State deficit 5.1% in 2010
According to the Ministry of Finance, the State deficit was 5.1% at the end of 2010, a little better than the Government prediction of 5.9%. The main reason for the improvement was a 10% increase in tax income, resulting from the higher VAT tax following the 40% increase in the rate.
Expenditure fell 2%, or 175,513 million euros.
The Government stresses the figures are preliminary; the confirmed figures will be presented at the end of February.
“Nationalisation” of Saving Banks
The Government is preparing a plan to save the ailing Saving Banks. Those, which do not have the minimum capital of 8%, compared with their assets, may seek private capital. However, if they do not have the minimum capital by September, the Government has the right to inject funds in exchange for participation.
Tax inspectors disagree with Government
State tax inspectors have publicly warned that it will be “very difficult” to comply with the aims of tax income anticipated by the Government for 2011; an increase in tax income of 8,000 million euros is very optimistic. The Association representing State Tax Inspectors estimates an additional reduction in public expenditure, 4 times sharper than in 2020, will be needed to balance the state budget.
Banks deposits increase – loans decrease
Spanish banks and saving banks received 56,657 million euros in deposits between November 2009 and November 2010, that is 155 million every day, but loans approved by them increased by only 17,172 million in the same period. A completely different picture from the period November 2006 to November 2007, when the deposits increased by 170,057 million and loans amounted to 282,112 million euros.
5.9% increase in overnight stays in hotels
Compared with 2009 Spanish hotels registered an increase of 5.9% in overnight stays during 2011. Foreign tourists accounted for 8.1%; Spaniards only 2.9%. However, hotel room’s prices declined 1.9%. Hotels had an income of 38 euros per available room, and 69.5 euros per occupied room.
Petrol at record price
A litre of petrol now costs 1.285 euros, the highest since July 2008 when a barrel of oil was 147.5 US dollars. Now the price per barrel is only 92.5$. The association of petrol stations explains the increase in prices with the currency situation (the lower Euro value against the US dollar) the taxes (50% of petrol prices) and lower sales.
Will Wealth Tax return?
The Government is increasing existing taxes and inventing new ones. In spite of the 2008 election program, when the governing PSOE declared Wealth Tax as “obsolete” and being a tax “on the income of middle class families” the foundation Alternativas, close to the Government, has proposed the reintroduction of the tax, which was suspended in 2008.
Government trying to sell stock of dwellings
Minister for Development, Jose Blanco, in meetings with the banks and property developers has been trying to find ways to eliminate the immense stock of unsold dwellings threatening the financial fabric of Spain. Property Developers and real estate agents tried to find buyers for the surplus, but failed. Then the banks and savings banks tried, through their own sales outfits. Except for a few sales to their own employees, they too failed.
Now Minister Blanco will try to find foreign investors willing to believe in the benefits of buying over-priced, low-quality dwellings, by praising the government guarantees.
Northern Europe – beware!
Price of dwellings up 659%
The price of new dwellings in Spain increased 659% over the past 25 years; 4 times that of inflation, which increased 161%. The property crisis over the past 3 years has reduced the speculation (prices had increased 791% between 1985 and 2007).
Building plots for 2,000 euros
Olmeda de la Cuesta (Cuenca) town hall is auctioning off building plots for as little as 2,000 euros. The reason for this good offer is that the village (situated 160 kilometres from Madrid) has a diminishing population; and only 15 elderly people. Plots owned by people not living in the village anymore, who have ceded their land to the municipality, will be cleaned up, the old ruins removed and then the plots offered for sale at prices just covering the cost of the cleaning.
For more information, contact Olmeda de la Cuesta, details on Google.
New dwellings increasing stock
Whilst the Minister for Development is pondering how to dump unsold dwellings on foreign buyers, property developers are continuing to add new unsold dwellings to the stock of more than 1 million. Over the past 12 months, 34,112 more unsold dwellings have been added to the existing mountain; 44% are in the Valencia Region, where 94 municipalities have approved the construction of another 870,734 dwellings (Almoradi 46,227; Cabanes 52,732; Benissa 6,700; and Belgida, which has 700 inhabitants, has approved the construction of 3,553 new dwellings …….
Labour reform almost without effect
The labour reform adopted by the Government in spring last year, that took effect in June, had a very limited result. In the 6 months before the reform commenced, 55,000 employees lost their job every month. In the 6 months following the reform, it was 50,000 a month.
Parliament approves pension cuts for retirees…….
The Congress (Lower Chamber) has approved the recommendations of a Commission on Extension of the Age of Retirement from 65 to 67. The Government is still hoping to get the “social agents”, meaning employers and trade unions, to agree to the recommendations.
…….but not for Ex-Presidents of Government.
The very same Congress refused a proposal from IU (leftist Izquerda Unida) establishing limits to the lifelong and succulent pensions for Ex-Presidents of the Government. IU proposed to cut the pension to two years, and make it incompatible with private income.
There are two ex-presidents alive, Felipe Gonzalez from PSOE and Jose Maria Aznar from PP, both of whom recently accepted posts on the Boards of big private companies, with salaries of 200,000 euros annually.
Both PSOE and PP voted against the proposal.
Si (
No(
