Spain Business
Spain Business Brief - Wednesday May 28 2008
By h.b.
May 28, 2008 - 12:49 PM

The Bank of Spain has spoken today of the ‘deep slowdown’ of the Spanish economy. In the bank’s second statistical bulletin of the year. The bank thinks growth in this second quarter will be lower than the 2.7% seen in the first quarter, and notes the decrease in investment in construction. The tourism industry is the main bright spark in the report, which also notes an improvement in the evolution of national and international markets.

More numbers on the falling house sales in Spain with the number of sales now down 38.6% in March compared to the same month last year. The INE, National Statistics Institute says that 46,074 properties changed hands this month, with the number 16.9% down on February which saw 55,000 sales.
Sales were more buoyant in La Rioja and Murcia and 57% of the total sales in March this year came from just four of Spain’s regions – Andalucía, Valencia, Cataluña and Madrid.

The Spanish employers association CEOE has said that it fears that this year will end with three million unemployed in the country. The CEOE is today debating a report from the Economic Policy department head, José Luis Feito, who has said that the Spanish economy will enter recession in the third quarter of this year.
Such an unemployment rate has not been seen here for the past ten years of boom, and the prediction comes as the conclusion of the combined effects of the real estate slowdown and the ongoing increases in the price of petrol.
The Government has meanwhile admitted that the state surplus will be spent this year because of the crisis.

The latest Euribor rate, just two days before the end of the month comes in at 4.985% down slightly from the high of just over 5% seen earlier in the month. It means the average mortgage is now 636 € more expensive a year.

Another prediction on the unemployment prospects comes from the AGETT, the temporary employment agencies association. They consider that unemployment in Spain will continue to increase until 2011 and will increase from the current rate of 9.6% to 11% in 2009, 13% in 2010 and reach 14% in 2011.

In a closer vote than expected the Government has won the right to increase power prices by the amount they consider appropriate. The opposition PP had the support of the PNV and Rosa Díez, while the PSOE was supported by the ERC and IU – 168 votes to 147.
Reports indicate that an 11% increase in power prices is on the way from July 1.

The British Airports Authority BAA, owned by the Spanish giant Ferrovial, has announced profits for the first quarter of the year of 482 million pounds, compared to 73 million in the same period last year. The extra funds come thanks to the sale of their World Duty Free shops.