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Banco de España: Spain in recession
The Spanish National Bank has confirmed what was until now a rumour, that, with a shrinking of the economy, Spain has been in a recession since the summer. The Government is dodging the real situation, but the projection of 1% growth for 2009, included in the budget for 2009, is already proving to be a false calculation.
Inflation eases
Annual inflation is falling. At the end of October it showed an increase of 3.5% over the past 12 months. The accumulated inflation for 2008 now stands at 2.9%. Transport is down 0.3%, food and drink down 2.0 and housing costs down 0.5%, due to lower heating costs.
Euribor down
Due to the easing of inflationary pressure in the Euro-Zone, the European Central Bank last week took the long expected step of reducing the Euribor interest rate on their loans to the banks, from 3.75 to 3.25%. The large fall in the price of oil on the world market, together with a reduction in the purchasing power of the average citizen, has contributed to this new development. The reduction in the official price of money was followed by a reduction in the lending rate between banks and the index for the mortgage rate, which is now 4.742%.
Discontent with Spanish “rescue plans”
The social partners, which the Government is consulting after the decision on the multi-billion rescue plan was taken, are harshly criticising it. Several opposition parties, including IU and the Catalan CiU, are calling the plan “improvised” and “insufficient.” Consumer organisations label the plan “cosmetic” “demagogic” and “insufficient,” whilst the trade unions doubt its efficacy. A recent opinion poll revealed that 78% of the Spanish population did not agree with the rescue plan for the banks, whilst 44% were sure that “it will be paid for by the citizen and benefit only the banks.” Consumer’s confidence is now at an all time low point.
Banco Santander in downward dive
Banco Santander's need for fresh capital has been apparent for weeks but until recently senior executives of Spain's biggest bank were confident they could recapitalise at leisure over the course of 2009, without recourse to market-shaking announcements.
That all changed before European markets opened on Monday when Santander unveiled an unexpected and deeply discounted €7.2bn ($9.2bn) Rights Issue designed to boost its core capital ratio to 7% of assets, from the 6.31% of the third quarter.
The shares of Spain’s financial flagship plummeted 7,58% on the 11th and another 7,61 yesterday. On the morning of the 13th, when this was written, the shares had lost 54,09% of its value over the last 52 weeks.
50,000 small and 15 big promoters
“The Financial Times” reports that many Spanish businesses, due to the effect their failure may have on Spanish banks and saving banks, are under constant vigilance by inspectors from Banco de España. The paper also reports that loans to the promoters and constructors represent “the greatest threat for the health of the Spanish financial system.” Spanish banks are taking over building land and half finished dwelling projects from a number of smaller promoters who are going broke or teetering on the precipice.
Industrial fabric tearing in Catalonia……
Catalonia, historically the most industrialised region of Spain, is experiencing an industrial collapse without parallel. SEAT is laying off almost 2,000 employees, Nissan are moving production out of Barcelona to Japan, destroying 1,680 jobs, the Delphi factory for car parts is dismissing 800 workers, vehicle tyre factory Pirelli is reducing its staff 30% ..... Acunda paper factory has gone bankrupt, Torraspapel is laying off 204 workers. T-system, a sister company of German Telecom, is reducing its workforce by 14%. So far 8,000 small businesses have closed down and the number is expected to increase to 20,000 before the end of the year.
The workers are taking more aggressive action against the layoffs. The social crisis is growing.
…..but luxury for the politicians
Politicians recommend the Spanish population to tighten their belts, but do not live by their own advice. We reported last week about luxury car purchases by politicians in the Catalan and Valencia Parliament. A few days ago Zaragoza Mayor Juan Alberto Belloch had, at the last minute, to cancel the purchase of 36 chairs for a meeting room in the town hall, they were Italian made and would have cost 2,683 Euros apiece.
In the “austere” state budget for 2009 the political parties have an increase of 4.2% in their allowances.
Illegalities forgiven in Marbella
The glaring urban planning illegalities perpetrated by a number of big promoters, who paid large sums to the Gil-party and politicians from other parties, are being forgiven and forgotten by the two big parties in Andalusia, PP now governing the glamorous municipality, and the socialists running the regional government. Almost all of the 18,000 illegal dwellings are being legalised in the new general plan, with just 500 dwellings in Banana Beach, Rio Real and La Vibora excluded
.
31% increase in electricity prices?
The National Commission for Energy (CNE) has recommended a 31% increase in the price of domestic electricity from the first quarter of 2009. The Commission has recorded a deficit by the electricity companies amounting to 6,700 million euros during 2008 and thus needs the increase of 31% in tariffs to balance costs and income. The last increase in electricity prices, 5.6%, was last July.
The Minister for the Economy, Miguel Sebastian, has called the demand “a barbarity” and we shall probably see several part increases over 2009.
Millionaire repaid 6.283 Euros in income tax
Vicente Grande Garau is the owner of a number of companies in the Grupo Drac (Mallorca). The property group is in the process of bankruptcy. All the assets, valued at 1,095 million euros, are in the names of the companies and the owner/director has just received a salary from his holding company Dracplus. He has also just received 6,283 euros refund from the Hacienda for the overpayment of income taxes.
The Spanish National Bank has confirmed what was until now a rumour, that, with a shrinking of the economy, Spain has been in a recession since the summer. The Government is dodging the real situation, but the projection of 1% growth for 2009, included in the budget for 2009, is already proving to be a false calculation.
Inflation eases
Annual inflation is falling. At the end of October it showed an increase of 3.5% over the past 12 months. The accumulated inflation for 2008 now stands at 2.9%. Transport is down 0.3%, food and drink down 2.0 and housing costs down 0.5%, due to lower heating costs.
Euribor down
Due to the easing of inflationary pressure in the Euro-Zone, the European Central Bank last week took the long expected step of reducing the Euribor interest rate on their loans to the banks, from 3.75 to 3.25%. The large fall in the price of oil on the world market, together with a reduction in the purchasing power of the average citizen, has contributed to this new development. The reduction in the official price of money was followed by a reduction in the lending rate between banks and the index for the mortgage rate, which is now 4.742%.
Discontent with Spanish “rescue plans”
The social partners, which the Government is consulting after the decision on the multi-billion rescue plan was taken, are harshly criticising it. Several opposition parties, including IU and the Catalan CiU, are calling the plan “improvised” and “insufficient.” Consumer organisations label the plan “cosmetic” “demagogic” and “insufficient,” whilst the trade unions doubt its efficacy. A recent opinion poll revealed that 78% of the Spanish population did not agree with the rescue plan for the banks, whilst 44% were sure that “it will be paid for by the citizen and benefit only the banks.” Consumer’s confidence is now at an all time low point.
Banco Santander in downward dive
Banco Santander's need for fresh capital has been apparent for weeks but until recently senior executives of Spain's biggest bank were confident they could recapitalise at leisure over the course of 2009, without recourse to market-shaking announcements.
That all changed before European markets opened on Monday when Santander unveiled an unexpected and deeply discounted €7.2bn ($9.2bn) Rights Issue designed to boost its core capital ratio to 7% of assets, from the 6.31% of the third quarter.
The shares of Spain’s financial flagship plummeted 7,58% on the 11th and another 7,61 yesterday. On the morning of the 13th, when this was written, the shares had lost 54,09% of its value over the last 52 weeks.
50,000 small and 15 big promoters
“The Financial Times” reports that many Spanish businesses, due to the effect their failure may have on Spanish banks and saving banks, are under constant vigilance by inspectors from Banco de España. The paper also reports that loans to the promoters and constructors represent “the greatest threat for the health of the Spanish financial system.” Spanish banks are taking over building land and half finished dwelling projects from a number of smaller promoters who are going broke or teetering on the precipice.
Industrial fabric tearing in Catalonia……
Catalonia, historically the most industrialised region of Spain, is experiencing an industrial collapse without parallel. SEAT is laying off almost 2,000 employees, Nissan are moving production out of Barcelona to Japan, destroying 1,680 jobs, the Delphi factory for car parts is dismissing 800 workers, vehicle tyre factory Pirelli is reducing its staff 30% ..... Acunda paper factory has gone bankrupt, Torraspapel is laying off 204 workers. T-system, a sister company of German Telecom, is reducing its workforce by 14%. So far 8,000 small businesses have closed down and the number is expected to increase to 20,000 before the end of the year.
The workers are taking more aggressive action against the layoffs. The social crisis is growing.
…..but luxury for the politicians
Politicians recommend the Spanish population to tighten their belts, but do not live by their own advice. We reported last week about luxury car purchases by politicians in the Catalan and Valencia Parliament. A few days ago Zaragoza Mayor Juan Alberto Belloch had, at the last minute, to cancel the purchase of 36 chairs for a meeting room in the town hall, they were Italian made and would have cost 2,683 Euros apiece.
In the “austere” state budget for 2009 the political parties have an increase of 4.2% in their allowances.
Illegalities forgiven in Marbella
The glaring urban planning illegalities perpetrated by a number of big promoters, who paid large sums to the Gil-party and politicians from other parties, are being forgiven and forgotten by the two big parties in Andalusia, PP now governing the glamorous municipality, and the socialists running the regional government. Almost all of the 18,000 illegal dwellings are being legalised in the new general plan, with just 500 dwellings in Banana Beach, Rio Real and La Vibora excluded
.
31% increase in electricity prices?
The National Commission for Energy (CNE) has recommended a 31% increase in the price of domestic electricity from the first quarter of 2009. The Commission has recorded a deficit by the electricity companies amounting to 6,700 million euros during 2008 and thus needs the increase of 31% in tariffs to balance costs and income. The last increase in electricity prices, 5.6%, was last July.
The Minister for the Economy, Miguel Sebastian, has called the demand “a barbarity” and we shall probably see several part increases over 2009.
Millionaire repaid 6.283 Euros in income tax
Vicente Grande Garau is the owner of a number of companies in the Grupo Drac (Mallorca). The property group is in the process of bankruptcy. All the assets, valued at 1,095 million euros, are in the names of the companies and the owner/director has just received a salary from his holding company Dracplus. He has also just received 6,283 euros refund from the Hacienda for the overpayment of income taxes.