Spain Business
Spain Business Brief - Monday October 13 2008
By h.b.
Oct 13, 2008 - 12:49 PM

European stock markets have rallied today following the new Eurozone rescue plan announced in Paris yesterday. A few hours after opening the IBEX 35 in Madrid had rallied nearly 7% to above the 9,600 level. The rally comes however on the back of the index’s largest fall in history on Friday and after losing 21% last week.

Good news for mortgage owners today with the Euribor rate falling back to its lowest level this month in the biggest reduction since January. The current level of 5.425% comes after the European Central Bank reduced the base rate from 4.25% to 3.75%.

Spanish bank Santander has announced it is to spend 1.25 billion € on Abbey, its business in the U.K. It comes in support for the British Government’s rescue plan for the banking sector.
Santander has also said that it wants to buy the United States bank Sovereign in which it already has a 25% stake.
The Wall Street Journal has valued the US group at 1.87 billion €. Sovereign has a large presence in the NE of the United States and has 750 branches and some 12,000 employees.

Despite the financial crisis, Telefónica has confirmed its growth objectives for 2008 and made a new offer for the 55% of its Chilean subsidiary it does not own. The company says it expects third quarter results show continuity from those seen in the year to June.

The Minister for Tax and the Economy, Pedro Solbes, has ruled out the purchase of bank shares in Spain by the Government here, because he said that financial entities here did not have recapitalization problems. He gave the news in a press conference at the World Bank in Washington, where he is taking part in the annual assembly of the bank and International Monetary Fund, IMF.

Despite Solbes being away the Prime Minister, José Luis Rordríguez Zapatero has called an extraordinary cabinet meeting at 1130 tomorrow morning to discuss the measures agreed in Paris over the weekend.
The PM has also invited the leader of the Partido Popular, Mariano Rajoy, for a meeting at 1730 in the evening to keep him abreast of developments.


In an interview published in the Vocento group of newspapers in Spain on Sunday, Minister for Tax and the Economy, Pedro Solbes, has said that there is no doubt that 2009 is going to be worse than this year.
He said it was difficult to know when the economy would start to grow again, as outside circumstances can change so quickly.

It seems as though Solbes has not read the latest edition of ‘The Economist’ magazine. It says that Spain will escape the 2009 recession and see a growth of 0.3%, going against the latest predictions of the International Monetary Fund which also claims a recession.

Natural Gas is to increase in price in Spain by 9%, with the industry justifying the hike because of an increase in costs. It means 1 € more on the bill of the average client who does not have central heating. So far this year gas has gone up by 19.6% in price.

And as the financial crisis begins to bite, 26% of Spaniards say they are trying to spend less on food. 39% of consumers here say they have switched to supermarket’s own or blank brands to get a cheaper price.