Spain Business Brief - Friday January 27 2012

Spain Business Brief - Friday January 27 2012
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By h.b. - Jan 27, 2012 - 5:48 PM
The state of the economy and problems for Spanair

Luis de Guindos - EFE

Minister for the Economy, Luis de Guindos, has confirmed today that they will impose a deficit requirement of 0% on the regional governments by 2020. He made the comment in Davos where he is taking part in the World Economic Summit, and noted that the Eurozone needs measures to stimulate growth, and strengthen the creation of employment. He said fighting unemployment would be the main priority of the new Spanish government.

The European Commissioner for Regional Policy in the EU, Johannes Hahn, has said that there is no money in the funds for growth. He was answering the French/German idea of using spare money in these funds to create jobs.

Confidence in the solvency of the Spanish economy, helped by the intervention of the European Central Bank, has taken the interest rate on the ten year debt bond in Spain to below 5% in the secondary markets to stand at 4.98%. The Risk Premium is now 312 points.

Qatar has decided not to invest in Spanair, and the Barcelona Generalitat has announced they will no longer inject funds into the airline. It means the airline will not get 150 million € which it was expecting from Qatar for a 49% share. It seems Qatar have decided to turn away for fear of sanctions for the airline regarding the Government grants. Since 2009 the Generalitat has given more than 100 million to the airline.
The future of Spanair must now be in doubt. The company gives direct and indirect jobs to some 4,000 people, and says it needs 150 million to face their financial obligations. (*NOTE - LATEST Spanair is making an application to stop all its flights)

A study by the self-employed organisation, UATE has said that at least three out of every ten autonomous workers would take on a worker this year if they receive sufficient support from the administration. It means that 500,000 jobs could be created in total. However only 5.2% of the self employed think that the cost of sacking would ‘sufficiently stimulating’.

The Government is halting grants for new renewable energy installations, as part of the cuts to the public deficit, and Minister, José Manuel Soria, said energy policy cannot be an exception. Such grants cost the Government 6,409 billion last year.

Social Security and Hacienda are demanding 2.4 million € from left wingers IU in Madrid saying the party has not paid the social security payments for its employees. The accounts of some party militants are already being embargoed, and there are reports also of unjustified election costs.

Banesto has announced it is to eliminate the payment of its fourth dividend because of a fall in profits of more than 70%. The greater demands on liquidity from the Government are putting pressure on the banks profits and the sharing of money to shareholders.

Sales in shops and small businesses fell by four points in the last quarter of last year at 5.8% down on 2010, according to the National Statistics Institute. Employment in the sector was down 0.4% over the year 2011.

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