Spain Business Brief - Monday June 29 2009
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By h.b. - Jun 29, 2009 - 1:19 PM
Spanish savings banks suggest retirement age of 70

Savings banks in Spain have recommended increasing the retirement age to 70. A report from the Savings Bank Foundation, FUNCAS, also wants to see a ‘deep reform’ in social security payments, compensated for by a ‘moderate’ increase in VAT. They consider such reforms are needed to guarantee pensions, bearing in mind that pensions are inflation linked and have to be paid from people working for 20 – 25 years.

Prices in Spain continue to fall, with the advanced number of June showing an IPC annual rate at minus 1%. It’s the fourth consecutive month to show a negative number according to the data from the INE National Statistics Institute.
The Government continues to insist that the falls are down to petrol and there is no danger of deflation. It notes a barrel of Brent was 133 dollars almost double 69 dollars now. Secretary of State for Hacienda, Carlos Ocaña, commented that he expected a return to ‘moderate positive numbers’ in the autumn.

The tourism industry in Spain has started price cutting in an attempt to save the summer season. Observers say that there are ever more offers, both for last minute deals, and those booked well in advance. Industry experts say there has been a 30% contraction in the sector to June this year compared to last.

The European Commissioner for Foreign Affairs, Joaquín Almunia, has said that the economy is not in free fall ‘but we have to continue to repair the motors’.
He said he thought that fiscal stimulus measures need to continue, making his comments in a forum organised by the Cinco Dias financial newspaper. He underlined that one of the priorities must be to ensure that unemployment does not become something structural.

It has now been estimated that the crisis is affecting immigrant workers and that about a third of them, some 800,000 in number, are no longer working legally or paying into the social security system. These are people who appear as working in the EPA survey of the active population, but who do not appear registered in the data from the Social Security. The number of immigrants and other workers employed illegally has been on the increase in Spain for more than a year. The EPA says that there were 2.6 million workers in March but only 1.8 million were paying Social Security in the same month.

Press reports that the Government has decided on a 2011 closure for the Garoña nuclear power station has it seems pleased nobody. Neither the employees who want it to stay open, nor the ecologists who want to see it close. Those who work at the plant lament that the Government has held no meeting with them, giving them a feeling of impotence, as there is no apparent alternative plan.

The liberalisation of power suppliers in Spain on July 1 has arrived without hardly any offers to make your monthly power bill any cheaper. The reason that most of the power companies have issued no new offers to attract new clients is because they waiting for the Government to fix a new maximum price. Those that have offered a discount have kept it below 3.5%.
As will as the traditional power companies, there are more than 20 new operators who will be operating after July 1.
Those whose power connection is between 3kw and 10kw will be able to choose, an estimated 90% or 22 million of current clients.

Repsol has said that it expects to extract as many as 8,000 barrels of petrol a day from new wells off the coast of Tarragona, close to the mouth of the Ebro.
The new wells, 45km of the coast, have been named Montanazo and Lubina and will multiply the Spanish production of petrol four fold.

Deputy Prime Minister, María Teresa Fernández de la Vega, has said that the Government will try to ensure that no bank or savings bank has problems. She was speaking after the creation of a 9 billion € fund, which will be used to raise as much as ten times more, in order to offer liquidity to entities in Spain. She said the fund has two objectives – to manage restructuring processes in the sector, and to contribute to the strengthening of the bank’s own resources.
Latest reports indicate that the Bank of Spain will reward the large savings banks who take over their weaker rivals. The Bank of Spain has made it clear it wants to see a new map in the sector.

And finally,
The period ends to make your income tax declaration in Spain tomorrow, whether you are expecting a rebate or not. Hacienda are expected to see 19 million declarations this year, an increase of 1.9%, but they expect to collect 24% less, and returning 12.65 billion € to 15.2 million contributors.

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