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Business Over Tapas (25th  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]  - ***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.

Editorial:

According to a report made by Bloomberg on 'the most efficient health-care countries in the world', Spain comes in fifth place worldwide and first place in Europe! The list shows Hong Kong leading, followed by Singapore, Japan, Israel and then Spain. The study is made from a balance on Efficiency Score (68.3), Life Expectancy (82.3), Health Care Cost (as a percentage of GDP per capita) (10.4%) and finally Health Care Cost per Capita ($3,027). Sweden comes 10th, The UK comes 14th and Germany 30th on the Bloomberg table.  The USA is 46th! From our own experience over the past few years, the standard and dedication of Spanish public health-care is very high, although the funding is now beginning to falter. (Some analysis from an American viewpoint here).

Housing:

'The housing market appears to be entering a new phase after several years of depression. According to the latest statistics from the General Council of Notaries, based on actual transactions, the number of home sales in February rose by 39.8%, to 26,602 transactions, compared to the same month of 2013. Prices also increased, by 0.6%...'. From Kyero.

The Telegraph enthuses about cave houses... '...Spain’s cave country is the unspoilt Altiplano de Granada – a mountainous region of northern Andalusia, between the Sierra Nevada and the Sierra de Castril. In the market towns of Guadix, Baza and Huescar, there are entire districts of caves; in some of the surrounding villages, they are the only form of housing...'. More here

Europe's highest building at 200m tall (says El Mundo) is for sale. The peculiar Benidorm twin towers, the InTempo, finally completed, sort of, with detailed work still needed on some interiors and surrounds, with 120 of the 269 apartments sold and described by its promoters as 'the Benidorm cathedral of the XXI Century', needs a buyer, fast. The promoters must find someone with a spare 90 million euros to pay off the debt on the building. Negotiations would need to be three-way, between the promoters, the Sareb 'bad bank' and those 120 key-holders. The building has cost Olga Urbana, 120m euros.

' "Either pay up or hit the street. We are not an NGO. We are investors. We have invested millions and we intend to make money." This was the response given to the Ivima young social housing tenants by Encasa Cibeles in Madrid, an investment company controlled by Goldman Sachs and Azora that the Comunidad de Madrid had undersold almost 3,000 VPO (council-owned dwellings) for 201 million euros...'. The homes, according to Diagonal Global, were worth 300m. Each apartment cost the vulture fund 67,000€ and they are on offer, to the residents, for around 150,000€. That's business.

The Junta de Andalucía is considering changing part of its housing law, the LOUA, in the weeks to come, to help 'regularise' thousands of homes belonging to foreign nationals in the Valle del Almanzora, where 13,000 homes are considered illegal and thus, at a smaller or greater risk, under threat of demolition. Many of these homes, populated by elderly retired Brits, have no water or electricity and the reputation of Andalucía in the British home press is taking a beating. El País reports Monday on this situation in an article called 'Una regularización masiva en el aire'.
A problem has been homes built on plots were the land was indivisible, and thus the plots themselves were illegal. The Junta has been unwilling to address this issue but may be prepared to become more flexible, says the report. A follow-up story in Ideal suggests that a new organ, the Consejo Andaluz de Ordenación del Territorio, will be re-thinking the whole mess and will introduce new planning laws for the region within two years. The Secretary for the Environment and Planning, María Jesús Serrano, nevertheless insists that she will 'not tolerate unsustainable urban development that lowers the quality of our territory, and is the breeding ground for corrupt practices'.

On the same subject, local paper Actualidad Almanzora points out that Ms Serrano's office moves slowly: 'Only 75 of the nearly 13,000 illegal dwellings that are accounted for in Almería have been regularised following the decree approved by the Junta de Andalucía better than two years ago … Indeed, across the entire region, where there are an estimated 300,000 un-regularised homes, only 177 have been legalised. “At this rate, it'll take thousands of years to fix the problem”, says Gerardo Vásquez, lawyer for the AUAN...'.

And then... From Málaga Hoy comes this sorry story:  A couple have been sent to prison for a year for refusing to demolish an illegal house. The 64 year old home-owner claims that he had no intention of violating the law and that there are many similar houses on the parcelación in Castiblanco de los Arroyos in the province of Seville. The area is in the process of being regularised. His 59 year old wife has also been jailed. The couple have no previous convictions.

A reader from Portugal sends information on that country's plan to expropriate all private-owned coastal property on July 1st this year with the dominio publico maritimo law- 54/2005. More on an alarming blog here.

Population:

The population of Spain is in retreat, with 400,000 less people living here than one year ago. The current total (according to information taken from the municipal 'padrón') stands at around 46,725,000, a drop from the high figure of 2012 (47,270,000). More at El Huff Post.

'The number of Brits living in Spain fell by over a fifth in 2013 as the exodus of Spain's foreign residents brought the country's total population down for the second year in a row, data released on Tuesday shows  ... The total number of Brits on Spain's town hall registers was 385,179 on January 1st 2013, but that population had plummeted to 297,229 a year later. And while the actual number of UK citizens who make Spain their home could be much higher — the British Embassy in Madrid predicts as many as 800,000 Brits could live in Spain for all or part of the year — the new INE figures reflect a clear trend: foreigners are saying goodbye to Spain...'. From The Local. Other numbers from the INE (based, as always, on the padrón): Germans, down 23.6%, Brits 22.8% and Colombians 18.6%. The only foreign presence that has grown in the past year are the Chinese, now at 185,000.

A similar story with the triumphant sub-heading 'British expatriates are deserting Spain in droves, according to new figures from Spain's national statistics institute' is on Wednesday's front page of The Telegraph (with a photograph of Mojácar, where Business over Tapas is based, blissfully happy), ending with: Have you had problems selling up in Spain? Tell us your story by emailing [email protected]

The Times runs a paywall-protected article titled 'End of the dream as one in four ex-pats says adiós to Spain' and The Mirror and others more or less repeats the Telegraph story...

(A friend comments): 'Spain is no longer the cheap and easy place it used to be. The authorities at all levels are cracking down, mainly to raise revenue since most of them are broke, through tax hikes, more rigorous application of traffic rules - less for safety many believe than to impose stiff fines, etc.  And by and large the services are below normal EU standards - that extends to household ones, even to schooling. Often they cost more than in other EU countries. At the same time the waste on great projects which have not been subject to market analysis is terrific - and the corruption is manifest: understated in the last Transparency International report'. The threats of demolition, expropriation, frustrated business experiences, Byzantine bureaucratic barriers and the iniquitous 'world asset declaration' are all making their presence felt for those who came to Spain in search of a quiet and peaceful life.

The Moncloa Website (official Government website in English here) says that 'The number of foreign citizens registered with the Spanish Social Security system stood at 1,535,899 in March. This figure represents an increase of 15,201 (or 1%) (on February) and is the largest increase since June 2012 (1.19%)...'. Of these, 607,940 are from EU countries.

Tourism:

Once again, foreign tourism is up. Figures released from the Ministry of Industry, Energy and Tourism say that 10.1m foreigners visited Spain in the first three months of 2014, an increase of 7.2% over 2013 – or 677,000 extra tourists! (From ABC).

Finance:

The South China Morning Post is bullish about Spain. After reciting the situation over the past six years, the paper says: '...But there are some tentative signs of recovery. Spain's economy has just edged back into positive growth territory, following twin recessions in 2008-2009 and 2011-2013. Gross domestic product expanded by 0.2 per cent in the fourth quarter last year, its second successive period of expansion.

Spain's industrial sector is staging a comeback. Industrial production rose at its fastest pace in more than three years in February, with output up 2.8 percentage points from a year earlier. Business optimism has perked up. In March, Spanish manufacturing activity expanded at its fastest rate in four years, while the services sector grew for its fifth successive month. This followed a long period of business contraction...'.

'Across Spain, the message is hard to miss in office windows showcasing offers: banks want to lend to small companies again. After gorging on property lending in the run-up to a financial crisis, banks are looking to revive high-margin loans to businesses as the economy emerges from a prolonged slump and bond-trading income slumps. But intense competition among lenders only just pulling back from a turf war on deposit rates risks taking the shine off the turnaround, companies and analysts warn...'. From The Chicago Tribune.
Good news from The Local: 'Spain's households increased their net wealth by more than 25 percent in 2013 with net financial assets shooting up above €1 trillion for the first time since before the country's economic crisis. The overall assets of Spain's homes soared to hit a record €1.89 trillion in 2013 or 9.1 percent more than a year earlier, figures released by Bank of Spain on Monday show. Once outstanding debts are factored in, that pot of savings was €1.04 trillion, the first time the trillion-euro threshold had been breached since 2006, or before Spain's economic crisis kicked off...'.

An article in Público appeared last week to say that many young people would be sharing cars over the past Easter holidays. Indeed, why pay for a bus when you can ride in someone's car? Cue an indignant spokesperson from the Federación Nacional Empresarial de Transporte en Autobús, the bus owners federation, who says that over a million young people are habitually riding in each others' cars, thanks to the Blablacar or Amovens car-sharing portals, instead of coughing up for a bus-ticket. In the tradition of those who build Betamax or eight-track tape machines, the federación is seeking ways to stop this disgraceful competition. The press also found time to run another item on a similar topic, this time regarding taxis and unfair competition from Uber ('Uber is your private driver in more than 50 cities and 20 countries. An entirely new and modern way to travel is at your fingertips') once again illustrating 'protectionism' dressed up as being 'in the public interest'.

Corruption:

Corruption by the numbers, says El Huff Post, with 1,700 investigations, 500 people charged and only 20 in prison. The digest here.

But maybe, just maybe, some of these accusations are political fog, designed to embarrass or incapacitate the opposition. Guerra Eterna looks at the massive 'Edu Fraud' in Andalucía that caught everyone's attention last week (and hasn't been mentioned since).

Meanwhile, the Prosecutor has extended the period before the Gürtel Investigation comes to trial. By a year. It's already been five! Público has the story.

Immunity for many in Spain. El País in English explains: '...Around 10,000 politicians, magistrates and other public officials enjoy what is known as aforamiento, giving them special protection before the law that their counterparts in other developed countries would be envious of. For example, if a politician in the United States or most of Europe is accused of breaking the law, they face trial under the same terms and conditions as any other person. But in Spain, an aforado can only be tried by Spain’s Supreme Court or by the highest court in their region...'.

European Elections:

The two main rivals are negotiating a televised debate on the elections. Arias Cañete (PP) and Elena Valenciano (PSOE) could see a head-to-head on the TV and perhaps a second debate thrown open to all (?) the contenders.

Podemos, we can, is one of the new minor parties for the elections. There's nothing 'minor' about their campaign video however (interesting subtitles)!

An interesting site called Guerra Eterna deals with racism in modern politics and the European Elections. Here it attacks the 'market of xenophobia in Europe' and features a British far-right party called UKIP.

Results in 7th June 2009 gave the PP 23 MEPs, the PSOE 21 MEPs, the CpE nationalist coalition 2 MEPs, the Izquierda (IU) 2 MEPs, and one each to the UPyD and the Verdes. A further 29 parties contended. The two main parties took 6.67m and 6.14m votes respectively.

In 2013, 41 parties from Spain are expected to throw their hat into the ring, although the full details will only be published later on Thursday in the State Bulletin BOE, with final approval appearing on April 29th. The judge Elpidio José Silva apparently one of the candidates...   El Diario has this to say: 'The two main parties, PP and PSOE, accustomed to more than 80% of the votes in nearly all elections, have begun to seriously lower their expectations in the face of the upcoming European elections on May 25. From internal data, both formations take it for granted that whoever reaches six million votes in the election will be the clear winner. However, neither of the two parties can be positive that they can reach that level of support.

If either side wins the elections with less than six million votes, it would be the most Pyrrhic election victory since 1989 and, clearly, would mean that bipartisanship is finished in Spain'.

Politics:

As the Basque People and the Galicians, watching the antics of the Catalonians, consider the dubious virtues of their own independence (a large pro-independence rally was held on Agerri Aguna: Basque Day, in Pamplona this Sunday), a study at the constitutionalist newspaper ABC suggests that independence in Euskadi would cost each and every Basque some 5,000€ per annum thanks to being outside the European Union. They would undergo a fall in exports (expect around 20% drop, according to experts consulted by the newspaper). These putative independent regions would also expect to lose the European currency, apparently... Meanwhile, we read that 'The president of the Federation of the Catalan Socialist Party (PSC) in Gerona and nine other PSC politicians in the city have resigned from their posts...', in protest at the national PSOE's policies (their sister party) regarding Catalonia's political status (story at El País in English), which adds ' ...The group of PSC politicians has said they will not be leaving the party, but are standing down because they are in favour of the drive by regional premier Artur Mas for a referendum on independence to be held in the region this year...'.

The Catalonian leader Artur Mas sent out a letter to the region's funcionarios on the Festival of San Jordi (Saint George's Day, Wednesday) saying in part that '2014 will be the year in which the people of Catalonia decide our collective future, democratically, peacefully and freely'.

The Spanish Health Minister Ana Mato thinks that the TV channels are running their main evening news and prime-time entertainment too late for civilised behaviour and wants them to be brought forward by 30mins or an hour so that we can all get to bed at 11.00pm. 

White Elephants:

All the money wasted on the AVE, the high-speed train that brought fame, notoriety and giant budgets to the appropriate councillors, planners and constructors. While a number of AVE trains criss-cross the country (each and every passenger subsidised by the taxpayer), other lines have run into crisis and have been shelved, mothballed or re-considered. Our own Almería - Murcia line, reduced to one track as a savings measure, is now mothballed, only a third built and with the tunnels completed now bricked shut. However, the Seville – Málaga line is the one receiving most attention. 280 million euros wasted so far on a project budgeted for 1,300 million euros. Work on the line cancelled since 2011. Large areas of arable land expropriated and lying fallow. A loan from the Central European Bank for 180m euros prematurely cancelled. El Confidencial has the story.

Various:

'Spain is the most pro-gay country in the world, according to a new ‘global morality’ survey.

Just 6% of the country’s population thinks that being gay is immoral, while 55% described it as ‘morally acceptable’, and 38% deemed it ‘not a moral issue’. These results make Spain the most accepting of homosexuality of all 40 countries that took part in the global morality poll carried out by Pew Research Centre...'. From The Olive Press (How things have changed in the last forty years!)

It is a popular custom to give a famous dead person a street to honour him or her by. The Madrid Town Hall, for example, wishes to remember the recently deceased Columbian writer Gabriel García Márquez, he of 'One Hundred Years of Solitude'. There are two usual ways, either wrest a street name away from someone who has fallen out of favour (Franco and his generals for example), or build a new street. Unfortunately, things are slow at the moment, and, along with García Márquez, another 18 of the illustrious dead are waiting, having been pencilled in for a similar honour. (suggested by a report in El País).

INTERNATIONAL CONFERENCE ON IRISH STUDIES University of Deusto, Bilbao, Basque Country, Spain 29-31 May, 2014. There will be a focus on the life and work of Irish writer, celebrating her connections with Bilbao, in particular, the Basque Country and Spain.

She based one of her most well known novels "Mary Lavelle" in Portugalete, near Bilbao.

There will also be a launch of the new translation in Spanish of Kate O´Brien´s biography of Teresa of Avila to coincide with the 500th anniversary of her birth (1515-2015). Information: here.

Iberian Nature Forum. If it flies, howls, grows, swims or bites, discuss it here. A Fascinating site!

The Spanish Economy

By Andrew Brociner

Deflation

There has been some talk recently about low inflation in the euro zone and about Draghi's next move to lower interest rates to new historic lows and make monetary policy more accommodating. But, is low inflation something we should worry about? The answer is most definitely, yes.

The ECB has a price target of around 2% and while inflation above this has its obvious consequences which the central bank wants to avoid, it is also true that an inflation rate lower than this poses its problems as well.

For instance, when prices fall, people begin to put off spending, much the reverse of what happens in periods of high inflation. As consumption is already very low, as we have seen in the case of Spain, this phenomenon puts off consumption even more into the future, making a recovery even less likely to occur.

It is already clear that with high unemployment, a rise in the elderly population who spend less, and a falling real wage and real pensions, consumption, which has fallen dramatically since the boom, is staying at a very low level. This latest phenomenon worsens this situation by postponing spending and keeping consumption at a low level.

Real wages in Spain are falling. While they rose for some time after the boom, this was due to low skill workers, like in construction, who lost their jobs, while those with higher skills tended more to retain theirs. But now the labour market has been stable recently, and this is no longer taking place; what we see now, rather, is older, better paid workers retiring and younger, lesser paid workers taking their place. This is what is now lowering the average real wage in Spain. The problem is that this effect can continue for many years causing real wages to continue declining.

Japan has been in a very prolonged situation of deflation and a comparison with this country  is now opportune. We can see on the chart below how real wages have been falling there for years:


There are many comparisons which can be made between some European countries, such as Spain and Italy, and Japan. We have already seen the ageing population and how there will be less and less contributors to the health and pension funds. There is also the pattern of consumption as the population ages, and spending falls. There is now deflation, which is contributing to lower consumption and this is creating more difficulties in getting a recovery under way. There is the fall in real wages, which also contributes to lowering demand. There is the contracting credit by banks, likewise contributing to the lack of demand. And there is also a lower demand for credit by an ageing population. There is the fertility rate, which is very low and far below the replacement rate, which will create further strains on the future pension and welfare systems. There is also the absence of immigration, with falling populations, again contributing to strain the pension and welfare systems. And there is also a rising and unsustainable debt. Japanese debt/GDP is currently 243% and continues to rise. In Spain, it is now around 100% and rising.

The following graph shows the legacy of deflation, in which GDP in Japan has been declining for decades:

Spain has all the ingredients to get stuck in the same kind of deflation with low demand and low growth as in Japan. All of the demographic elements are there as well. There has been no successful remedy to the problems in Japan, as expansionary monetary policies have not worked; nor have depreciations, which while temporarily raising the price of imports, have not had lasting effects on inflation, nor have they improved the trade balance by decreasing the demand for higher priced imports and increasing the demand for more competitive exports. In fact, the trade deficit has worsened. That there is no known remedy to this type of problem is worrisome, to say the least. Spain could be caught in the same sort of situation for a very long time.

Letters

Dear Coastal Resident,

We are making a short film that documents some of the current problems faced by foreign residents in the Costa Blanca. Max Holleran is a sociologist from New York University working on a project that examines coastal property development in Spain from 1990-2008; Samuel Holleran is a designer and film-maker who has conducted a number of multimedia projects on urban issues in Brooklyn, New York where he works for a design non-profit.

We are interested in briefly interviewing coastal residents about their experiences with the Spanish property bubble. We are particularly interested in learning about foreign residents who have had problems with the urbanization status of their land, as well as home-owners who live in areas where the value of their home has been affected by the current crisis. We will be in the Costa Blanca from May 12-20 and would very much like to speak with as many people as possible. We would be extremely grateful if you contact Max Holleran in order to participate: [email protected] or mobile +34 630 27 4299.

Thanks very much for your help!

Max

'Britons leaving Spain: Gerard Couzens, a journalist representing the Daily Mail would specifically like to speak to individuals who are returning or have returned to the UK because of problems with an illegal property to complete a news story on the various reasons behind the apparent British exodus from Spain.

Gerard can be contacted on Gerard Couzens [email protected]

A letter to the AUN from a British couple from the Valle del Almanzora now returning to the UK:

'My health has suffered lately, and the constant stress is taking its toll, hence our reason for the great escape. In my area of Spain the only contented ex-pats are those who rent (very cheaply on the black market) or are on the fiddle, most of my peer group would leave tomorrow if they could.

Main reasons are as you describe, i.e. how much more can they squeeze out of us, and the more honest we are, the more they seem to want to make us suffer.

May I take this opportunity to thank you for all your support and hard work for the cause, without you, AUAN, SOHA etc, things would be much worse.

BH

Finally:

Despite some 70,000 bars closing their doors across Spain in the past four years, there are still more bars per inhabitant than any other country in the European Union. We have 279,343 establishments apparently, and (of course) Andalucía has the very highest rate of bars per customer in Spain - including the place across the street from the Business over Tapas office. Video from Antena 3.

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