Population of Spain is 47,190,493
In 2010 the population of Spain war recorded as 47,190,493, an increase of 0.4% on the previous year. The regions which experienced the largest increases, 0.8%, were Andalusia, Castilla-La Mancha and Navarra. The Balearics and Murcia increased by 0.6% whilst the capital Madrid grew 0.5%.
Inflation was only 2.9% in November
Inflation increased only 2.9% in November, compared with same month last year, mainly due to cheaper petrol and medicines. This means that 5 million pensioners will not have their pensions increased next year, since the November inflation figure is used as index for this purpose, and if it is less than 3% inflation, there is no increase.
Retail trading fell 7.2%
Retail commercial turnover fell 7.2% in November, compared with the same month in 2010; the 17th month of shrinkage. Sales of food products fell 4.1%, non-food products 9.8%.
Onions cost 1,100% more
Onions increase in price 13 times from farmer to consumer. Due to the low price paid to the farmers (8 cents a kilo) many do not bother to harvest them and thus onions are being imported from countries where production costs are cheaper. The same goes for olives, Spanish farmers are paid 36 cents a kilo, whilst customers are charged 3.87€ and carrots, produced at 19 euro cents sold in the shops for 95 cents.
Wealth of Spanish shrinks…….
From the start of the crisis in 2007, Spaniard’s wealth per head has fallen from 105 to 100 points, which ‘average in’ the Euro Union. Luxembourg is on top of the list, with 271 points; Romania and Bulgaria at the bottom, with 44. Spain comes 13th in the 27 EU countries.
…….but not for all
Executives in banks which have received public money to survive, must reveal publicly what their salaries are before the end of 2011. Some have refused to do so, whilst others have not. Rodrigo Rato, Chairman of Bankia, received 2.3 million euros, and Jose Luis Olivas, who had to retire from his Vice-Presidency in the same entity due to the scandal of Banco de Valencia, got away with 1.6 million.
Owner of Zara has 24,000 millions
Amancio Ortega, the owner of the Zara chain of woman’s clothes shops, with 24.000 million euros is the richest person in Spain. Runners-up are the family Del Pino with 4,100 million, Rosalia Mera, the ex-wife of Armancio Ortega, with 3,305 million, the Entrecanales family have 2,454 and the March brothers 1,699 million.
In a year where the Ibex stock exchange lost 13%, the ten richest people in the exchange increased their fortunes by 8%.
Corruption in Spain
In the last produced World index on corruption, Spain moved one place, compared with last year, from 12th to 13th place. However, the country scored 6.2 points out of a possible 10, a 0.1 point improvement.
New Zealand is number 1 with 9.5 points, Somalia is last, with only 1 point.
Exports up 46% from 2004
Spain has increased exports by 46% since 2004. In the first 9 months of 2011, the country exports 158.000 million euros worth of goods, but even so, their share of international commerce fell from 1.98% in 2004 to 1.60% in 2010. The reason: the strengthening of the emerging countries in world trade over the last decennium (China, India, Brazil).
Labour costs hit 2,456,9 Euros
According to the national office of statistic, labour costs per month per worker hit 2,456 euros in the third quarter of 2011, up 1,5% from the same time in the previous year. 1,800 euros is paid in salaries, 574.60 comes from social security payments. The hourly cost increased 4.8%, due to a reduction in the number of hours effectively worked and an increase in vacations and fiestas. After deducting vacations and fiestas, the working week is effectively 28 hours.
Spanish engineers learning German
In the first half of 2011 a total of 7,257 Spaniards emigrated to Germany to find work. In Germany there are 73,000 job vacancies for engineers. Medics and mathematicians are also welcome. German language courses at the offices of the Goethe Institute in various cities in Spain are fully booked, thus many unemployed Spaniards are going directly to Germany to learn the language.
Economic activity shrinking
Official figures on the economy report an increase of 0.4% in the third quarter and an estimated fall of 0.2 in the last quarter of the year. However, several qualified observers doubt the official figures. The American economist Nouriel Roubini phrased it like this: “Spain is returning to recession, if it ever went out of it”.
Agency Fitch expects economic growth of only 0.5% in 2012. The foundation of the saving banks Funcas predicts a growth of 1%. The Zapatero Government foresaw growth of 2.3% !
Lights out in many town halls
Many municipalities have difficulties paying their electricity bills. Electricity companies, complaining that they owe in the region of 500 million euros, after the summer, as a warning to all of them, cut off supplies to some municipalities.
Some of the town halls without lights are Coin in Malaga, Huelva and Priego in Cordoba, Las Palmas on Gran Canaria, Jerez de la Frontera, Llera in Badajoz, Creixell in Tarragona and Badalona in the province of Barcelona.
Court refuses action against rating agencies
The National Court has reassessed the appeal against the decision of the Anti-Corruption court in favour of the rating agencies. The leftist federation Izquerda Unida and two associations presented the appeal because they considered the ratings of the Spanish economy false and based on privileged information. The decision of the National Court is final and cannot be appealed.
High deficit for 2011 expected
Director Angel Laborda in Funcas expects a deficit in the public administration for 2011 of 8% of Gross Interior Product, instead of the 6% projected by the government, making an adjustment of 4.4% necessary for 2012. Instead of a 16,500 million euros savings for 2012, as projected by the new government, an additional 40,000 million will be needed.
In-law of King prosecuted…..
Ińaki Urdangarin, married to Princess Cristina, has been accused by the courts for the activities in his foundation Noos, where he is supposed to have siphoned off important sums of money collected from private and public entities, especially in the Valencia Region and the Balearics. The governments of the two regions paid out hundreds of thousand euros. King Carlos has denounced the activities of Urdangarin as improper, and stressed that all must be equal before the law.
….and Minister Blanco
The infamous Minister of Development in the outgoing government and peddler of Spanish properties on road-shows in Northern Europe, Jose Blanco, is being prosecuted by the Supreme Court. He is accused of having taken significant sums of money, via a relative, from a contractor to speed up contracts affecting his company.
Town hall of Gandia owes 300 million euros
The auditing company Deloitte has found that the Gandia municipality in Valencia has debts of 300 million euros. Debts to banks amount to 141 million, to suppliers 62 million, other financial commitments amount to 32 millions and the debts of the municipal companies are another 65 million. In the town with just 80,000 inhabitants, 82 new workers were employed between 2007 to 2010.
Wine exports up 26.8%
In the first 10 months of 2011 the wine export from Spain increased 26,8%, to 1,813 million litres, however, since most of the increase was ‘bulk wine’ the average price fell 5.9% to 99 cents per litre. The export of bottled wine from registered wine districts increased 20.7% in volume and 20,.1% in value, whilst sparkling wine increased 21.3% in volume and 16.4 in value. Most of the increase in bulk wine went to Italy, China, Russia and France.
Evictions Increased by 14.2% in Third Quarter
Eviction procedures presented in the Spanish courts in the third quarter of
the year totalled 10,869, an increase of 14.2% over the same period in the previous year, but less than the 16,464 evictions between April and June.
The same data shows that in the first nine months of the year there were 42,879 foreclosures, a figure much higher than the 34,459 recorded for the same period in 2010.
By region, Valencia with 2,797, recorded the most foreclosures in the second quarter; the least recorded, 45, were in La Rioja.
The Economy
On its Last Leg
We have a new year and a new government, but Spain’s economic situation remains the same, or it may even be worse !
Unemployment reached 4,422,359 at the end of 2011, an increase by 7.86% over the same time a year ago.
The public deficit for 2011 was 8%, exceeding that predicted by the previous government by 2%.
The Social Security System ended 2011 with a deficit of 668 million euros; the previous government had expected a surplus.
The number of companies suspending payments to suppliers totalled more than 6,000, up 12% on 2010.
The ‘country risk’ of Spain was 385 points in the first week of 2012 and the Ibex was down to 8,289 points.
Valencia Government illiquid
The Valencia Government was unable to repay a loan from the Deutsche Bank of 125 million euro due at the end of last year and could not find any other bank willing to bridge the gap. The regional government had to ask the national government for assistance to avoid a scandal, which could seriously damage the financial standing of the country. It seems however, that the national government has refused to give the free-spending Valencianos extra funds or a guarantee but that they have persuaded a bank to give them a new short term loan. The Valencia leaders have had to present a plan for cuts of 1,000 million euros in their public sector sending.
Banks saved from worthless ‘building land’
On the very last day of 2011, the Government passed a law, extending for one year, the possibility to allow banks to classify as ‘building land’ land that has not been urbanised as foreseen in the plans, which otherwise must have been redesignated to the category of ‘suelo rustico’.
This amounts to a gift of 33,344 million euros to the banks, in the aftermath of the property bubble, when dumb banks granted enormous sums in loans to reckless promoters who bought up agricultural land, made urbanisation plans for thousands of dwellings (including golf courses) paid the mayors for getting them approved and were given thousands of millions to finance the construction…….
The banks accepted the land as guarantees for their loans, and when the bubble burst and the time schedules foreseen in the urbanisation plans had passed, were left with worthless land on their books. Bankia has 5,100 million euros worth of such land on their books, Banco Santander 4,301 million, Caixa Catalunya 3,347 and La Caixa 2,611 million.
Banco de Espańa has calculated that the bad loans, advanced by the banks to the property industry, amount to 176,000 million euros.
And now, paying back the debts
Several of the countries in the Euro Zone have to refinance huge sums in 2012, amongst them Spain. In 2011 the country had to refinance 40,000 million euros. However, the need for new financing is 255% greater in 2012, at 142,174 million. With a high country risk and subsequently high interest rates, this is like rolling a snowball down hill, until it is so big that it cannot be controlled anymore…….
The new Rajoy Government
Before Christmas, the winner of the national elections in November, Mariano Rajoy from the Partido Popular, was appointed prime minister and formed his government, presented a very sketchy government programme in Parliament and won the backing of an absolute majority. This is important since it will not make it necessary for him to seek difficult compromises with the smaller, mostly nationalist, parties.
Soraya Saenz de Santamaria (a young woman) is the ‘strong man’ in the Rajoy government. She is Minister of the Presidency, First Vice President and Government Spokeswoman, in addition to being President of the regional government in Castilla – La Mancha. At 28 years of age she became Leon’s Chief Attorney General, went into politics in 2000 and very soon became the right hand and associate of Rajoy.
The appointment of Luis de Guindos as Minister of Economy was a surprise (even though he had worked in the department in the Aznar government) as he was the President of the infamous investment bank Lehman Brothers in Spain and Portugal a few years before the bank went bankrupt.
Another negative surprise is the appointment of Jose Manuel Garcia Margallo, a personal friend of Rajoy, as the new Foreign Minister. He is from the Valencia Region and has been a member of the European Parliament since 1994, and in that capacity, did what he could to suppress the petitions of European citizens against urban planning abuse in Spain, and voted against the Auken report, which won overwhelming support in the Parliament. Beware of Señor Margallo !
Cristobal Montoro has been appointed Minister of Finances and Public Administration and will have the necessary, but difficult task, of forcing the regions to reduce their formidable spending. The fact that most of those regional governments are from his own party, does not make the task any less difficult.
New Minister of Justice is Alberto Ruiz Gallardon, the young and brilliant Mayor of Madrid.
Cutting expenses
The new government is busy cutting expenses and increasing taxes, after finding a deficit of 8% for 2011, 2% over the previous government’s expectation. By the end of last year decisions had been taken to cut spending by 8,900 million euros and to increase taxes by 6,275 millions, and more are to come !
Included in the savings measures is freezing the salaries of the public employees and restricting the number of new bureaucrats, as well as increasing their short work-week from 35 to 37.5 hours. Subsidies to the public television are cut by 200 million euros, the same as for the railways and the political parties will see their income from the State reduced by 20%.
The subsidies to the private concessionaires of the motorways will be cut, as well as the funds for investigation and development. The finances promised by the previous government to a number of regions will be suspended.
Taxes increasing
The Government has decided to increase the Income Tax general tax rate for the years 2012 and 2013, by three quarters of a percent for lower income earners, up to 7% on incomes over 300,000 euros.
The tax on savings will be increased by 2% to 6%.
The IBI tax (Local Rates) on property will be increased for 50% of all dwellings, i.e. those with the highest value at the moment. In many municipalities the dwellings of foreign owners will be in the upper half.
On the other side, the deduction in Income Tax for those buying a permanent dwelling will be maintained, as will the reduced IVA on the purchase of such dwellings.
The battle with the Regions
To reduce public deficit this year the Government has to get the regions to see the light, a difficult task. The demand of the Finance Minister that the regions must be given ‘approval’ by the central government before deciding their budgets, is being met with resistance in some regions. The Basque Government refuses this control completely, as ‘an attack on the self government of the Regions.’ Catalonia has called the measure ‘unacceptable and intolerable’ whilst Andalusia has promised to ‘defend its autonomy’. The Valencia Government, on the contrary, has welcomed the measure, a move much encouraged by their need for government assistance in saving them from going broke.
