Why is the pound in a state of collapse ?

[Drewth]

John 50 - having read the articles, I am inclined to agree with you. What will further add to the economic problems of this whole area, is that, to some extent, it's fortunes have been pegged to disposable income and that disposable income has reduced massively. 2009 does not bode well and having made enquiries today into the cost of a satellite TV, I would say this, 'make the most you can by conning people boys, it isn't going to last !'

[Diabla]

I agree with John50 too. The Spanish have bitten off the hand thats been feeding them.

[KEVIN TYLER]

I agree with John50 too. The Spanish have bitten off the hand thats been feeding them.

yes i too agree, right up to the elbow,

they should of stepped in and did something positive when all the scare mongering started about crime and such, what do they do? nothing, when will they realise many havent come here for thier culture and language its just the sun, and the sun shines in other countries too.

kev

[Drewth]

A good article here from a very good money website - thisismoney.co.uk. Interesting to note that Pound/Euro parity is becoming a reality and the final death of the Pound Sterling more talked about by quite senior economists now.

Should we join the euro, if £1 ends up worth €1? - This is Money Blog

Slight easing at opening of business today with the £ being 1.193 Euros and the Euro costing 83.8 pence.

[Drewth]

Blast ! Its tumbled again.

[KC1]

There is an article in the Coastrider this week that says it all. I am surprised that this has not made other papers but at least it made page 8 of this one !

British tourism to this neck of the woods is down 60% and likely to worsen during 2009 - so what do the clever Spanish do ? Well slap a 20 Euro charge on rental cars at the airports of course. In the same paper there is an allegation by the local business association that there is a kind of 'business apartheid' often illegal, aimed at ex pat businesses by the Spanish authorities. Well, expect to see a lot more of that going on.

As one who has run a business here, nothing the Spanish do surprises me. Now the crunch is finally hitting home caused in part by the weak pound. People won't come to this type of place for their annual two weeeks when they can get far better for their pounds elsewhere - Turkey, Tunisia, anywhere but here. The Spanish will surely reap what they have sown. They have been warned down the years but no, they carried on building more and more and assumed that holiday makers loved visiting the urban jungle along this part of the coastline. What they could never understand that it was the low prices that drew people, that and the warm weather which allowed tourists to lay on the beaches. It certainly wasn't the scenery ! Now that prices have been inflated, terribly so by the collapse of sterling, they assume people really want to come here ? They are fooling themselves and the unemployment figures and closing restaurants, cafes, bars, shops and even now banks won't even serve to convince them. They will see the error of their ways - when it is too late. They have been told this at a recent World Travel Market but they failed to listen, not only to the Brits, but to the Germans, the Scandanavians and a whole lot more. I have listened to both the pleas of representatives of the Visiting Market and then the Spanish response and conclude that their mindset is one of complete Latin stupidity. That stupidity is even causing the low cost airlines reconsider their routes. They will only learn when the money dries up entirely during 2009. They have been told time after time that this area cannot offer quality to satisfy wealthy tourists and should concentrate on the Chinese Restaurant method of keeping costs down to ensure 'bums on seats' . No the Spanish knew and know best.
What will the various ayuntamiento do then ? Put up taxes of course. That is their way. Service industry - they wouldn't know the meaning of the word !

£1 -- 1.19 Euro
E1 -- 84 pence

What you say appears to be right John50. I read this item only a few days ago:


MADRID -- Spain's mighty tourist industry is set to contract this year at a time when the economy is already heading for a recession for the first time in 15 years, an industry association said Thursday.

Exceltur, which groups together the country's travel companies, forecast foreign tourist receipts in 2008 would fall by 3.6 percent, while the number of visitors would drop by 0.1 percent and fall short of the 60 million predicted at the start of the year.

Receipts in the first eight months of the year climbed 3.0 percent from a year earlier to EUR 34.965 billion. The number of foreign visitors in the same period was flat at 41.2 million.

Spain is starting to feel the effects of a downturn in the economies of its major markets, such as Britain and Germany. Visitors from Britain, which is also expected to suffer a recession, are opting to stay in cheaper alternative forms of accommodation to hotels especially so bearing in mind the virtual collapse of Sterling against the Euro.

Exceltur said while the average stay per visitor had increased, tourists are spending less per day.

The association said its so-called tourism GDP contracted 0.4 percent in the third quarter and is forecast to fall by 0.1 percent for the whole of 2008, the first drop since 2002.

Tourism accounts for 12 percent of Spain's GDP and is a key source of employment and foreign income. Spain is the second biggest tourist destination in the world.

El Pais / Adrián Soto

[John50]

Weak pound hits property sales - report

Spanish property prices need to fall substantially before recovery is possible

Spanish property prices have to fall furtherProperty prices in Spain need to fall substantially if there is to be a recovery in the real estate market, according to a report from consultants.

A drop of at least 23% is needed to bring housing affordability back to its long term average and return the property market to normality, the report from property consultants Aguirre Newman says.

But the prices need to fall even further for second homes as these are a 'luxury' and will therefore not see a recovery before the primary property market, the report adds.

Whilst identifying over pricing as the main problem, the report also points out that the market is under added pressure from the credit crunch, weak pound and falling consumer confidence as unemployment rises.

With the property market paralysed by high prices, Aguirre Newman expects a trend towards renting over buying, should property prices not fall.

Renting has been an unpopular option in Spain, with less than 8% of households renting, compared to 35% in other European countries. Aguirre Newman recommends legal and fiscal changes to stimulate the rental market.

The report forecasts that rents will increase just above inflation, making rental property investments worthwhile with the right legal and fiscal changes.

However some experts are predicting that a much steeper fall in prices is required with one talking in terms of a 30% drop and that the property glut will take 15 years to clear in some areas.

It is estimated that a million new homes are currently unsold. Figures from the Ministry of Housing suggest there are between 650,000 and 930,000 and Tinsa, one of Spain's biggest appraisal companies, is forecasting a surplus inventory of 930,000 new homes by the end of the year.

This makes the situation in Spain worse than in the US according to Professor José María Montalvo, of Pompeu Fabra University. It will take at least five years to clear the surplus, he estimates.

But in some areas it could take 15 years according to Professor Gonzalo Bernados of the University of Barcelona. He cites Les Borges Blanques, Alcarras, Alicante Province including the massively overdeveloped Torrevieja and Figueres as areas that could experience a very slow recovery.

Developers confirm that new property is not moving. 'Nothing sells, despite the fact that we have reduced real prices by 30% over the last two years and by more on the coast,' said Félix Abánades, president of Afirma that has 450 unsold properties and 300 more under construction.

A lack of credit and a weak pound are the main reasons behind the lack of sales. 'Banks are refusing to subrogate the developer's mortgage for 40% of buyers. Buyers are being forced to back out of their purchase contracts because they can't get a mortgage,' said Abánades.

[Armin Tamzarian]

Well, John50 and KC1 if you want to spread further gloom by quoting, then make sure you are quoting correctly.

The 60% figure you have quoted is a number stated by own tour operator, TUI.

But you failed to mention that the reduction in package holidays is almost completely offset by independent travellers coming here on Budget airlines with Ryanair and Monarch for example promoting new routes.

This is why they expect visitor levels to be more or less the same but also expect tourists to spend fewer Euros when they get here due to the combination of the devalued pound and the credit crunch.

Tourism is by no means expected to be anything like as badly affected as you are making out.

[John50]

I believe the tourist industry here are living in dream land. What I have written is based on many years experience in the industry and also backed up by what independent observers have written. This area has survived on low prices and sunshine. Bar that, and without wishing to sound unkind, there isn't much going for it. Better quality and even more economical holidays are to be had elsewhere. One sure thing, businesses here will continue to close and time will tell on the tourism front. Cheap flights and sandwiches made up from food items purchased in Lidls and consumed on the beach and accommodation in someone's primary or second home or paying undeclared rental to a property owner does not represent a tourist industry. Maybe you are one of those Spanish who know best ? Well, as I say, time will tell. I'm retired from it now.

[Drewth]

The Pound started the day looking a little more positive but has now dropped back again unfortunately and looks as though it will settle on 1.179 Euros meaning a Euro costs 84.8 pence.

[Drewth]

Good article in today's Guardian about the fall of Sterling:

Larry Elliott: Don't fear for the pound | Comment is free | The Guardian

Opening today £1 = 1.187 Euro/Euro = 84.3 pence

[Drewth]

John 50 - several articles in today's Round Town News to support exactly what you have been saying. EasyJet's profits are down and the Spanish are very worried about the drop in tourism and Benidorm hoteliers are extremely concerned. Worth a read if you are in to tourism. One person commented that there are better and cheaper places to go now than Spain which echoes what someone posted here.

Anyway, Pound all over the place today and at one time I thought it was slowly crawling up again but no blast it, its now at Euro = 84.6 pence to buy/£1 =1.182 Euros so its lost all its gains as it seems to most Fridays.


PS. is it me or have loads of subject threads disappeared again ?

[Armin Tamzarian]

John 50 - several articles in today's Round Town News to support exactly what you have been saying. EasyJet's profits are down and the Spanish are very worried about the drop in tourism and Benidorm hoteliers are extremely concerned. Worth a read if you are in to tourism. One person commented that there are better and cheaper places to go now than Spain which echoes what someone posted here.

Surely you're not relying on getting your information from the Round Town News, Drewth?

Let's get realistic. Easyjet's profits were down because of the high price of fuel earlier in the year. They actually carried 17% MORE passengers in that period.

Ryanair's profits suffered for the same reason even though their passenger volumes in the 2nd quarter this year were UP by 20%.

Both airlines say they expect good results if the oil price stays at its current level and Easyjet reported bookings for the first quarter of 2009 "slightly ahead of last year".

Did RTN report this as well?

(edit) Passenger numbers through Alicante airport October 2008: 872,294 (from UK 428,079) 2008 total : 9,683,377 (UK 4,139,13

Passenger numbers through Alicante airport October 2007: 866,221 (from UK 431,290) 2007 total : 9,029,206 (UK 3,939,900)

So, last month UK visitors through this aiport were very slightly down month-month by 0.7%, but this year there have been 5% more visitors here than in 2007. They must be staying somewhere?

Also, the Alicante airport figures show big increases (both in October and for the year) in the numbers of Germans, Belgians and Swedes coming here.

[Drewth]

An excellent article has appeared in the Independent about this very issue and the effect it is having on a lot of us here in the Torrevieja area:

Costa lot: Expats forced to tighten their belts - Europe, World - The Independent


I am no expert on tourism but the Round Town News article which Armin disagrees with is reproduced here:

Written by David Mills

Thursday, 20 November 2008

British Tourism Downturn

The devaluation of the pound sterling against the euro in the last six months has caused an estimated 20 per cent increase in the price of holidays for British tourists choosing the Costa Blanca as a holiday destination!

According to the hotel employer’s association Hosbec in Benidorm, the negative affect is thought to have been caused by the worldwide economic crisis that threatens the whole tourist infrastructure in Spain. They said the exchange rate is making other destinations away from the Mediterranean such as Turkey or Egypt, more viable options for cash-strapped Brits.

The euro was changing hands for 67 pence in June however; yesterday the same euro was costing 81 pence. The US dollar was static at 67 pence the same amount as the euro six months ago due to the pound being very strong against the euro.

Greater effort

In order to fight this negative downturn, the local Spanish companies demanded action from the National, Regional, Provincial and local tourist administration to invest a greater effort in marketing the Costa Blanca in general and Benidorm in particular in Great Britain. HOSBEC have also called for a ‘joined up and concerted effort’ by all businesses big and small to protect their investment.

The weakening of the pound and the economic crisis that is affecting the UK has already caused alarm in the tourist sector of the Costa Blanca that relies heavily on British tourism comprising around 54 per cent (2.5 million people) of the total. The reduction in the numbers is a reflection of deep cutbacks in expenditure by people in the United Kingdom. Thomas Cook announced at the end of September they anticipated a 15 per cent reduction in business during the summer of 2009.

The ‘knock-on’ effects of these economic cuts and losses have been reflected in the activities of the airline company Easyjet. This week they announced their annual profits for the fiscal year September to September were 98.3 million euros down on last year, a drop of 45 per cent! The airline attributed the reduction in profits to the scarcity and relatively high price of fuel, especially in the UK. Easyjet connects Alicante’s El Altet airport with 12 UK airports as well as Basel and Dortmund.

Liverpool and Birmingham

The Benidorm Councillor for Tourism, Angelica Such, will head to the UK next week as part of a ‘First Direct’ sponsored tourist promotion. The team will try to attract more tourism in the north of England, in particular in Liverpool and Birmingham, home to nearly seven million people. Numerous street activities are planned including giving away ‘goody bags’ with trinkets and teasers to encourage more holidaymakers here.


I wouldn't say this was a badly written or researched article.

[Warrior]

Pound Rises

I understand that the pound has risen to 2.4



against the Matabele Gumbo Bean!!