Why is the pound in a state of collapse ?

[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]

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.

[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

[Drewth]

Blast ! Its tumbled again.

[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.

[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

[Diabla]

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

[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 !'

[John50]

Costa tourism slump in 2009

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

[KEVIN TYLER]

and all the tower blocks and school playing fields have gone too.

i suppose if you are lucky enough to get a decent price for your casa here, some people will see this advantageous to skipping back to blighty without the need for further borrowing.

kev

[John50]

Euro is 84.3 pence this morning or 1.185 to the Pound whichever way you look at it.

Agree with previous poster. The Thatcher years are back but this time round the mines and British Leyland aren't there anymore.

[jonno]

Today i handed my neighbours keys into the bank









I never liked him and it serves him right for dropping them

[KEVIN TYLER]

all the doom and gloom, job and home losses on the horizon, those guys who prayed for the return of the thatcher years,

your wish has come true.


sorry just couldnt resist,


kev

[Drewth]

The broadsheets are now picking up on the fall of the pound against the euro. Good. Perhaps we might see a bit of propping up in all our favours.

Recession: the euro is too dear; the pound will rise again - Telegraph

Pound sinks to record low against the euro - Business News, Business - Belfasttelegraph.co.uk

[John50]

It depends which 'expert' you quote and don't forgot it is more often or not these 'experts' that got us into the financails mess in the first place. If they were so clever they would have been playing the futures market and would now being sitting on their yacht somewhere warm rashter than working for a living. Here's an alternative point of view.

"The economic horizon has now significantly darkened as the European Union economy is hit by the financial crisis that deepened during the autumn and is taking a toll on business and consumers," EU Economic Affairs Commissioner Joaquin Almunia said in a statement. "In 2009, the EU economy is expected to grind to a standstill."

The EC predicted economic growth in the 27-nation EU will be a paltry 0.1% in 2009. However, many analysts - including those with BNP Paribas SA (OTC: BNPQY), Citigroup Inc. (C) and Royal Bank of Scotland PLC (RBS) - believe even that figure is generous.

"A recession in 2009 seems now unavoidable," Jacques Cailloux, chief Eurozone economist at Royal Bank of Scotland, told Bloomberg News. "Today’s new GDP forecast of 0.1% for 2009 by the European Commission still looks too optimistic to us."

And I know I shouldn't say this, but a little reality in the Euro Zone might do us pound sterling dependant ex pats a favour by devaluing the exorbitantly high Euro v. Pound right now which is killing this area. Mind you, on the Sky News last night they were saying the UK economy would be in negative growth which is even worse than 0.1 % or 0% growth.