Spain Business
Spain Business Brief - Thursday October 30 2008
By h.b.
Oct 30, 2008 - 1:54 PM

Minister for the Economy, Pedro Solbes, has welcomed the latest IPC inflation rate in Spain which has fallen in October by a whole percentage point to 3.6%. The largest fall for seven years comes thanks to the fall in the price of petrol which has fallen from 147 dollars a barrel in July to less than 60 now. Solbes notes that half the fall in inflation was thanks to the petrol price reduction but noted also significant falls in foodstuffs also.

The Euribor rate, used to set most mortgages, has ended the month at 5.2%, it’s lowest level since May.
It comes ahead of an expected announcement of an interest rate cut from the European Central Bank, following the half point cut announced by the Federal Reserve in the United States yesterday.

The Bank of Spain has called on Spanish banks not to announce large profits in this time of crisis, but rather to make better provisions and be more realistic in these times of financial turbulence. Governor of the Bank, Miguel Angel Fernández Ordóñez said that savings banks too should reduce profits and increase their provisions.
Meanwhile Basque savings banks BBK and Kutxa have announced their merger today. The two banks will disappear and reform with a new name.

Consumer sales in September were down by 5.6% on the year, but the latest numbers show that sales actually rose in large department stores and hypermarkets. Employment in small shops fell by 0.3% according to the numbers published by the National Statistics Institute.

Power company Unión Fenosa has increased its profits by 27.6% thanks to a greater income. Turnover was 5.230 billion for the first nine months of the year, up 19.5% thanks to the increase in prices seen in the energy market.

Car company Seat had seen its losses multiply by 2.5 times as sales have fallen 4.9%. Operating losses for the first nine months of the year are 30 million €, compared to 12 million for the same period last year. Seat has already announced plans to cut jobs among the 4,600 currently employed at their factory in Martorell, Barcelona.

T-Systems Iberia, a division of Deutsche Telekom, have applied to sack 550 workers. The number represents 14% of their workforce of 4,030 in 40 centres across the country. Sources say that more than half the jobs would go in the Cataluña region.

Telecinco has announced a reduction in their profits by 13.1% at 228 million € for the first nine months of the year. Rival private channel Antena 3 has announced a profit fall of 46.5% for the same period at 71.3 million €.