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Business Over Tapas (October, 03, 2013) 

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.

The British TV ITV 'Tonight' program will be shown this evening, Thursday, at 8.30pm Spanish time under the title of 'Spanish Bargains in the Sun'. If I can find a video copy (and it's worth it) then I'll link to it in the next edition. Lenox 

Editorial:

Unemployment is up again, as usual for September, but the Government – and even to a certain degree the Opposition – seem pleased as the figures show a falling off from other years. As we wait for the less sanguine numbers from the tri-monthly Encuesta de Población Activa, we are given those supplied by the Ministry of Employment at 25,572 newly registered with the unemployment agency for September (following on from the August figure of a massive 31 new jobs), with a total of people (officially) seeking work across Spain currently standing at 4,724,355.

Housing:

'Spain’s ‘Golden Visa’ law has been ratified, meaning that owning property in the country will soon be made much easier. The new Residency Law has been given the green light by the Congress of Deputies following its approval in the Spanish senate. After this legislation has been signed off by the king, it will be published in the official state gazette and formally become law.
Under the new rules, non-EU citizens who invest at least €500,000 in residential, commercial property or land will be able to live legally in Spain. They will also be permitted to travel within the 26-country Schengen Zone'...  From Property Showrooms.

'The association of people affected by foreclosures and auctions (AFES) forecasts that in 2014 the home mortgage delinquency rate will be greater than 6% and warns that 2015 could end up with more than half a million families homeless and in debt.

The president of the association, Carlos Baños, says that since the crisis began, 150,000 families have lost their homes, and in 65% of cases, unemployment has been the main cause of the non-payment of the mortgage'...  From El Mundo.

'Institutions and experts are all in agreement that a high rate of unemployment, the very limited access to credit, the loss of household wealth, the great 'stock' accumulated in the Spanish real estate market - between two and two and a half million units - and expectations among potential buyers that prices will continue to decline, will all continue to force down  the valuation of real estate nationally.

The promoters would subscribe without hesitation to the forecasts of the European Commission, who believes that prices will continue to fall "at least until 2014" while facing the evidence that the sector has not yet hit bottom'...  From Te Interesa which notes that 'the largest sector of first home buyers, those in the 25 to 35 years old group, are expected to fall in numbers from 7.7 million last year to just 5.1 million in 2022'.

The Málaga Diario Sur is convinced that fiscal pressure is driving away residents. - 'An excellent climate, good infrastructure, both public and private, and a wide range of deluxe amenities. All ingredients boasted by the Costa del Sol, which may arouse jealousy on the part of competing destinations, but are, nevertheless, insufficient to maintain and promote the market for foreign residential tourism. Spain's fiscal policy and the foreigners laws are beginning to tip the balance and is endangering one of the more vigorous economic sectors on the coast. “Having the best climate is not enough to convince a large majority”, says Jolanta Jarczewska, President of the association of foreign residents of Andalucía and a real estate entrepreneur in Marbella, summing up a situation which is debated upon both inside and especially outside our borders'...  The article continues - 'High taxation, problems to renew residence permits and the mistrust of financial institutions are the major complaints from foreign citizens who, as they begin to discover, do not find an especially 'friendly' panorama when it comes to investing part of their fortunes on Spanish soil'...

A comment on a forum regarding the subject of Spanish businesspeople trying to attract more home-buyers here, and following on from this comment 'More and more people are deciding not to live in Spain permanently, as they had planned, and to just have a holiday home; this cannot be good for Spain who are missing out on a lot of revenue': - 'Me included. I, like many others have worked hard in the UK to fund what I hope will be a comfortable retirement. I am perfectly willing to pay my way in Spain but not to the point of risking my capital to a government who frankly has done nothing for me. When I visit Spain I spend my money freely amongst Spanish bars, restaurants, car hire, petrol stations, hotels, tourist attractions etc. That is as far as I am prepared to go. I will not allow my years of effort to be subjected to review and plunder by arguably the most corrupt government in Europe'.

Tourism:

From Kyero: 'According to the latest Egatur Tourist Expenditure Survey, published by the Ministry of Industry, Energy and Tourism’s Department of Tourism Information Studies, inbound tourists to Spain spent a total of 8.26 billion euros in August, which is an increase of 12.2% over the same month in 2012.

This figure, which represents a new record for Egatur, is the result of both an increased number of tourists and higher average spending. In fact, year-on-year the variations in the average spending figures rose significantly: by 4.7% for the average spend per tourist (to 997 euros); and by 2.8% for the average spend per day (to 101 euros).

The French, German and United Kingdom markets had the greatest influence on the overall growth in spending, and the main regions to benefit from this growth were Catalonia, the Balearic Islands and Andalucía'...

'The Corvera airport, located in the south-eastern region of Murcia, would be just another symbol of Spain's wasteful spending during the boom years, were it not for a legal battle — which even the Civil Guard has become embroiled in — between the regional government and the company supposedly in charge of managing the facility, Aeromur.

A number of high-profile failed airport projects have hit the Spanish headlines in recent years, such as Castellón and Ciudad Real, which have barely seen any planes take off or land — despite millions of euros of public money being poured into their construction. In the case of Corvera, however, no one even knows who should take possession of the keys to the airport, who should be in charge of its management should it ever be inaugurated, or who will assume debts of more than 200 million euros that have been spent on the infrastructure'...  From El País in English.

A more political version of the above appears in Vozpópuli: (Headline) 'Murcia President Ramón Luis Valcarcel manages to close the public airport of Murcia to "make profitable" the one built by Sacyr'.

'The Government of the Partido Popular promoted a monumental airport just a few tens of kilometers from the semi-civil airport of San Javier, which was recently expanded. Now, it has led to the historical airport of the Mar Menor to be closed (probably in 2014) to boost the new privately owned airport at Corvera'...

Finance:

From Kyero: 'According to their quarterly report on the economy of the euro-zone, the credit rating agency, Standard & Poor’s (S&P), predicts that the Spanish economy will grow by 0.5% in 2014, one tenth less than their July estimate, and that unemployment will continue to increase up to a maximum of 27%. S&P has maintained unchanged the forecast for Spanish economic contraction in 2013 of 1.5%, but has improved by five tenths the unemployment rate with which the Spanish economy will close this year, from 27.2% to 26.7%.

However, the unemployment forecast for next year remains unchanged, at 27%, as the agency assumes that the unemployment rate will rise again in 2014, before starting to decline in 2015'...

'The Council of Ministers has approved the draft law of the General State budget (PGE) for 2014, which includes the commitment to reduce the deficit of the Central Administration to 3.7% of GDP.

According to the Government, the cuts will help to create a lower risk premium. thus, next year 36.590 million euros will be paid to the markets in interest on the debt, down by 5.2% in 2013'...  From El Mundo.

'The Secretary of organization of the PSOE, Óscar López, said on Saturday that "the world says no" to the policies of the Government of Mariano Rajoy, in particular after the General State budget by 2014 which he described as "the budget of cuts and lies".

In an appearance at the party Madrid headquarters, López questioned why, as claimed by the Executive, the 2014 budgets are those of recovery. "Recovery for whom?," he asked before going on to denounce the "cuts" in education, health, dependency, or pensions, "in all the areas where they promised not to get out the scissors"...  From El Mundo.

'The next global financial crisis has already started, in the form of nearly 75 million unemployed young people around the world.

If this mass of jobless youth doesn't find work, the consequences will be dramatic, a group of politicians and economists at the Concordia Summit here Friday warned -- from increased violence in the Middle East to ever-higher rates of income inequality in the United States to increased political unrest in Europe.

"Youth unemployment is dramatic," said José María Aznar, the former prime minister of Spain, where the jobless rate for those aged 15 to 24 is 56 percent. "It's jeopardizing the opportunities for future prosperity and growth."... More at The Huff Post US.

'Spain is considering using Treasury cash instead of bank loans to pay off as much as 7 billion euros ($9.5 billion) of commercial debts on behalf of regional governments and town halls, according to two people familiar with the matter.

Government officials are considering this option to reduce the reliance on banks, which financed the program last year, as funding conditions in the bond markets are improving, said one of the people, who asked not to be named before a decision on the matter. Officials still have to decide how much of the cash will come from the Treasury and how much from banks, the person said'... Article from Bloomburg.

'Labour Minister Fátima Báñez on Tuesday announced that over the next three months the government will withdraw 6.1 billion euros from the reserve fund of the state pension system to cover benefits due to retirees.

In July of last year, the Labour Ministry availed itself of 4.5 billion euros from the fund to cover the extra payment due to pensioners in the summer.

Since it took power at the end of 2011, the conservative Popular Party government has drawn on public reserves of 23.3 billion euros to meet funding requirements, including 18.6 billion from the pension reserve fund itself and a further 5 billion from another public fund. Including the sum to be withdrawn announced by Báñez on Tuesday, over the period 2012-2013, the reserve fund of the pension system will fall to 59.3 billion euros from 67 billion at the end of 2011'...  From El País in English.

Introducing an article in Público about the cost to the public purse of the failed toll-roads outside Madrid (estimated at six billion euros) Urbanismo Patas Arriba has this to say: 'The issue of waste in public infrastructure continues. This time it is the highways built a few years ago around Madrid, known as the radiales de peaje, which have finally gone bust thanks to their futility and lack of use, as many had predicted...  ...Another example of the felonious politics of privatizing profits but socializing losses'...

'The cost of electricity went up again on October 1st; the average bill has grown by 404 euros a year since 2007. It was the fourth hike so far in 2013. Since the beginning of the crisis, the average electricity bill has increased by 33,70 euros a month, that's 404 per year'... Story at Qué.

Corruption:

'The President of the regional government of Andalucía, Susana Díaz, has gone one step further in her declared fight against corruption by ordering that the alleged irregularities committed by the UGT trade union to be analysed and that “those responsible are tried and punished”.

The Andalucian union has six summaries currently open in various courts of Seville, with complaints concerning false invoices and the diversion of training funds, presented by a private organisation called Manos Limpias. The prosecution has opened investigative proceedings after receiving a complaint from the UPyD political party against two past General Secretaries of the Union, Pastrana Manuel and Francisco Fernández Sevilla, along with some other senior union members, for alleged embezzlement of public funds, forgery and fraud in subsidies granted by the Government of Andalucía'... From Ideal.

'The judge of the national audience Pablo Ruz has imputed the architect who reformed the national headquarters of the PP, Gonzalo Urquijo, for allegedly charging part of the reform in black. Some papers of Luis Bárcenas show that several payments to the architect for a total of 888,000 euros were paid 'in black'. The former treasurer of the PP says that Urquijo took 30% in black of the reform of the headquarters of the PP in Madrid's Calle Genova back in 2008'...  From El Mundo.

'A study by the University of Las Palmas (ULPGC) estimates the social cost of corruption in Spain at 40 billion euros annually, a phenomenon which, according to the report, is "much higher" than figures from official statistics'... From Público.

Labour:

"I will say one thing that is going to anger public employees: you can't freeze the salaries of the funcionarios, you either have to drop their salaries by 30 percent or fire 30 percent of them across the board. Thirty percent of public employees are unnecessary. I'm really sorry. Because that's just what we've already done in the private sector"... The comment comes from Miguel Angel Rodriguez, spokesman for the Aznar Government. Video and article here at Periodista Digital.

Public employees will once again bear part of the adjustment which the Government must make to the public accounts next year with their payrolls. The Ministry of Finance and Public Administration has informed the public sector unions that it will once again freeze the pay of all public workers (officers, staff, interim and eventual) in the budget of the Council of Ministers for the fourth consecutive year.

Freezing the salary of civil servants with a new loss of purchasing power joins similar measures undergone by private sector employees as well as pensioners in a process of internal devaluation which the Government is pursuing as a recipe against the crisis'...  From El País.

Politics:

'According to Finance Minister Cristóbal Montoro, in the coming year, Spain's public debt will exceed one billion euros. Rajoy will begin his third year of Government without the excuse of the inheritance from Zapatero. November will mark two years from the election victory of the PP and Mariano Rajoy will have spent half of his legislature. According to the State Budget for next year - made by the Government of the PP and as explained by a Minister of the PP, Montoro – Spain's public debt will nudge 100% of the gross domestic product, specifically, the Government places it at 99.8%'... From El Plural.

Ignacio Molina, considering that 'The relations between the UK and Spain are extremely close-knit and should not be allowed to be jeopardised by the Gibraltarian government’s recent actions (sic)'. His conclusion: 'Half way between the summer doldrums and a serious diplomatic dispute, the crisis that broke out at the end of July 2013 seems to have set back, by several steps, the fostering of stronger political ties between Spain and the UK, appropriate to countries whose bonds are already so close in the social, economic and cultural areas. It is up to Spanish analysts to recommend the government in Madrid to take into account a much wider and important reality and to act with particular moderation when it comes to Gibraltar. However, such a complex dispute cannot depend solely and indefinitely on the self-restraint of one of the parties... In any case, if it is a case of talking about what is or was solid –much like the Rock of Gibraltar itself–, it will always be better for everyone to focus on the most important issue that remains sound, and that is the bond between two European partners'... From The El Cano Royal Institute.

Various:

'Valencia — For a while, this sprawling Mediterranean city embraced Santiago Calatrava’s architecture with gusto. In a dried-up riverbed, Mr. Calatrava built and built, eventually filling 86 acres with his radical, and some say awe-inspiring, designs.

But these days, even as Mr. Calatrava’s eye-catching PATH station creeps toward completion in Lower Manhattan, he is often cast as a villain here in Valencia. One local politician runs a Web site called Calatravatelaclava, which loosely translates as, “Calatrava bleeds you dry.”... From The New York Times.

'“I have moved away from the prohibition of drugs to advocate their legalization". With this surprise declaration from Araceli Manjón, the former Director of the National Plan on Drugs and current Secretary General of the Complutense University of Madrid, the Expocannabis 2013 conference started on Friday.

The former judge of the Audiencia Nacional was the highlight of the Expocannabis Hemp Festival 2013 conference. This event, that took place from Friday through Sunday in the Rivas Vaciamadrid, is confirmed in its ninth edition as the place for enthusiasts and professionals of the cultivation and consumption of cannabis'... From El Mundo.

'The Spanish authorities have stepped up their searches of vehicles on the Gibraltar border, less than 24 hours after a high-ranking visit by the European Commission (EC) to investigate the issue.

The action brought misery to thousands trying to get home on Friday evening, and many turned to social media to vent their frustrations. “Stuck in Gibraltar again – They are making every car park at the border, opening up each boot and bonnet and searching – when there are a few thousand cars waiting,” read one. “It is a total joke”. The sudden go slow led to some people spending up to four hours in the queues, it was reported'... From The Olive Press.

'Remittances sent back by Spaniards living abroad have surpassed those sent out of the country by immigrants living in Spain for the first time in a decade as a result of a wave of emigration sparked by the economic crisis, which has also prompted increasing numbers of foreign workers to move back home.

According to figures from the Bank of Spain, remittances received by Spain in the second quarter of this year totalled a record 1.591 billion euros, while remittances by foreign workers amounted to 1.563 billion, leaving a positive balance in Spain's favour of 28 million euros - the first time this has been the case since 2003'...  From El País in English.

'A young Spaniard with two bachelor's degrees and a master's has become the poster boy for Spain's "lost generation" after an online rant in which he complained that the only work he can find is cleaning lavatories in London. Benjamin Serra Bosch, 25, has garnered thousands of followers on social networks after posting a message about his plight as an overqualified youth unable to find a decent job in his own country.

"I received a distinction for both my degrees and now I clean shit in a foreign country," he wrote in a message posted on Facebook and Twitter on Friday. "I've been working in a well known café chain in London since May. And after five months working there, today for the first time I saw it clearly'... From The Telegraph.

Those delicious 'Donuts' we all eat with our morning coffees, together with the 'Bollycao' buns the children take with them to school, are under threat from the unions. The company, Panrico, is teetering on bankruptcy and the unions say they will shut down the factory from October 13th.

'A Spanish judge has got himself into hot water after he said a driving school was within its rights to charge female learners more than their male counterparts.

Judge Javier Albar from Zaragoza, in northern Spain, decided in favour of a local driving school which had argued their decision to charge women more than men wasn't discriminatory.

His reasoning was that official data from Spain’s Directorate of Traffic proved that "every single year, men displayed greater dexterity and better open road skills" than their female counterparts'...  That's not going to fly! From The Local.

How the Sagrada Familia would look, finished. On YouTube. Pretty! Another copy here.

The Spanish Economy

By Andrew Brociner

It's That Time of Year Again

There's been a lot of talk lately about Spain returning to growth. The politicians brandish this phrase as if all is going to be fine again. Remember, we said it here earlier on in the year, that round about now, that is what you will hear.

So, is there any truth to this? The plain answer is no. Yes, there might be a quarter or two or even more of positive growth, but this will likely fizzle out. As we pointed out in a previous issue, any growth that will take place will be weak and oscillate around the zero point. This is by no means a recovery.

Let's look at a few basic variables. Take unemployment. It is still over 25% for the country as a whole:

With so many people out of work, they have nothing to spend. Consumption, therefore, has been continuously declining:


And with no work to be found, young Spaniards, as we have seen, are leaving Spain. This is a very serious problem as there are less and less people who will pay for the elderly and sustain the welfare system. Moreover, as we have discussed, this emigration will put Spain on a new, lower long-term growth rate. So, there will be no talk of recovery as going back to something we knew (when it does take place), but there will be a lower trend growth rate at best.

With current policies, growth will be simply insufficient to make any significant reduction in unemployment. IMF estimates are for unemployment to be around 23% in 2018 and it won't be much better beyond. This is a very slow process. The prospects are grim, the young have to bear most of the burden since the Spanish system is biased towards older, protected workers and it is no wonder they are leaving to look for work elsewhere.

So the government will continue to talk about growth and about a recovery, but with such weak growth as is likely to occur, it won't make any significant difference to the current situation. Unemployment will be stubbornly high, people will continue to leave to look for work and many of the same problems will persist. Spain should apply other policies to tackle its unemployment problem, such as lowering wages and eliminating the discrepancy between younger and older workers. As we have seen in a previous issue, it is the young who are responsible for most of the productivity, creativity and innovation and at the same time, it is they who get paid the least and have the most precarious positions. It seems as if Spain would have to turn its way of thinking around to achieve these results.

Finally:

You have probably seen this by now, the School-yard play of the invasion and execution of Gibraltarians. 'In footage of the satirical play posted on YouTube, a group of socks-and-sandal wearing "Britons," carrying Union Jack placards and wearing the flag on their T-shirts, place their deck chairs in the centre of the auditorium, to the sound of the National Anthem. Parents and fellow students watch from the sidelines as a tank arrives, accompanied by students dressed in military fatigues and carrying guns'... Says The Telegraph. Of course, the ABC and its readers think the story is wonderful.

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