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Weekly Report

Business Over Tapas

By Lenox Napier and Andrew Brociner (Enviado por José Antonio Sierra)

viernes 18 de marzo de 2016, 01:41h

18MAR-16.- 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. Business over Tapas and its writers are not responsible for unauthorised copying or other improper use of this material.

Editorial:

In the event of fresh elections (on June 26th), the Partido Popular says it will field exactly the same lists as it did in December (why change something so perfect?). Pedro Sánchez from the PSOE begins to be keen on the prospect of fresh elections, under the impression that Podemos is falling in popularity (and that their voters would flock to the socialists). Ciudadanos meanwhile is threatening to leave its perch under the wing of the PSOE if the socialists suggest negotiating with the secessionists in Catalonia. Podemos could improve its showing – only if it can bring in the Izquierda Unida (925,000 votes) into the fold. The ‘Yes we can’ people are meanwhile under investigation from the Ministry of the Interior, convinced that the left-wing group is controlled from Venezuela (which is, on the face of it, rather unlikely). Now it seems that 80% of Spaniards reckon on a new general election for June: at a cost of 160 million euros to the tax-payer. Will anything change? The latest poll from Metroscopia suggests that there could be some appreciable movement, with Ciudadanos rising in popular support at the expense of Podemos. But in these days of manipulation and dishonest reporting, who trusts the polls?

Housing:

According to El País, homes increased in price by 3.6% in 2015. More details here.

UK Spanish property buyers ponder nationality over Brexit vote. An interesting article discusses the possible repercussions at Opp.Today.

Tourism:

The Mallorca city of Calvià, which includes the popular resorts of Magaluf, Paguera and others, is doing well in the tourist business, where forty hotels have recently been granted building licences by the town hall for improvements worth 240 million euros.

‘Travel over the Easter period has been thrown into jeopardy after a rail strike was called for March 23. The strike, on the day that Spaniards traditionally depart for their Easter holiday, is in protest against rail firms Renfe and Adif breaking a promise to hire more workers’. Item from The Olive Press.

Finance:

A site called The Spain Report has an article titled: ‘Brussels Tells Spain to Strangle Regional Government Spending to Meet Deficit Targets’. Begins: ‘The European Commission says ... that "Spain should step up efforts" to make its budget compliant with deficit targets agreed upon with Brussels under Excessive Deficit Procedure rules in 2013. Spain's deficit for 2015 was likely to come in a 4.8% of GDP, the European Commissioner for Economic and Financial Affairs Pierre Moscovici said in a new recommendation, above the 4.2% for 2015 agreed upon in 2013, a difference of 0.6 percentage points...’.

‘...Mortgage borrowers in Spain, and their banks, are acutely affected by the rate cuts that European Central Bank President Mr. Draghi, rolled out on Thursday. That is because 96% of mortgages in Spain, a far higher percentage than in other European countries, are variable-rate loans that fluctuate with the rise and fall of the euro interbank offered rate.

The 12-month Euribor, as the rate is known, plummeted from 2.2% in mid-2011 into negative territory last month. It is now around -0.03%...’. From The Wall Street Journal.

If Spain were to move to 100% renewable energy, then the savings, say Monitor Deloitte, reported in El Diario here, would be over 40% to the State. Since Spain currently spends 34,000 million euros a year in importing oil, this is an important consideration.

‘Saudi Arabia Turns to Nightmare for Spanish Consortium - Taxpayer, get ready to open your wallet’. A good read from Wolf Street about the failing AVE project in the desert (get this: the rails are regularly covered in blown sand). An excerpt: ‘...When, in October 2011, the Saudi Railways Organization (SRO) announced its decision to award the bid to build a high-speed rail line between Medina and Mecca to a Saudi-Spanish consortium, it was like a dream come true for the Spanish infrastructure and rail companies involved. Decades of patient lobbying of the House of Saud by Spain’s former King Juan Carlos I had finally paid off. Never before had Spanish companies won a tender for a project so big, so prestigious and so lucrative on the Arabian peninsula. The project’s total contract value is worth €6.74 billion. But the dream is already souring...’.

‘The Madrid City Council closed 2015 with a debt of 4,767 million euros, representing a decrease of 19.6% from a year earlier, when it stood at 5,936 million. In the second half of the year, a period that corresponds almost to the management of Manuela Carmena in front of the City Hall (she was proclaimed mayoress in mid-June), the fall was 15.4%, which translates into a reduction of debt of 870 million euros...’. From El Boletín.

Politics:

Before the call for fresh elections, we read of two last efforts – one from the PSOE and Podemos to thrash things out and another from the PP, still not quite prepared to drop their insistence on Rajoy as the candidate, to talk with the PSOE and Ciudadanos.

‘Political Spam, or how the Parties Manipulate the Social Media’. You’ve seen it on Facebook perhaps, or on Twitter, o in your emails. Spurious stories, one-sided ‘shock’ reports, strange unknown sources. All appear to be politically driven, and many are set up purposefully by the political parties themselves. The originators of these ‘bots*’ (as they are infamously called) can easily send out thousands of messages to support their political or mercenary view. El Mundo reports with numerous examples. (*‘An Internet bot, or web robot ... is a software application that runs automated tasks (scripts) over the Internet. Typically, bots perform tasks that are both simple and structurally repetitive, at a much higher rate than would be possible for a human alone...’. Wiki).

‘Spain’s solar association Unión Española Fotovoltaica (UNEF) reports a majority of members in the Spanish parliament have signed an agreement removing a controversial Royal Decree against self-consumption of solar energy, also known as the ‘sun tax.’ The agreement has been made within 100 days of a new government being formed...’. The story comes from Clean Technica.

Any ex-deputy, on submitting a written note to the effect that they don’t receive any remunerative salary, can get an ‘indemnisation’ which can be as much as 2.813,87€ for each year worked in Parliament. In this spirit, Ana Mato, the outgoing Health Minister now no longer in politics, has been given 53,500€ of public funds. Story from 20 Minutos.

‘Pablo Iglesias has sacked Sergio Pascual, the Podemos organisation secretary, highlighting the party’s internal crisis. The Podemos leader considered that ‘the latest events show deficient management’ which had seriously damaged the party at a ‘delicate moment’ during the process of talks...’. From Typically Spanish.

Susana Díaz, president of the Junta de Andalucía, remains the darling of many of the powerful people within the PSOE. Will she attempt to take over from Pedro Sánchez? In an analysis, El Mundo wonders if she might not be the party candidate in the June elections...

Pablo Iglesias from Podemos is calling for the resignation of the acting Minister for the Interior Jorge Fernández Díaz, when the papers or ‘proofs’ showing illegal funding for the party are shown to be spurious inventions, says El Diario here (see our editorial above). Meanwhile, the same Minister has sent police investigators to Venezuela in the hope of turning up some scandal against the party. Público has the story.

A PP councillor from Palafolls, a town in Catalonia, recently said that Ada Colau, mayoress of Barcelona, ‘...in a serious society, would be mopping floors’. Ms Colau answered with ‘in a healthy society, to be a mayoress and to mop floors is perfectly compatible – being a machista and a councillor: not so much’. Here’s Europa Press with the story.

The UGT has a new General Secretary following the retirement of Cándido Méndez. This is Josep Maria (Pepe) Álvarez. In an interview at El Diario, he says that ‘our relationship with the PSOE will depend on their policies and ideas’.

Forty per cent of all ministers, on leaving politics, have passed to the boards of the private sector – major Spanish or international companies – since democracy returned to Spain following the death of Franco. In numbers, that’s 71 of the 176 since 1977, says El Diario here. Endesa, Repsol and Gas Natural are the companies which have had the most ex-ministers under their wings...

Corruption:

Valencia remains the eye of the PP storm. With revelations of the party taking a 3% commission on anything that went through their hands in Valencia. The police inquiry, known as Operación Taula, is centred on illegal finance and money laundering. The EU is reported as being ‘very worried’ about the state of its funding to the region and has asked the Government in Madrid for explanations. El País here and here.

Rita Barberá, now a senator, but previously the Mayoress of Valencia, seems to be bombproof. All of her ex-colleagues in Valencia are under investigation, but Rita, while agreeing ‘to talk to the judge about I don’t know what’, has been able to hold things at bay. El Mundo notes how other populares are surprised to see how she has the complete protection of Mariano Rajoy. This ongoing story is also covered by The Local which says ‘...The former Valencia mayor told a news conference on Tuesday the allegations against her were "unfounded" and "completely false" and she had not committed any crime...’. The Partido Popular has nevertheless (and finally) decided to ‘launch an internal probe’ into Rita’s activities (El País in English). Meanwhile, one of her erstwhile councillors from the Valencia Town Hall was recorded on tape as saying ‘the PP (in Valencia) has loads of money from commissions which it needs to launder’.

El Mundo says on Wednesday that both ex-presidents of the Junta de Andalucía Manuel Chaves and José Antonio Griñán have refused to answer questions in front of the judge who is investigating the ERE scandal in Seville. Both claim that they ‘never made, or condoned any illegality while in office’. Outside the courthouse, demonstrators were shouting ‘where’s the bread for so much chorizo?’(‘chorizo’ means both sausage and crook).

Also in Andalucía, the EU has shut down any fresh funding to the region thanks to the perceived corruption there. Negocios.com reports.

Catalonia:

The Spanish army is sending reinforcements to Catalonia, including a hundred armoured cars, says La Vanguardia here.

Courts:

To date, twelve Andalusian businessmen have been reprieved from their part in the ERE investigation, since their misdeeds have been prescribed due to the agonising length of the investigation. It looks like a lot more can expect the same absolution. Story at El Mundo.

Brexit:

‘Britons living in Europe who feel betrayed by Government’s failure to reinstate their voting rights ahead of the referendum have launched legal action to win the right to participate.

If successful, the High Court proceedings could see the In/Out vote, scheduled for June 23, delayed while up to two million extra names are added to the register of voters...’. An interesting development from The Telegraph.

Why British expats shouldn't worry if the UK leaves the EU. An article from The Local. (Lenox doesn’t agree with the ‘back to earlier status’ reasoning - it’s just wishful thinking) See his Spanish Shilling here.

...and why they should worry: The Guardian reports from the UK about ‘The non-EU workers who’ll be deported for earning less than £35,000’. Spain would certainly retaliate if any Spaniard was deported for not earning enough.

Gibraltar is asking for guarantees from Westminster for diplomatic protection against Spain in the event of a ‘Brexit’. The Peñon also would seek to maintain a ‘fluid circulation of goods and people into the colony, says El Diario.

Various:

A useful up-to-date site about Spain. How much is the Gross Domestic Product... and the public debt? Economía de España in Country Meters here.

Edward Snowden is asked by a Spanish journalist about administrative spying on our emails, surfing, telephones and messages here in Spain (like everywhere else, evidently). Full 80m interview (mainly) in English from Ana Pastor at La Sexta here.

‘The squandering of millions of euros on Spanish Public Television: 126m have been spent on films that have not been broadcast. The 2014 audit conducted by the General Comptroller of the State Administration of Radiotelevisión Española reveals that the corporation holds 283 foreign films that cost 126.4 million euros and which have not yet been broadcast. These include 65 films made prior to 2009. Furthermore, there’s a stock of old Spanish films, for which an outlay of 15.5 million was made, that will "probably not be issued in the coming years" for not being of interest to the public...’. Story at Vozpópuli.

A report in El Mundo says that around 60% of Andalusians won't be able to afford even a one week holiday this year (as against 45% in the rest of Spain). But, what does poverty mean, asks the ‘Red Andaluza de Lucha contra la Pobreza’ (EAPN-A)? It means not going to the cinema (54%), or to have a few beers with friends. According to the EAPN-A, this is 'the invisible poverty' that affects so many people these days. A last statistic: 34% of the andaluces can't even enjoy spending a few euros on themselves once a week!

Which comunidades owe the most money? A useful graphic from Vozpopuli here.

‘British residents registering on the Padrón could be eligible for free or subsidised access to sports and leisure facilities, benefits and even reduced community charges and local taxes, say town hall representatives in Andalucía. They could also qualify for access to health and social care, and help towns to obtain funds for essential public services such as police, health centres and schools...’. From Gov.UK.

‘Spain remains the most popular destination for Brits looking to buy a property abroad, and has recently been identified as the healthiest place to live in Europe...’. The Radio Times reports here.

‘A guide to Spanish citizenship and permanent residence. After you have lived in Spain for five years you can apply for permanent residence, and after 10 years you can apply for Spanish nationality – although there are exemptions, which allow some people to apply even sooner for long-term residence in Spain. There are some differences between the two types of Spanish permanent residency...’. From Expatica.

The ‘progres’, (the ‘left wing luvvies’ in British vernacular) like to use masculine and feminine versions of the same word to show ‘solidarity’ with womenfolk. They say amigos y amigas, or trabajadores y trabajadoras etc. The ‘Real Academia de la Lengua’ has felt itself obliged to come out in public with the news that repeating a word in its two genders is ‘contrived and unnecessary’. This followed a silly call to change the name of Parliament to the ‘Congreso de los Diputados y Diputadas’ by Podemos. Story at La Información.

The report that appeared recently in El País (mentioned in BoT last week) about the conditions suffered by workers in the Almería plastic farms has not gone down well with the local press. La Voz de Almería quotes the local agricultural association ‘Coag’ which appears to be more upset by the ‘bad press’ from a Spanish source and the lack of a contrasting opinion (!)... Story and recording here.

‘Spain has shown the same interest in science as, let’s say, Britain has for bullfighting’. An oncologist made this remark in an interview with El Correos. Dr Mariano Barbacid says he hopes that the next government has ‘someone with the brains to realise that, with R&D, this country is going nowhere’. A joke on Twitter has a similar feel: ‘'Spain doesn't do experiments', says Rajoy. And he is right - all of our scientists have moved abroad’.

‘Thousands protest in Spain in favour of bullfighting traditions. The rally in Valencia against local authority bans included a leading ‘torero’ who said that ‘this is our life, it’s a tradition’...’. The story at The Guardian here.

See Spain

‘Recipe: How to make a classic Spanish tortilla de patatas. The tortilla de patatas is Spain's unofficial national dish. The simple yet hugely satisfying potato omelette is the staple of practically every Spanish menu, from the hole in the wall bars to the fanciest of restaurants...’. Story (or recipe) at The Local. Mmmm, good!

Spain’s biggest waterfall occurs with the River Nervión on the frontier between Álava and Burgos with a drop of 222 metres. Video and story here.

The Housing Sector: More on the Stock of New Houses

by Andrew Brociner

We have been looking at the housing sector for some issues and in the last one, we began to consider the topic of the new empty houses left in Spain. We saw that there are still many new and empty constructions, especially concentrated in a few areas. The many new dwellings are being absorbed only very slowly. That there are so many left eight years after the boom ended means that whatever demand might be beginning, there is still a considerable supply.

It is clear that this stock of empty houses is a result of the building frenzy that went on during the boom, with a lack of demand for them in the years following. The avidity and short-sightedness has left us with a glut of empty houses, which, eight years on, is still being absorbed only very slowly. But now, there seems to be another factor which has emerged and does not bode well for the stock of empty houses, if and when a rise in demand does take place. This factor is that while over the last few years, sales of second-hand houses have risen, the sale of new houses have very much decreased.


From 2008 to 2012, there was no significant difference between old and new in terms of numbers sold, but the difference since 2013 has become significant and increasingly divergent.

If we look at the sales of new houses by province, we can see that they all show a similar pattern of decreasing sales.

Here we show some of the provinces with the largest number of new empty houses. This change has been significant, with declines in Murcia and Valencia of over 80% and in Barcelona, Almería and Alicante of over 75%. And sales of new houses in Murcia, Valencia and Almería are very small in absolute numbers as well.

This lack of demand for the new houses built, together with the oversupply of new constructions is in part holding back the increase in prices. Since the demand for new houses has decreased considerably lately, it will take longer to absorb the new empty houses built after the boom. Building so many new houses after the boom was clearly not a good strategy, not only for the obvious reason that demand for housing dried up in general, but now also for the reason that there is a change in preference away from new houses, only adding to this situation and leaving so many of these new constructions empty for a very long period of time.

Letters

Gibraltar: I see that the Gibraltarians are angry over Brexit. However, does anyone remember that in 1982, the EU all stood beside the UK over the issue of The Rock (Spain was not yet in the EU, and had no support beyond that of Argentina). So if we leave the EU, who will be left to care if we had to face another invasion? I wonder how many of the Brexiters , who were so very British in their support of the Falklanders, will remember the dead who we left there. Please, Brexiters, remember that we have a duty to support the Gibraltarians, and we cannot throw away our EU alliances. Think of how you would feel if history attempted to repeat itself!

Bill

Home rentals: A friend of ours has just received a badly written mail-shot from her lawyer who is trying to tout for some business on the back of the new legislation. I don’t know if this is a diktat from national government or whether the Junta de Andalucía have gold-plated the more draconian legislation.

It starts off looking fairly reasonable and then came this part:

“A contract document must be signed by all parties, showing the details of the property, the owner, the number of days of occupancy and the cost of the accommodation, as well as the ID of the people with a copy of their passports or ID cards. It will be a simple document of just 1 or 2 pages that the owner must keep on file for a period of 1 year.

Likewise, the owner must notify the Guardia Civil of the occupation of the property with each new client. The owner must provide a copy of the signed contract and the passports/ID cards of the guests.”

In other words stupid, unworkable bureaucracy that will put most ‘small’ people out of business. Assuming most owners are like our friend and based in the UK/Northern Europe, they will already have to pay for cleaners, key-holders and a gestor to do their non-resident tax return (my friends does her own online) and now they will have to employ someone to set up the licence (this lawyer will happily do it for a large fee) and faff about with the endless ongoing paperwork/rental contracts and copies of passports.

Basically, this is anti business and designed to stop people renting out their properties – estate agents will have to change their “good rental income” sales pitch because nobody in their right mind would want to get involved with that lot. My friend’s apartment is of a very high standard and actually complies with the physical parts of the new legislation but the extra paperwork is the tipping point for her. She is going to sell her apartment at a loss, due to the state of the market, so if anyone reading this thinks buying an apartment in Spain is a good investment, think again.

This is going to be unviable for the vast majority of people and from what I can see, the only upside of the whole thing is the end of the horrid 1950s style gas fires on wheels. My friend will now have to tell all her guests who have been staying at her apartment for years that they will have to find somewhere else to go on holiday. Will they stay in a hotel instead? Will they hell, no UK TV for a start and far too inflexible.

Jane (Via The Olive Press)

Finally:

Some nice guitar from Paco de Lucia with José

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