures show that unemployment rose in Andalucía...

An opinion piece from the same paper: 'Prices are falling. Salaries are falling. Loans are falling. The real estate sector is yet to touch bottom and consumer spending is still down. Two labour reforms later, unemployment is still above 25 percent; four years after austerity measures were rolled out, Spain’s public debt is nearly 100 percent of GDP and the deficit remains one of the biggest in all of Europe.

None of that bad news is stopping the government from arguing that a recovery is on its way, with forecasts getting better and better. The latest figure to be put out there is growth of 1.5 percent for 2014. “There is a clear improvement in market forecasts, and all of the early indicators are good,” government sources explained in Athens, ahead of the informal Eurogroup and Ecofin meetings between economy ministers from the EU and euro zone. “Growth will be between 1 and 1.5 percent in 2014.”...'. El País in English.

'The Ministers of Finance of Spain and other 10 EU States have reached a political agreement to set up the tax on financial transactions – known as the Tobin Tax – which could enter into force in 2015, according to a comment from the Minister of the Economy Luis de Guindos...'. From El Mundo.     'A Tobin tax, suggested by Nobel Laureate economist James Tobin, was originally defined as a tax on all spot conversions of one currency into another...'. From Wikipedia.

More generalised information on ideas for a version of a 'European Union financial transaction tax' here. Spain, Germany, France, Italy, Portugal, Greece, Slovenia, Austria, Belgium, Estonia and Slovakia are said to have agreed.

'The Government is about to announce the creation of another 'Bad Bank', this one to rescue nine toll roads that are now in ruin. The reason for their failure is simple enough – they were built when and where they shouldn't have been. As a result, the motor-traffic, which was always very low, has fallen a further 52% in the first two months of 2014 in relation to the same period of the previous year, according to the latest data provided by the Ministry of Public Works. Known popularly as the 'Sareb of the motorways', the fund will be constituted after having agreed a reduction of 50% off the 4,600 million euros which, in its day, the banks lent to dealers...'. From El Diario.

The relieved speculators are all household names:  Acciona, ACS, Comsa, FCC, Ferrovial, OHL, Sacyr and Sando, plus a few second-line banks such as Bankia and the CAM. In short, it appears that we (the tax-payer) are buying them off the contrite and embarrassed owners so, they could be become toll-free autovias, owned by the State. However, to help with Spain's national debt, there's talk of making all motorways toll roads...

An unacknowledged secret is out: - 'Poverty has trapped tens of thousands of British pensioners in Spain. The hard-hitting study claims that around 20,000 ex-pats are desperate to return home, but finding it difficult to relocate. Isolation from friends and family, lack of suitable care homes, and the increasing cost of living are the main reasons elderly ex-pats want to relocate. And the ground-breaking survey claims that once they do finally return home it will put a huge strain on the UK authorities...'. From The Olive Press.

Corruption:

'The EU has opened an official investigation to see what’s happened to over €200 million of EU funds that seem to have “vanished” in Andalucía. The corruption investigation looks at how the Junta de Andalucía has been spending the EU funds, which were supposed to go on labour policies and reduction of workplace accidents. One angle of the investigation is looking into whether the Junta de Andalucía has flouted workplace rules for its own workers by not implementing the correct health and safety measures, despite having received vast amounts of EU money to implement these measures...'. From David Jackson. More here.

Tax:

Here is Hacienda's web-page for your taxes. In English. It says: 'From this platform you will be able to access the Tax Agency's electronic services and process formalities 24 hours a day, 365 days a year'. The days of filling these things out with a pen have passed.

From DMS Consulting (in various languages) here's: 'ANNUAL STATEMENT 720 (Declaration of assets abroad) in 2013 TO DECLARE OR NOT TO DECLARE? That is the question. We continue fighting in Brussels to end with this obligation!'.

Politics:

The new leader of the Andalucian Partido Popular, Juan Manuel Moreno Bonilla, discussing the Andaluz economy, said on Wednesday '..."I have not seen anything in these two years, any initiative that has been able to improve the lives of the Andalucians”. He further accused the left-wing government of “paralysis”, of having the social, educational and health services in a state of collapse and of lacking "political energy" and "ideas". He reproached the Government from approving more decrees that bills and to be “not only silent over the drama of unemployment, but also deaf”...'. Story at El Ideal.

While Gibraltar is back in the news following a recent incursion into Gibraltarian waters by a Spanish research ship and a Guardia Civil vessel... and comments in the press from the public joyously talk of 'British pirates' (the usual slur against the Gibraltarians), the Andalucian Government is now talking some sense. El Público reports that the Junta de Andalucía wants the Spanish Government to negociate with the British Foreign Office and with the Gibraltarian authorities to find ways to remove the hours-long queues across the frontier and in to the colony.

Various:

How much did the King know about the 23-F coup before the event? Quite a bit, perhaps. An interesting article at David Jackson.

'The head of Europe's key wind energy association has described the Spanish government's policy towards wind power as "quite disastrous" and "nothing to do with rational policy".

The comments from European Wind Energy Association (EWEA) chief executive Thomas Becker in Recharge magazine came in the lead-up to a four-day conference being run by EWEA in Barcelona, beginning (last) Monday... ...Wind energy provided Spain with 21 percent of its total power in 2013, making it the country's major power source.

But in 2013, the Spanish Government introduced what it called urgent measures to slim down an accumulated €26 billion ($36 million) gap between energy production costs and what end consumers pay for power...'. From The Local (H/T to John)

A report about marble energy from The Local: 'Spain could be a world leader in solar power' If this charismatic German is successful, giant marbles could soon be powering our planet. Now he hopes to go into production. Meet Barcelona-based architect and inventor Andre Broessel. A few years ago Andre Broessel had an idea he believes could revolutionize the energy sector. "I was watching my daughter put a marble in an egg cup,” he told The Local recently. "It was a Sunday and I saw the focal points moving on the sphere, and a project was born."  The end result is a giant see-through sphere hanging in a bracket which squeezes energy out of the sun. It's known as the Rawlemon. "The sphere collects sunlight and converts it into energy," he said.

'Fifa has banned Barcelona soccer club from signing any new squad members in the next two transfer windows as punishment for breaching regulations relating to the transfer and registration of players under the age of 18, Europa Press reported Wednesday.

As a result the club, which also received a fine of 450,000 Swiss francs (€370,000), will not be able to hire any new players in the next summer or winter transfer markets and will only be free to enrol new recruits from June 2015...'. From El País in English (Good, maybe somebody else can win a game for once!)

'The National Archeology Museum (MAN) is like a chest of assorted treasures that lays out the evolution of the Iberian peninsula from prehistoric times to almost the present, revealing all kinds of anecdotes and curiosities along the way.

The museum has been undergoing renovation work for the past six years. Now it is finally complete, and a week before its scheduled reopening, the press was allowed in to get a preview of the new facilities...'. From El País in English. Madrid's museum, located next to the Plaza de Colón on the Calle Serrano, re-opened this Tuesday. Pictures here.

Did you know that you can report crimes with the Policia Nacional in English on 902 102 112. Please share widely. Or go to www.policia.es/denunweb/den_tel_in.html

A list of 221 rude words in Spanish (for occasional use only). Found at GQ. The average Spaniard uses a vocabulary of around 1000 words in their everyday speech, says the article, so here are a few new ones... Well, I'll be discombobulated!

The Spanish Economy

By Andrew Brociner

More on the Current Economic Situation

As we have seen in the previous issues, a recovery cannot be sustained at present given the lack of internal demand. Unemployment remains high and consumer spending is very low. In addition, we can see in the next chart that lending by banks has been falling since the end of the boom and is currently contracting by something like 6% a year.

Among the elderly, real pensions too are falling. We have already looked at the demographic issues and saw how there are fewer people contributing to a pension system with more elderly people in it and how low fertility rates and emigration are exacerbating this problem. Pension reforms, in an effort to reduce the cost of pensions, involve increasingly restrictive parameter changes which translate into less spending power by pensioners. They are also increasingly relied upon to help the younger generation who are out of work.

And real wages in Spain are also declining. This is denoted by the blue line on the graph below.

All of this leads to the conclusion that there are no sources of demand in Spain.

Not surprisingly, industrial output, which has fallen considerably since the boom, has not picked up at all, as can be seen in the following graph:

This shows us that there is really no sign of any recovery, despite what some might be trying to proclaim.

So, with unemployment remaining very high, real wages and real pensions declining and lending by banks decreasing, there is nowhere demand is coming from. It is no wonder that consumption is low, as is industrial output. There is, in short, no recovery in sight.

The only element which could brighten the picture is the increase in exports, but as we have said, this is not enough to compensate for the lack of internal demand.

Letters

(From BoT 61): “Any ex-pat who derives an income from UK property or a pension, but is not resident in the UK for tax purposes, could be affected.”

Good morning, I am sure you know, but that might be misleading for some readers. All UK pensions, other than Government employee pensions (police, military etc which are taxable only in UK), must be declared in Spain and not in UK.

Some think they can choose where to pay that of course is not so.

Regards, John

Finally:

They've made this jolly song about Marbella, with local personalities including the Mayoress dancing along to Pharell Williams' song 'Happy'. Very original. Well done. Oh, wait. Here's another for Almería, and another with Pamplona, and the kids from Seville... and even one from Slovenia.

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