Spain Business Brief - Tuesday June 16 2009
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By h.b. - Jun 16, 2009 - 1:28 PM
Bank of Spain warns that unemployment will still rise after the economic recovery has started

The Bank of Spain has warned that the loss of employment across the country is likely to continue even after when the economy is showing signs of recovery. The Governor of the Bank, Miguel Ángel Fernández Ordóñez, told the cabinet today that the moment of largest contraction in economic activity is very probably past, but he warned that more jobs could be lost for some time more.

It comes as Nissan has presented an ERE application to lose 581 workers at their factory in the Zona Franca in Barcelona.
The workers committee at the plant has accused the company of breaking off talks, and has rejected the proposal. They say they will call strike action again after the failure of the talks on voluntary redundancies. Reports in El Mundo indicate that only six employees have taken up the voluntary redundancy plans which offer compensation of between 23,000 and 120,000 €. The company is reported to consider there are an excess of 700 workers currently at the plant.
Meanwhile the President of Renault España called for ‘another chip’ to work more for less. Jean Pierre Laurent asked for more flexibility from employees in order to increase the productivity in their factories.

There has been another record fall in house sales in Spain, with a 47.6% reduction during April compared to last year with 29,217 operations carried out. It’s the lowest number seen for house sales since 2007, and the fact that Easter fell in April this year is being seen as a possible cause for the size of the reduction.

The Minister for the Economy, Elena Salgado, has said that she is surprised by the 76 million loan which has been granted by Caja Madrid to Real Madrid, but not scandalised by it as there is nothing illegal about it. However, the Minister also said that if the savings bank has liquidity it should be giving credits to small businesses and individuals. She also notes that the State will have political rights in banks where they have received funding help from Government.
Salgado is insisting that the recovery in the economy will start next year but that the GDP will still shrink by the reduced 0.3% over the year according to the latest estimates. She admitted that the cost of the new payments to the unemployed will serve to increase the state deficit even more.

Meanwhile the ICO, the Official Credit Institute, has said that will have given 50% of the credit it has available for small businesses and the self-employed in two months time. So far only 13% has been taken up.
Between January and April this year banks and savings banks credits fell by 11 billion, while the ICO credits were up by 3 billion.

After the reduction by Moody’s rating agency for 25 Spanish banks and savings banks, the President of Banco Popular has admitted that this will mean increased charges. Defending the fact that 63% of bank loans have a ‘real guarantee’ behind them, Ángel Ron, questioned Moody’s by saying that they were penalising banks which had a ‘diversified portfolio of credits for small businesses’. He said that methodology was at least ‘debatable’.

Following the increase in taxes on cigarettes announced by Elena Salgado over the weekend, today the price of a packet of 20 Fortuna or Marlboro have increased in price by 35 cents. A greater increase has been noted in rolling tobacco, where some brands are set to be 52% more expensive. Ducados negro now costs 3 € a packet.
Meanwhile the Government has ruled out increasing IVA VAT to try and fill the growing finance black hole, but has said it will be evaluating other taxes. Carlos Ocaña, the Secretary of State for Hacienda said increasing VAT now would ‘not be a good measure at this moment’.

Cortefiel has announced it will be closing its 11 Milano tailor’s shops across the country after the summer sales campaign. The premises are to be replaced by other brands from the Cortefiel group.

And finally,
The average spend in the summer sales in Spain is forecast to be at the lowest levels for ten years at 90 € per person.
The reduction in spending power has now reached the sales according to a study from the FUCI, the Federation of Independent Users and Consumers. They found that 80% of those asked said that they would be spending no more than 100 € during the summer sales and only one in ten said they would be spending more than that.

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