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Business Over Tapas (7th Nov – 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.

Editorial:

Who would you vote for (if you could vote)? Has the Government done a good job and is Spain now on the road to recovery. Has the PSOE been effective in the Opposition? Is it time to support a third way...? The PP now has an intention of vote of 34% against the PSOE at 26.8%, according to the latest poll. Other sources, however, say that the old two-party system is over and proof of this will come in the European elections next May.

Housing:

Authorized permits for new construction for residential use in Spain was 23,901 units in the first eight months of the year, representing a decrease of 25.6% compared to the same period of the previous year (32,133 units), according to data from the Ministry of Public Works (Ministerio de Fomento). Of this total number of licences between January and August, 16,169 were for flats in apartment blocks (with a year on year drop of 26.3%) and the rest, 7,721, were for single-family homes (- 24%).

The building permits for 2013 continue the negative trend of the previous years. They marked a historic minimum (44,162 units) in 2012 and follow six consecutive years of falls. Since the peak reached in 2006 of a massive 865,561 residential units, these permits had plummeted more than 95 percent by the end of 2012. Taken from El Mundo (no link).

'Five years after Spain's property bubble burst, hundreds of thousands of new and unfinished properties remain unsold throughout the country. Finding buyers will be a slow process: in a country where the perceived wisdom has always been that bricks and mortar never go down in value, real estate companies, as well as homeowners, have had to get used to the idea of selling at lower prices, assuming that the banks start lending again. Meanwhile, some of the biggest companies in the world have had to eat humble pie, reduce their size, and in some cases have simply been swept away.

Slowly, and reluctantly, the property sector is facing up to one of the major reasons nobody is buying property: the huge numbers of homes that remain unsold, some of them unfinished'... From El País in English. Perhaps, continues the article, '...as happened in Ireland and the United States, which were also hit hard by the collapse of the property sector, one solution may simply be to knock some of them down'...

A peaceful demonstration will take place this Saturday in Cantoria (Almería) at the Almanzora Palace calling 'for solutions to the problem of illegal houses and for an end to demolitions that have such a detrimental effect on the image and economy of the region as a whole in addition to their devastating effect on the lives of individual home owners who, in the judgement of the court, acted in good faith'. Helen Prior will be among the speakers. The  protest is organised by the AUAN. More here

'A large police operation cordoned off a home in Alhaurin el Grande (Málaga) which was demolished Wednesday. A protest by the pressure group “Stop Derribos” failed to prevent the machines reaching the home after they were moved away by riot police, according to local press'... From David Jackson.  The owner of the property, on this occasion, is Spanish.

Tourism:

'Spain is present at the London World Travel Market, the largest tourist fair in the world, occupying 2,000 square meters and with 334 exhibitors. The stand of Turespaña, covering an area of 1,001 square metres, accommodates 26 companies and 14 destinations.

From January to September, the United Kingdom is the main tour market for Spain with the arrival of more than 11.7 million British tourists, up 4.4% and 24% of the entire total of foreign tourists.

The positive trend continues for the winter season (October-March) with an increase in air capacity of 11.65% between the United Kingdom and Spain; that's to say – 720,000 extra passenger seats'... From Top Turisme.

The rule about holiday lets is examined by Spain Holiday: 'Introduced on June 1st this year, changes to the existing law on Spanish residential rentals (LAU), which could affect the holiday rentals market, has led to much criticism and confusion amongst experts and holiday home owners. Despite the fact most of us are aware that changes have been announced, the specifics have been vague and inconsistent. Is there a new licence, how much will it cost, will it affect me and when? The truth is, right now, nobody has conclusive answers and that includes the 17 regional governments who have been tasked to enforce the new legislation. Private owners of holiday lets want to know if they too will be affected by the new regulations introduced. The answer is some will, some won’t'... This is an example of a powerful lobby, the hoteliers, protecting their industry, even if it adversely affects the local economies (eating in the hotel rather than a restaurant, short-term rentals and the ownership of 'second-homes' discouraged, tourists looking 'elsewhere' to holiday, and who wants to stay in a hotel for up to four weeks anyway?).

'It seems that in January, the construction of the first phase of the Paramount Park will begin in Murcia (the municipality of Alhama de Murcia, between Murcia and Totana to the south). The Spanish building company Ferrovial won the 52 million euro contract'. News at Top Turisme. (Pictures here).

'The period between January to August has generated a new trauma for Spanish aviation. The nation's railways have managed to take away 18.3% of air-passengers due to the aggressive commercial policy of Renfe. Earlier this year, the railway operator modified the rates to increase the occupation of high-speed trains. The three corridors, linking Madrid with Barcelona, Valencia and Malaga have grown in passenger use by 10.3% overall'... The story, in O2B, is titled: 'Air Traitors: 400,000 Passengers Take the AVE'.

'Come enjoy Andalucía, the place where we will demolish your home in front of the Media: "Discover the bulldozer experience". I don't know if the tourism of the Junta de Andalucía services will be in need of effective ideas or suggestive slogans (once they illustrated an institutional brochure about the Guadalquivir River with a photograph of the Cathedral of Palma de Mallorca, and in another, they created a map of the battle of Trafalgar with a number of fictitious ships) but I suggest this line of promotion after seeing the President of the Junta de Andalucía, Susana Díaz, was anxiously looking for tourists at the World Travel Market in London'...  Editorial in Wednesday's La Voz de Almería.

Finance:

'For the first time since the crisis erupted in 2007, a credit agency has improved the note for Spain. Fitch, although it maintains a 'BBB' rating, two rungs above the 'junk bond', has revised upward its Outlook, which ceases to be 'negative' to 'stable'.

In a statement, the entity explained that the improvement was due to Spain's fiscal consolidation and the "significant reforms" carried out by the Government in the labour market, the pension system and the financial sector'... From El Mundo.

'Spanish banks could cope with losses of 161 billion euros ($217 billion) on soured loans if the economy contracted again over the next two years, the Bank of Spain said on Wednesday in an analysis of lenders' financial strength.

The exercise, which tests how banks would fare under various economic scenarios, shows the Spanish banking sector as a whole in a good light ahead of a Europe-wide review of euro zone banks' assets early next year and subsequent stress tests'... From Reuters.

From an opinion piece in El País: 'Spain owes around 320% of its gross domestic product (GDP), which is equivalent, in absolute terms, to about 3,300 million euros. Citizens would have to be working more than three years in a row, without paying or spending anything, to satisfy that huge debt. If there were any sense in finding the average, then every Spaniard owes more than 70,200 euros. This gigantic debt and the extraordinary level of unemployment, the hallmarks of a great depression, are the main problems that distinguish us from our neighbouring countries and that make us special'...   (Note: From Wikipedia, the difference between 'long and short scales' giving two extremely different meanings to the word 'billion').

'The European Commission has reduced its growth forecast for Spain to 0.5% for next year and has warned that compliance with the deficit in the coming years "is in danger" due to the risks that face the economy. Taking into account the public subsidies to the banking sector, Spain will fail its deficit targets for the next few years despite the significant improvement in the economy that has begun to occur this year and that will continue, albeit in moderation, in 2014 and 2015'... From El Mundo.

'News that billionaire Bill Gates has acquired a 5.7% holding in Spanish builder Fomento de Construcciones & Contratas SA (FCC) has certainly caught the attention of property investors around the world. The 5.7% stake cost Bill Gates $155 million and led to an immediate increase in the share price of FCC . However, is it time to follow Bill Gates into the Spanish property market or should you remain on the sidelines?

The property market in Spain has been very much in the news of late amid concerns that activity is falling dramatically and prices are still under pressure. The short term outlook appears to be gloomy but perhaps Bill Gates has seen something which nobody else has yet realised?'...  From Property Forum.

Corruption:

'A Spanish court on Wednesday ordered the arrest of five bankers in a fraud investigation into failed bank CAM, a casualty of the near-collapse of Spain's finance sector, an official said. A judge ordered the five arrests and the searching of premises including lawyers' offices... CAM, a regional savings bank and formerly Spain's 10th biggest bank, was taken over by Banco Sabadell as part of a shake-up to stabilize the financial sector which was hit hard by the collapse of a building boom in 2008'... From The Local.

'The “Anti-corruption Prosecutor” (an office that, despite its name, appears to have little to do with independent justice, and it controlled by the Ministry of the Interior) forwarded on Tuesday a letter to the judge of the National Audience Pablo Ruz to remove in practice the Partido Popular of the main criminal responsibilities arising from the case of the role of the secret accounts of the ex-treasurer for the PP, Luis Bárcenas. In the 12 page notice from the prosecution, it is clear that the office is  frontally opposed, once again, to the proceedings and requests for the charges. In this case, anti-corruption has rejected the extension of the complaint that a group of associations headed by Izquierda Unida presented on February 28 and that Ruz opened as a separate part of the Gürtel Inquiry on the manuscripts of Bárcenas'... From El País.

'A court in Spain has impounded a luxury villa and other properties belonging to the son-in-law of King Juan Carlos in a corruption case that has proved damaging to the royal family.

The court in Mallorca ordered the seizure of properties owned by Inaki Urdangarin, husband of the king's daughter Cristina, to cover a 6.1 million euro (£5.2 million) bond for his liability in the case, it said in a written ruling.

The court is investigating accusations that Urdangarin, an ex-Olympic handball player, and his former business partner Diego Torres embezzled six million euros in public funds'... From The Telegraph. 

The Cadiz Provincial Executive of the UGT (workers' union) resigned en bloc on Monday following the arrest and release with charges of its secretary general, Salvador Mera, in relation to the case of the ERE scandal. The executive say that they had given Sr Mera ample opportunity to explain his position, without receiving any satisfaction. (El Mundo)

'In Spain, undeclared economic activities represent 28 percent of the GDP and each year Hacienda fails to collect 80 billion euros thanks to this black economy. These are the findings of a recent study by the Universidad Autónoma de Madrid revealed on Monday at the opening of a seminar on the prevention of money-laundering chaired by the director-general of the Civil Guard, Arsenio Fernández de Mesa'... More at Europa Press.

Those who would read of political corruption should check out Un Espía en el Congreso, here. It's a kind of Spanish version of the British political gossip blog Guy Fawkes (here).

Healthcare:

From Eye on Spain comes this interesting piece on new health care options for those without cover: the Spanish government recently announced guidelines for the new Convenio Especial (or Special Scheme). The Convenio Especial is a public health insurance scheme through which those who don't have access to state-provided healthcare can pay a monthly fee to get cover... ...The scheme will be nation-wide, but managed by each autonomous region which will have the option of including different services over and above the basic package announced by the Government. Policy holders, including children, will pay on an individual basis and be able to receive access to public healthcare anywhere in Spain, regardless of pre-existing conditions'...  Further information will soon be available from your local health centre. http://www.healthcareinspain.eu/

More: 'The EHIC Campaign is joint project between the UK Department of Health and the Valencia Health Authority, and is partially funded by the European Commission. The campaign will look to inform British nationals in Spain about the correct way to use the European Health Insurance Card (EHIC) and inform those who don´t have entitlement to use the card how to get themselves correctly registered'.

Various:

'Staying in the European Union is "overwhelmingly" in Britain's interest, although reforms are urgently needed, business leaders have said. The Confederation of British Industry highlighted research showing that EU membership was worth between £62 billion and £78 billion, around 4-5% of the country's total economic output'... From The Huff Post UK.

The Valencian public television (was 'Canal 9') has been closed down by the regional president Alberto Fabra after a court had ruled that the firing of 1,000 employees a year ago was illegal. Now it seems likely that another public TV, the one in Madrid, might follow suit. (More)

The Gibraltar Government has referred a complaint to the European Commission saying that the long queues to enter the colony is now not only for motorists, but now also for pedestrians...

...The Gibraltarians also note that the main 'impact' of the Spanish behaviour is against its own citizens who work in Gibraltar but live in Spain'... From El Mundo.

'The AVE has effectively been transformed from a totemic symbol of Spain’s economic might, built on the shaky foundations of the property bubble, to another embarrassing example of government waste and poor planning.

The idea of linking together the entire nation via a high-speed rail network was concocted at a time when reining in public expenditure was as rare as the sight of a thrifty politician'... - The AVE, Almería's Flightless Dodo, from Richard Torné.

'In a measure that reflects Spain’s desire to distance itself from its Fascist past, a judge has ordered the city of Valencia to strip former dictator Francisco Franco’s honorary title of mayor. The judge upheld a motion proposed by a left-wing coalition called Compromis and rejected a plea by Valencia’s municipal government to retain the honour which was awarded to Franco in 1939, at the end of Spain’s Civil War.

The judge cited that anything that placed Franco in a favourable light is contradictory to the values of a modern democracy'... Found at the International Business Times.

What did Franco introduce which is still revered in Spain? Two extra month payments annually for most employees, bomb-proof job protection for civil servants, unions funded by the State, and for many years, manufacturing protectionism (I bet they wish they still had on the books the obligation today to only buy cars 'Made in Spain'). Follow this idea (at your peril) at 'In Defence of Francisco Franco' from Svein Sellanraa here.

An open letter from the mayor of a small village in Almería to the new President of the Junta de Andalucía includes this plea: '...Since 2009 I am waiting for the arrival of 37,425 euros which are pending from the Treasury to my City Council. With this money the people of Chercos, in Almería, with 340 inhabitants and 80% unemployment, could mitigate, partly, the desperation of people who are suffering from economic hardships, and are on the verge of absolute poverty'... From La Opinión de Almería. 

'North Korea will soon open an Embassy in Madrid, which will be located in the District of Aravaca, a wealthy area of the capital. The country already has premises on lease, reported diplomatic sources.

Although the North Korean regime resists having foreign embassies on its soil, Spain has given its approval to host Pyongyang's legation here. Spain is immersed in full campaign for the promotion of its candidature for the Security Council of the United Nations for the biennium 2015-2016, in which, as they say, 'every vote counts''... From El Huff Post.

'In the Appalachian foothills of western North Carolina, archaeologists have discovered remains of a 16th-century fort, the earliest one built by Europeans deep in the interior of what is now the United States. The fort is a reminder of a neglected period in colonial history, when Spain’s expansive ambitions ran high and wide, as yet unmatched by England.

An archaeologist working near Morganton, N.C., in a section of the defensive moat of the earliest fort built by Europeans.

If the Spanish had succeeded, Robin A. Beck Jr., a University of Michigan archaeologist on the discovery team, suggested, “Everything south of the Mason-Dixon line might have become part of Latin America.”'... From The New York Times.

Here's a petition worth signing if you are British: 'I ask the government to create several members of parliament to represent the 5 million plus Britons living abroad (expatriates) similar to what is done in France. France has 11 MPs for its 2 million ex-pats (representing different constituencies throughout the world) as well as 12 senators and a dedicated minister. Britons abroad would vote in general elections for their own MP to represent their specific interests, including pensions and benefit rights. These MPs would better represent the interests of British expatriates, many of whom continue to pay tax – and own property - in the UK'. Link to the HM Government e-petition here.

'Sandra Ortega Mera has become Spain’s richest woman after inheriting her mother’s stake in the world’s largest clothing retailer Inditex. She received around 90% of Rosalia Mera’s fortune, and has a net worth of $7.3 billion, according to the Bloomberg Billionaires Index.

Her riches have also made her the 182nd richest person in the world and the youngest female European billionaire on Bloomberg’s ranking. Inditex, whose brands include Zara, operates more than 6,000 stores worldwide'... From The Olive Press.

La tauromaquia, 'bullfighting', has been declared as a 'cultural heritage for Spain' by the Government, and the Partido Popular promises that bullfights will return to Barcelona (the Catalonian government banned the spectacle in 2010, while inexplicably retaining the rather less attractive carrebou entertainments).

'I've never really understood the Britons who live in Spain but very seldom actually visit the country. They stay at home listening to British radio, reading British papers and watching British TV surrounded by British food. I see no problem at all with keeping up with news from the UK or liking steak and kidney pudding - Britishness courses through our veins after all - but it often seems to be done at the expense of anything Spanish. These people do not have the vaguest idea about the history or geography of their new home, the culture passes them by and their knowledge of what's happening to the country is generally secondhand rumour. Even New Year is celebrated at GMT not local time'... From a Blog called Life in La Unión (a mining town in Murcia known for its annual Cante de las Minas flamenco competition. Here are some more interesting blogs about Spain.

Finally:

A beautiful site with pictures of 'seven villages trapped in medieval times'. These are relatively unknown Spanish villages where the modern day has – more or less – never arrived.

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