Spain Business
Spain Business Brief - Tuesday July 22 2008
By h.b. - Jul 22, 2008 - 12:46 PM
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The public accounts have moved into the red for the first time in three years with a deficit of 4.68 billion € recorded for the month of June.
The cause of the problem, the ongoing slowdown in the construction sector and the ever increasing price of crude which has led to increasing costs for businesses. The deficit amounts to 0.42% of G.D.P. The government says that the measures they introduced earlier to help businesses and families have also had an effect on the deficit.
Between January and June this year state income fell by 4.8% to 66.93 billion € while costs increased by 10% to 71.62 billion €.
Minister for tax and the economy, Pedro Solbes, has said that the important thing is not the state deficit, but that there is no increase in the debt. Solbes said that a ‘slight deficit’ did not worry him. He said he wants to keep current levels of public debt and admitted that the surplus in Social Security can not compensate for the deficit in the public accounts.
British mobile phone operator Vodafone, has warned about a slowdown in demand in Spain, and the statement has led to a consequent fall in Telefónica shares as a result, down by more than 7% in morning trading..
The British company says that quarterly sales are up 19% thanks to emerging markets and that this has ‘compensated for the weakness’ of the Spanish market. Vodefone said that demand in Spain was down by 0.2% over the quarter.
Businesses in the tourist industry in Spain have warned that the crisis is now being noted in their sector. Exceltur has warned of a fall in domestic demand, and has said that the second quarter of the year shows ‘the first symptoms of the crisis which is affecting the economy’.
The Spanish social security system lost 17,500 foreign affiliates over the month of June according to data just released which shows a 0.8% fall in the number of affiliated foreigners with respect to the previous month. Nearly all the loss, 16,451, came from the construction industry.
There are now a total of 2,128,348 foreigners registered in the Spanish Social Security system, with nearly half of all of them in Cataluña and Madrid. Over the past year the number of non-EU foreign workers has fallen by 1.9%, while foreigners from other EU countries were up 10.1% in number.
One credit agency, Fitch, has issued a warning about how the Caja Madrid savings bank is exposed to the real estate and construction slowdown in Spain. The report thinks that bad debts to the bank have reached 3% with the money owed by Martinsa, with 23% of the credits from the bank awarded to construction or real estate companies.
Caja Mediterráneo is to launch on the stock market at the lower end of the expected launch price at 5.84 € a share. The lower price has been set despite the demand from institutional investors being 1.3 times the offer while demand from individual investors is over 2.2 times the offer. The shares start trading tomorrow.
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