Editorial:
The cartoon in the paper has Spain's president looking out at the view and seeing some leaves twitching just above the bottom of his window. 'Ah', says Mariano Rajoy, 'the first green shoots of the recovery'. The following picture sees his old boss, dressed as a Roman senator, walking into the room. He's wearing a toga and a laurel wreath on his head – the green leaves of the first picture. 'What did you just say?' asks the heroic José Maria Aznar (it's no secret, he's desperate to help). 'Nothing, nothing', says Rajoy.
Despite continuing bad news in the property front, there are better signs coming at the moment in tourism, jobs and the economy. Spain makes money in the summer months. 'The first, hesitant, green shoots of recovery?' - perhaps it's a stretch, but some of the bankers and politicians are beginning to say so.
Housing:
From Your Money: - 'British buyers are 'rekindling their love affair' with Spanish property as mortgage enquiries for the country have picked up, overtaking France for the first time in a year. According to overseas mortgage specialists, Conti, Spain accounted for 44% of all enquiries compared to 37% for France.
The report said buyers are being attracted to Spanish properties by the cheap and easy access from the UK, good rental opportunities and the warm climate. Swiss bank UBS predicted that Spanish properties have another 8% to go before bottoming out'...
'The consumption of cement in Spain has fallen by 24% in the first five months of 2013, which means a million and a half tons less than in the same period from 2012. As reported by the cement agency 'Oficemen', in May the consumption was also down at over 20%, standing at 1,027,597 tons'... The agency suggests that the Government should fix the secondary road network and thus help the cement industry rebound. The story is in El Mundo.
'There won't be 'any green shoots of recovery' in the Spanish property market, at least until 2016, perhaps not even until 2018 thanks to the massive imbalance between supply and demand'... Taken from El Confidencial. The words come from Fernando Rodríguez y Rodríguez de Acuña, President of the consultancy often referred to in property news stories 'RR de Acuña y Asociados'. He envisions 'a complicated future for the Spanish real estate market over the next five years'. Of course, these comments are directed towards the average Spanish market for homes – bank-held apartment blocks on the edges of major cities, or large undersold urbanisations, and are not necessarily descriptive of one-off homes for the slightly eccentric foreign market.
'The postponement of a planned sale of a Spanish property portfolio has been taken as a sign that banks in the country are still unwilling to lower real estate values further, despite calls to do so. La Caixa is believed to have put off selling 12,000 homes due to pricing issues, two sources close to the deal told Reuters. The bank was hoping to agree €1.5 billion (£1.3 billion approximately) for the portfolio, but buyers were unwilling.
Banks such as La Caixa have already had to make huge write downs on their distressed assets, which they were lumbered with following the 2008 real estate crash. While the creation of the bad bank was hoped to absorb all those financial institutions unable to cope in the new environment, freeing up healthier banks to sell devalued properties at big discounts, many are still struggling. This is partly due to the selling of individual properties, with portfolio sales still rare'... (From Property Showrooms)
Avaaz and Greenpeace have joined up to create a petition to ask the European Union to block Spain's new 'Ley de Costas', the coastal law, which relaxes rules on building near or on the nation's coastline. You can sign here if you wish...
'The regional government of Andalucía is set to temporarily seize dozens of properties. The Junta de Andalucía says the homes are, themselves, at risk of being repossessed by Spanish banks because the owners have fallen behind with their mortgage payments.
The Junta says it will then pay the banks rent for the property it has seized'... From the BBC, plus three minute video.
Confusion about holiday lets examined at IFAonline: - 'The reform of the Spanish Tenancy Act, commonly known as 'LAU', which is now in force across the whole of Spain, has done little to clear up uncertainty. Recent reforms affecting holiday home lettings have produced conflicting advice and confusion among Spanish home owners as to how they need to comply when letting out their property, and indeed if they can let them out at all, according to Will Besga, a Mallorcan-based lawyer'...
Finance:
Mariano Rajoy arrived in Brussels yesterday with proposals backed by all parties in the Spanish parliament except for the IU (the united left coalition).
As El País in English noted: 'Specifically, the 10-point document calls on the European Central Bank to inject funds in the economies of member states, free up credit for small- and medium-sized businesses and the self-employed, and to approve an effective plan to generate employment among youths. Spain’s jobless rate stands at 27 percent, and 56 percent among young people'.
'The government will save some 37.7 billion euros over the next three years under its restructuring of public administrations, which includes the mergers and elimination of 57 public bodies and organizations, Deputy Prime Minister Soraya Sáenz de Santamaría said Friday.
Most of the cost-cutting measures, which were approved on Friday by the Cabinet, will be passed on to taxpayers, she said.
The Popular Party (PP) government is calling the figures “conservative estimates” but said that they involve a spectacular amount of savings — projected to be about four percent of GDP. Under the plan approved by the Cabinet there will be no layoffs, the deputy prime minister said'... From El Páis in English. More at El Huff Post.
The Bank of Spain forecasts that the country will come out of the recession during the third quarter of this year. From El Mundo last week: - 'The Governor, Luis María Linde, joins the positive expectations of the Government although the Minister of Hacienda, Cristóbal Montoro, is even more optimistic, estimating that the recession would be over by the end of the second quarter.
However, Linde says, actual economic growth will not be seen before the third or forth quarter, as already anticipated by the Minister of Economy, Luis de Guindos'...
'Clean-up efforts have given Spain’s banking system the resilience to cope with any new provisioning needs it may face this year and next, Central Bank Governor Luis Maria Linde said on Thursday last week.
Spain last year requested lenders set aside more than 80 billion euros in provisions to cover hefty losses from real estate investments made during a decade-long property boom that crashed in 2008.
Thanks to that capital cushion as well as a “massive drop” in property-related risks, “our banking system has the capacity to cope with provisioning needs that could arise in 2013 and also in 2014,” Linde said'... From Euronews.
From El Mundo: Spain's Social Security swelled by 32,115 foreign contributors in May, an increase of 2% over April, with the current number of immigrants registered at 1,651,390, according to the Ministry of Employment and Social Security.
According to a report in La Información: - 'The net fiscal balance of immigrants in Spain represents 0.54% of GDP, which is about 5.5 billion euros for the public coffers, according to the International Migration Outlook 2013 published last Thursday by the OECD.
The report explains that the fiscal impact of immigration in Spain, i.e. the difference between the contributions via taxes and contributions to Social Security for these people and the expenditure on public services, social benefits and pensions, yields a positive result that represents more than half a point of Spain's GDP'...
'The percentage of young people aged 15 to 29 who are neither studying nor working continues to grow in Spain, and is among the highest rates of developed countries, with a rate of 24.4%; that's to say, almost two million young people'... (From El País)
Tourism:
And what were they reading in the German Bild am Sonntag this Sunday? According to a distraught El Mundo, it seems that lager louts don't only come out of the UK: - 'The Germans speak of Mallorca as "The 17th State", in reference to the 16 Länder that make up the German territory. The weather information of the island appears daily in the newspapers and the name of Mallorca, the Spanish place name most known to the Germans, also evokes the idea of fun for the young, a family paradise for holidays with the children, and a delightful leisure-spot for the elderly. At least so far. The newspaper Bild am Sonntag published a devastating report on Sunday about what it considers as the terminal decline of the island and concludes that the economic crisis is burying the charm of this holiday destination. 'Mallorcas dunkler Sommer' - 'The dark summer of Mallorca', is the title'... Prostitutes, fights and purse snatching; criminal bands and who knows what! Around four million Germans visit Mallorca each year and there is a sizeable residential population as well. Like The Sun in the UK (see last week's BoT), criticism of Spain in a newspaper like Bild am Sonntag with a circulation of 4.4 million and a readership of 12 million can only do harm to Spain's reputation as a safe tourist destination.
A total of 19.8 million international tourists visited Spain up to the end of May, which is 3.9% more compared to the same period in 2012, according a study released last week by the Ministry of Tourism.
The Department stated that the number of arrivals in the cumulative period is the highest since 2008, Spain's best year for tourism, and noted that this increase is mainly due to the impulse of markets like the Nordic countries (+ 13.8%) and France (+ 7.5%).
The United Kingdom, the main market for Spain, registered a rise of 4.4% between January and May; with Germany, the second-largest, similarly increased by 4.3% in the same period (more at agenttravel.es).
Corruption:
(A reader sent me this one): - Spain, the world's largest black market (a larger version, with graphs, from Intereconomía.com)...
'Trafficking in drugs, prostitution or piracy. Spain is a paradise for all kinds of illegal activities, according to an international study conducted by the consulting firm Havocscope.
According to Havocscope, in Spain, we trickle through our fingers some 2,000 euros per inhabitant, including children and the elderly, on various black market deals making us the country with the highest black market spending by number of inhabitants.
In illegal activities there are none to match us: the United States spend around 1,500 euros per person per year, while in Mexico they barely spend 1,000 euros on illegal stuff; and in China, it's just about 150 euros per head.
In addition, in absolute terms, we are the World's fourth largest black market. During 2012 drug trafficking, counterfeiting, piracy and prostitution accounted for a whopping 123,000 million euros in Spain, i.e. approximately 10% of GDP.
Politics:
The President of the Junta de Andalucía, José Antonio Griñán, surprised his supporters on Wednesday when he announced that he would not 'seek re-election' in the 2015 Andalucian regional elections. He also said that he thought two terms was enough (his predecessor, Manuel Chaves, enjoyed eighteen years at the helm of the autonomy before 'being kicked upstairs' by José Luis Rodríguez Zapatero). His possible successor is Susana Díaz. The PSOE-A will hold its primaries in July. Griñán's reasons for leaving could be – at least seen through PP eyes – his ongoing difficulties with the ERE corruption case. Andalucía has always been the main centre of the PSOE's success since the arrival of la democracia in Spain. Final thought – will Alfredo Pérez Rubalcaba, the besieged opposition leader in Madrid, become encouraged to resign as secretary of the PSOE?
A media campaign appears to be going on, aimed at the high 21% IVA charged on culture – films, concerts, books and music, with many stories talking of considerable drops in audiences across Spain. One typical story from the Noticias de Navarra blames the high rate on the closing of over 1000 cinemas across Spain, the loss of 3,500 jobs and the drop in ticket sales of 9%.
Hacienda came out last week with news that the Princess Cristina had sold a number of properties and neglected to pay tax on them. Then came the news that it was, um, a mistake and that her NIE number had been misread. But by whom? Neither the notaries nor ordinary Hacienda staffers were prepared to take the blame for any – whoops – mistake, and now the Minister for Hacienda, Cristóbal Montoro, is in the hot seat with an estimated 61% of Spaniards disbelieving his evasions. Now the excuse for the thirteen slips has been described by Hacienda as 'coincidental errors'.
Not that many people believe anything any more, after the Anti-Corruption State Prosecutor let the banker, Miguel Blesa, ex-director of the failed Caja Madrid, out of clink, twice, last week. The judge Elpidio José Silva has now been dropped from the inquiry – perhaps for showing too much zeal. He later commented: 'without judicial independence, there's no Democracy'.
Our old friend and ex-treasurer of the Partido Popular, Luis Bárcenas, a stalwart of Business over Tapas, may have a few more accounts in foreign parts, according to Hacienda, apart from his 47 million in Switzerland, with the USA, the Bahamas and Uruguay mentioned.
Labour:
A useful article at The Local about working in Spain: - 'Think hard before going self-employed in Spain'
'Many companies in Spain are reluctant at present to take on the financial risk of hiring staff on either full-time or part-contracts. But there is another option for foreigners looking to work in Spain: going self-employed, or autónomo'...
Various:
Spain's teeming millions shrank slightly last year by 162,390 people (as far as the very exact numbers given by the Instituto Nacional de Estadísticas can be relied on – with many people living here 'under the radar'). Last year, 476,748 left the country (including 59,724 Spaniards) while 314,358 people arrived to take up residence here. There are now 46,704,314 people living in Spain. (El Mundo)
'A journalist who accused the Falange of 'crimes against humanity' is himself accused and facing judgement. The journalist and economist Gerardo Rivas has been indicted for the alleged crime of slander against the Falange Española de las JONS. Judges for Democracy and historians such as Ian Gibson and Paul Preston consider the acceptance of the complaint in court as an abuse of the right to freedom of expression and to the truth'... Story at publico.es
The Spanish Economy. Andrew Brociner is away this week
Letters
Lenox,
There must be some good news in the Spanish newspapers that you can print to give us, your faithful followers, something to smile about. I would like to have a chuckle now and again when sipping my wine reading Business over Tapas and momentarily forget the doom and gloom.
I don’t feel that the downturn in the housing market is all bad news. I accept that for people who purchased in the boom years it is a disaster, but did they sell their UK home at an inflated price at that time?
I have had property in Spain since 1989. I am currently selling 2 adjoining apartments at a greatly reduced figure than I could have got a few years ago, but when I look back at what I paid for them in 1989 in pesetas, I have not done too badly.
I am now purchasing a villa at a very economical price – property is a long term investment. At the current low prices many foreigners, particularly UK residents, are being attracted to Spain.
So, yes – sorry that people lost money on property purchased in the boom years, but pleased that other people can purchase at lower prices that will encourage new people to enter the housing market.
Kind regards
Malcolm.
Finally:
'Hands up anyone, where is Orense?' - See how well you know Spain with this interactive map of the provinces of the country posted for your amusement... here.
Si (
No(
