Spain Business Brief - Tuesday February 9 2010

Spain Business Brief - Tuesday February 9 2010
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By h.b. - Feb 9, 2010 - 2:16 PM
A busy day for business matters in Spain

900 jobs to go at the Opel factory at Figueruelas - EFE

Speaking in the Senate, the upper chamber of the Spanish parliament, Prime Minister, José Luis Rodríguez Zapatero, announced that another 200,000 unemployed whose benefits rights have run out will be granted the Government’s emergency payment of 426 € a month for six months. The measure will not be extended to those 300,000 who have already taken advantage of it once, but goes instead to those who qualify from now on. The Prime Minister insisted that despite the efforts to reduce the deficit the Government would not be reducing cover. The new six month extension to the measure is estimated to cost 511 million €.

Details are emerging about the pre-agreement reached on Monday night between the Employers and the Unions on the wage round. 1% this year, 2% next and between 1.5% and 2.5% in 2012, but we now also know that companies in difficulties will not have to apply the increase. Under the plan they will however have to set a time by which the wage increase can be recovered.

Spanish debt bonds have seen some recovery on the international markets today. The difference between the Spanish and German bonds has reduced by seven points following the explanations given by the Spanish Government in London yesterday.

The Spanish Minister for Tax and Economy, Elena Salgado, was in London on Monday together with the Secretary of State for the Economy, José Miguel Campa, to try and convince the City that Spain is making the ‘necessary adjustments’ to reduce the state deficit. A presentation was made during a lunch organised by Barclays, Citi and Santander banks, with the Spanish team also meeting journalists from the Financial Times.
Spain will owe 553 billion € in debt by the end of this year according to the latest predictions. The Ministry for Economy is keen to note that the amount is 55% of G.D.P., some 20% lower than the European average and lower than in countries such as the U.K., France and Germany. Even so international investors have voiced doubts of late that Spain will be able to reduce the debt, and have called for tougher measures from the Government.
The Spanish team said to a hundred or so investors and analysts in London that they can reduce the public deficit from 11 to 3% over the next three years, and that further adjustments would be made beyond the new stability plan to do so.

Read the document presented in London by the Spanish Government (in English) - here

Some 50 Spanish and British businessmen and parliamentarians met in the House of Lords in London on Monday for a working lunch which was organised by the British Chamber of Commerce in Spain.
The meeting agreed that ‘Spain is not Greece’ and that there is no cause for alarmist headlines over the state of the Spanish economy.
Daniel Brennan, President of the Constitutional Affairs Commission in the House of Lords, and loyal friend to Spain in Westminster, said that it was ridiculous to compare Spain to Greece, backing up his statement with some data, showing for example that the Spanish public debt is 10% of GDP lower than that seen in the U.K., and that the budgetary deficit is similar in both countries. He noted to that unlike the UK Spain has a very strong financial system and has not had to spend thousands of millions of pounds to save the banks. Also private saving in Spain has reached nearly 20% of family disposable income, in line with the Eurozone average.

Opel has announced that 8,300 jobs are to go across Europe, and 900 of them at their Spanish plant in Figueruelas. Despite the number production is to continue in Spain under what is being described as the ‘definitive restructuring plan’. The Spanish plant will share the manufacture of the Opel Corsa with the plant in Eisenach in Germany.

The fall in house prices here during January was 5.5% compared to a year ago. It compares to a 6.6% fall registered in the year to December, with the monthly index from TINSA Indicates a slow-down in the rate prices are falling, and that a 15.4% price adjustment has been seen since October 2007 for flats on average. Prices in cities are down 17.8%, while along the Mediterranean prices have fallen by 20.5%.

Swiss and United States investors are looking at creating a new technology centre in Valencia. The idea is to establish a ‘Mediterranean technological hub’ in the port. The promoters of the idea have met with the Valencia Regional President, Francisco Camps, and with the President of AVE, Francisco Pons.
The Swiss interest is from the Wisekey company, sponsor of the Alinghi sailing team.

And finally,
There has been another set back for the Sevilla dockyards as an order for a ‘party boat’ has been cancelled. The Finnish company, Viking Line is now demanding its advance payment of 39 million € be repaid along with interest taking the payment to 42.6 million.

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