Spain Business
Spain Business Brief - Thursday May 15 2008
By h.b. - May 15, 2008 - 12:40 PM
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Brussels has told the Spanish Government that they have to remove all the conditions they placed on the take over for Endesa within a month. If Spain does not comply it will now be taken before the European Court of Justice for the case which was opened last January. An appeal by Spain has thus been rejected.
Meanwhile the European Central Bank has warned today that inflation will remain high for what they described as ‘a prolonged’ period. The warning comes in the bank’s memo for May, and is read by some that an interest rate cut is unlikely.
The price of housing in Spain has fallen in some areas by 30% over the past year according to Juan Carlos Sandoval. He is President of the Union de Créditos Inmobiliarios, UCI, company which is owned by the Santander and BNP Paribas banks.
Speaking yesterday he said that there was too much supply for too little demand and that the fall in prices has been seen in both new and resale property. Many large real estate promoters were now using offers and promotions to try and move some of their stock, he said, underlining that now was a good moment to buy property in Spain.
His statement comes as the Don Piso real estate agency has announced that it is to close 120 of its offices, with the loss of 350 jobs. The company is already in the red, with sales falling by 66% over the past year. Most of the offices to close are located in Cataluña. The company has 120 of its own offices, which will be the ones to close, and 140 more which operate under a franchise.
The real estate slowdown has led the agencies in the sector to increase the number of jobs they think will be lost to as many as 250,000. The number is 50,000 more than the previous estimate.
40 billion € liquidity is needed to keep the industry at current levels according to the G-14 lobby – which groups together the main real estate agencies in the country. They have called for greater measures from the Minister for Tax and the Economy, Pedro Solbes, than the ‘fiscal patches’ seen upto now.
The Minister for Public Administration, Elena Salgado, has announced that the naming of David Taguas, the ex Director of the Government’s Economic Office, as the head of the Constructors’ Association SEOPAN, does not represent any incompatibility or conflict of interest.
The decision is as expected despite the fact that Taguas has the right, for 18 months, to collect 80% of his public wage, in addition to that which he will get as the President of Seopan.
The Bank of Spain has sent out a clear message to banks and savings banks asking them to lift current restrictions on the granting of credits. The Governor of the Bank of Spain, Miguel Ángel Fernández Ordóñez, has said that the current difficulty in obtaining credit is negatively affecting the capacity for growth of the Spanish economy. He also had a warning for the Government, considering that there was a danger that fiscal decisions made now could compromise the stability of the budget in the medium and long term.
Cut price Spanish airline Vueling has announced an increase in losses of 47% for the first quarter of the year compared to last, moving into the red to the tune of 32 million €. The company is blaming the increase in the price of aviation fuel, but says it still hopes to improve results this year compared to last and move into profit in 2009. Incomes was up by 48% over the year at 88 million €.
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