Spain Business Brief - Friday October 30 2009

Spain Business Brief - Friday October 30 2009
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By h.b. - Oct 30, 2009 - 1:05 PM

Joaquín Almunia - The European Commissioner for Economic and Monetary Affairs - EFE

Spain held back by real estate collapse in addition to the world recession

Joaquín Almunia, the EU Commissioner for Economic and Monetary Affairs, has described the 3.5% growth in the United States economy for the third quarter as ‘the start of the end’ of the crisis. However he also noted, talking to Radio Nacional de España, that Spain was an exceptional case given that the recession is linked also to the collapse in the real estate market, and for that reason it will take longer to improve.
His comments have been echoed by the Minister for Employment, Celestino Corbacho, who has also lamented that unemployment in Spain has the ‘dead weight’ of the construction industry.

Meanwhile the verdict from many visitors to the Salón Inmobiliario real estate fair in Madrid, has been that many of the discounts on offer are not real. Organisers say there were 43,000 visitors to the fair, and that many sales were completed.

After 13 months of consecutive falls in the Euribor interest rate used to set most of the mortgages in Spain, payments on average are down by some 4,000 € a year.
The yearly rate of the Euribor is now at its eighth all-time monthly low, ending October at 1.243%. However the experts think that it will start to climb again at the beginning of 2010.

The latest bad news, coming from the unemployment data for the Eurozone in September, showed that the rate rose by 0.1% over the continent as a whole, to reach 9.7%, but that it was up five points in Spain to reach 19.3%.

A debt of more than 1 billion € in foodstuffs company SOS has led them to apply for an ERE to temporarily lay off all their workers in Spain. Currently 700 workers are employed in factories in Córdoba, Jaén, Sevilla, Valencia, Alicante and Las Palmas de Gran Canarias.

Spanish multinational Repsol has announced yet another crude oil find, this time in the Gulf of Mexico. The exploration of the area is one of the key projects in the company’s strategic plan, and the latest finds have been made with partners BHP Billiton and Hess Corporation. They are described as ‘well above production expectations’.

Profits in the Banco Pastor fell by 29% for the year to September compared to last, at 120 million. The number is down as 135 million has been set aside to meet bad debts which now stand at 4.88% in the bank, below the average for the sector.

Previous Partido Popular Prime Minister, José María Aznar, has called for ‘progressive privatisation’ of the cajas or savings banks in Spain. Aznar said that reform of the labour market was a ‘moral obligation’ for the Prime Minister, because ‘fighting unemployment with grants is the worst political policy’.

A meeting of the technical commission between unions UGT and employers’ organizations CEOE and Cepyme, is taking place today, Friday. It’s being seen as the last chance to try and normalize relations between the two sides, with the unions believing the employers are blocking progress on the wage round, and even denying to apply wage increases agreed previously. The employers reject the accusation.

Congress has agreed a change to the law which will allow shops to pass on the credit card commission they are charged to the customer. It is likely to lead to customers paying a 1% surcharge for using a credit card, and is expected to see more people turn back to cash.

The Social Security treasury has said it expects the surplus in the social security account at the end of this year to be 44% lower than Government forecasts. The Director General of the treasury has said it will be 4 billion, while the Secretary of State has been forecasting 7.1 billion.
It has already fallen by 30% in the year to September.

And finally,
As Spain marks All Saints Day on November 1st on Sunday, the traditional time for Spanish families to visit the graves of their loved ones, thousands take to the streets to purchase flowers for the occasion. The small farmers union COAG has denounced what it describes as the ‘abysmal difference’ paid to growers compared to that charged by florists. They say typically a bouquet which brings the grower 2€ can be found in the florists on sale at 30€.

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