Spain Business Brief - Tuesday November 24 2009

Spain Business Brief - Tuesday November 24 2009
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By h.b. - Nov 24, 2009 - 5:03 PM

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The State Deficit grows and the Social Security Surplus shrinks

The Spanish State Deficit has grown nearly seven fold over the past year, with the number for first ten months of the year coming in at 58.31 billion €. That compares to 8.501 billion for the same period in 2008.
It now represents 5.63% of the GDP.
However the growth in the deficit in October is lower than it was in the precious month because of smaller falls in the tax take.

Spain is now responsible for one in three of the newly unemployed in Europe since the recession began, according to the annual report of the European Commission. Unemployment across the union has grown by 6.1 million since the Spring of 2008, to reach 22.1 million, of whom 4.3 million live in Spain.

Meanwhile industrial prices have slowed down in their fall. Latest data from the INE, National Statistics Institute, shows them unchanged in October with respect to September, but 4.2% down on October last year. The annual price has now fallen for the past ten months.

The ongoing recession cut the surplus in the Spanish Social Security account by almost a third in October. It fell 27.4% to 13.998 billion, but has led the Ministry for Employment to comment that the system will end the year with a ‘much larger’ surplus that forecast earlier. The current surplus, represents 1.33% of G.D.P. and Secretary of State for Social Security, Octavio Granado, said that the income was now much better than at the start of the year, while costs have moderated in their increases.

The Governor of the European Central Bank, Jean Claude Trichet, has said that Spain needs a greater flexibility in wages in the future. He said that temporary workers were feeling the brunt of the recession in the country, and declared that structural reforms ‘cannot be avoided or postponed’.
He wants to see wages linked to productivity and not the inflation index, and more investment in Education and work training.
Trichet did have praise for the Bank of Spain however describing the Spanish financial industry as ‘a source of strength and national pride’.

Citigroup has forecast that Spain will move into growth at the end of the year. The United States bank now has a forecast for the country better than that of the Government, although it does also warn that growth will be weak in both 2010 and 2011.

The average retirement pension in Spain is now 860 € 28 a month. The number paid in November is 4.9% more than for the same month last year, according to the data from the Ministry for Employment and Immigration.

Pilots in Spanair have accepted lower wages and more sackings. The Sepla union pilots in the company, 447 of the total 516, have voted 221 in favour to 191 against accepting the loss of 177 jobs and an average 25% wage cut. In doing so the collective will be given a 5% shareholding in the company and have a place on the board.

European countries which have an Opel plant are to negotiated EU grants collectively, as Brussels does not want to see a race similar to that seen when Magna were believed to have purchased the company from General Motors. The new GM plan will be discussed with the unions this week.

Development Minister, José Blanco, has admitted that the AVE high speed train between Vigo and Oporto will not be running until 2015, two years later than previously announced. He refused to confirm whether the 2013 date on the Madrid to Oporto line would still be met, although Spain will be putting out tenders worth 900 million € over the next six months for sections of the line.

A study by consumers group OCU has shown that leaving electrical appliances on stand-by can cost more than 100 € a year. Items left on stand-by use 11% of the total electricity across the European Union, and will be regulated by a new EU directive from next year.

The President of Real Madrid, Florentino Pérez, has said he is against the ending of tax breaks in Spain for top paid foreign footballers, known here as the Ley Beckham.
He said that another solution should be found by dialogue before Parliament approves the measure to increase income tax from 24% to 43% in such cases.

And finally,
Spanish company Telepizza has opened its first shop in Dubai. Two more are planned later this month in neighbouring Abu Dabi.

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