Spain Business Brief - Wednesday November 19 2008

Spain Business Brief - Wednesday November 19 2008
larger | smaller
By h.b. - Nov 19, 2008 - 1:07 PM

Miguel Ángel Fernández, Governor of the Bank of Spain - Archive Photo EFE

More bad news for the economy as the slow-down gathers pace in Spain.

The Spanish Government has admitted that the country could be facing a prolonged recession. Consumer spending in the second quarter was up just 0.1% compared to the 3% a year ago, with the increase in unemployment thought to be responsible for the downturn. Large items such as cars and electrical appliances have been hardest hit in consumer spending cuts.
Investment is also down for the second consecutive quarter as the slowdown appears more spectacular than previously thought.
Secretary of State for the Economy, David Vegara, today refused to rule out the scenario of a prolonged recession.
He said data for the third quarter showed continuing weakness, down 0.2%, the first fall since 1993 and confirmed by the National Statistics Institute today.

The Bank of Spain has called for prudence from the Government as they take fiscal measures to fight the economic crisis. The Governor of the Bank of Spain, Miguel Ángel Fernández, says that margins have to be maintained in case of things getting even worse.
He said the Government should be very careful and prudent, both in the reduction in taxes and in spending plans. He said that care was needed as all the Governments would be on the borrowers market shortly, describing the current changes as ‘pronounced’. He said he did not want debt to be greater than 3% of G.D.P.

The Government has meanwhile announced that it is considering reducing land registry and notary fees by upto 70% as a way of stimulating the real estate industry.
It seems a 20% reduction on notary costs will be established from January 1 as a first step.

The OECD, the Organisation for the Economic Cooperation and Development, has said it considers that Spanish cajas or savings banks should not be subjected to regional approval if they want to merge. The OECD thinks the regional governments in Spain place other obstacles to the savings banks, and make their opinion in a report published today. They also advise Spain to reduce the costs for those who are trying to modify their mortgage.
The OECD predicts that the recession in Spain will reach 0.9% in 2009, with recovery postponed until 2010.

Francisco González, Chairman of the BBVA, has said that state intervention should be limited to the ‘damaged parts’ of the financial system. He says he is concerned about possible discrimination at the time that help is granted, and wants to see such public intervention as being only temporary. He said he did not want to see the state help giving an advantage to those companies who had not performed well at the detriment to those who had.

Bad debt in Spain was triple in September compared to a year ago, reaching 2.54%, the highest level since April 1998. That compares with 2.48% in August, affected by the restrictions on credit and the Martinsa insolvency.

Click here for related stories

mobile |

email this article | print

printer friendly page

More Spain Business

Readers' comments:
Please keep to the subject. Opinions published here are of our visitors, not the Typically Spanish team. Comments which go against Spanish laws or which are libellous are not allowed. We reserve the right to delete any comment we wish. Placing a comment indicates you have read our terms and conditions and privacy policy.

Por favor, céntrate en el tema. Son las opiniones de los internautas, y no las de Typically Spanish. No está permitido verter comentarios contrarios a las leyes españolas o injuriantes. Reservado el derecho a eliminar los comentarios que consideremos fuera de tema. Escribir un comentario indica que has leído nuestros condiciones de uso y politica de privacidad.