IMF doubts
However, the International Monetary Fund has doubts whether the new government will be able to comply with the limit of a 4.4% budget deficit agreed with Brussels and anticipates the deficit will reach 6.8%. In this case it will be necessary for the Government to take additional measures, since each decimal point deviation requires 1,000 million euros in additional cuts in expenditure.
The IMF is even more pessimistic for 2013, when the deficit should have fallen to 3%, the Fund expects it to be 6.3%.
Official: Recession started in 2011
The new government has been forced to admit that Spain fell into recession again in 2011. After a third quarter of standstill, the economy retracted 0.3% in the fourth. The IMF believe the recession will continue for two more years.
Spanish court will not investigate equity release fraud
The Spanish National Court has announced it will not be investigating the equity release fraud, which has left scores of expats on the Costa del Sol facing the loss their homes.
The Audiencia Nacional insists there is not enough evidence to merit launching a criminal investigation despite the group of twenty foreign residents, who have submitted over two hundred pages of documents supporting their allegations against several Scandinavian banks.
“This is a clear case of judicial apathy by the Court which, after probably not reading the complaint, considered it nevertheless irrelevant, in what is a steadily worsening record of them protecting the rights of consumers,” said Antonio Flores from the Marbella law firm of Lawbird who are representing the Malaga victims.
However the Danish Government has now decided to open an investigation into the alleged fraud, thus offering a ray of hope to the hundreds of expats affected.
“It does not sound very good that a Danish bank is involved in such an allegation, but nevertheless it will be included in our priorities,” insisted Johnny Hansen Schaadt, Director of The Danish Tax Office Special Department for Economic Crime.
EU experts sent to assist Rajoy
The President of the European Commission, Jose Manuel Durao Barroso, has decided to send a team of experts to Spain to assist Rajoy in reducing the number of unemployed young people, which is currently close to 50% in the under 25 year old group.
Employers and unions reach agreement
- This year salaries will be increased by 0.5%.
Spanair goes bust
The Spanish air company Spanair, which was purchased by the regional government of Catalunya and a group of Catalan business people, both to create competition for Iberia and Madrid and also to convert Barcelona airport into an international centre, has gone bust. All flights have been cancelled and all planes grounded.
Official figures: 22.85% unemployment
In the last quarter of 2011, a further 295,300 people joined the ranks of the jobless, bringing the official percentage of unemployed at the end of last year to 22.85%. In 1,575,000 homes all occupants are unemployment. This is 149,800 more than in the third quarter.
Andalusia with 31.23% unemployment is the region with the highest rate, followed by The Canaries with 30.93%.
To these figures must be added the around 300,000 Spaniards who since 2008 have moved abroad to find work. A quarter of all Spaniards are now deemed to be living in social exclusion and at the risk of falling below the poverty line.
Experts anticipate that unemployment will increase still further.
The Spanish news agency Europa Press canvassed experts about their opinion on unemployment levels. Most of the answers point to the figure rising to 5.5 million unemployed this year and that there is no hope of ‘net jobs’ being produced before 2013.
Protests against acquital of Camps
The Valencia socialist party has warned they will appeal the acquittal of Ex-President Francisco Camps by the Regional Supreme Court. Our readers will remember that several members of the Camp’s cabinet had previously pleaded guilty to the same corruption charges.
Finally, less bureaucrats
In spite of promises, programs and objectives, the number of public employees increased, even in the first part of 2011, although they did start to fall towards the end of the year. The reduction in the regional administrations is small, merely 18,600 fewer, bringing the total to 1,769,000. Central Administration has reduced it’s staff by 26,900, to 533,100, whilst the town halls have slimmed down from 657,200 bureaucrats to 623,500.
Price of dwellings will drop
Finance Minister Luis de Guindos has explained that the reason many properties held by banks are not being sold, is that they are over valued. When the banks are forced to sell off their real estate portfolios, the price for housing will fall more.
Property Valuers, Tinsa, reports there was a fall in property values of 8.1% during 2011.
Patrimonio Tax
In last week’s report some figures were given for rates of the Patrimonio tax, however, they are wrong and were include accidentally. We will come back with the correct figures when we get notification of how the rules will be applied.
The crisis this week
On Monday this week, after several weeks of lower rates, demand interest by the markets for Spanish bonds again surpassed 5%.
At the same time the country risk started to move upward from the 310 points, and passed 330
Rating Agency Fitch downgraded Spain and 4 other countries. Spain was down rated from AA- to A
There are still no agreements between Greece and their private bondholders.
The Government has calculated that the banks will need a provide 50,000 million euros to meet their losses in the property sector
Bad debts from the property bubble at the moment stand at 176,000 million euros
70% of Spanish businesses do not intend to create new jobs this year
The Government has decided on 0% deficit for the regions, but only from 2020 ……
The Rating Agency Standard & Poor’s has downgraded 4 Spanish regions and the City of Barcelona.
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