Spain’s political leaders are in cheerful mood at the moment. According to the country’s Economy Minister Luis de Guindos, the Spanish economy will return to growth in the second half of 2013. “The perception of the Spanish economy has improved and will continue to do so over the coming weeks and months,” he told his audience at the World Economic Forum in Davos. Earth-shattering it will not be, but grow it will, he insisted. Perhaps, he suggested, the economy will be stationary in the third quarter, with very slight growth in the fourth. And quite possibly he is right. The core of the problem is whether any faltering growth emerging in the last three months of the year will be sustained … [Read more...] about Has Spain’s economic contraction become self-perpetuating?
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Rodrigo Rato: exiting through the revolving door
Given Rodrigo Rato’s previous form and his current predicament, the news that Telefónica has appointed him to the advisory boards of its European and Latin American businesses raises new concerns about transparency and corporate governance in Spain. Rato - who has also served as head of the International Monetary Fund and as Spain's economy minister - will help "reinforce the global vision of Telefónica", the country's largest telecommunications company said after announcing the appointment on January 4. Readers will remember that it was Rato who oversaw the privatisation of Telefónica back in 1997. Rato’s hiring by Telefónica comes less than a month after he was summoned before a … [Read more...] about Rodrigo Rato: exiting through the revolving door
2013: Another rough ride for Spain
Last year presented probably the toughest baptism of fire for any Spanish prime minister since the transition to democracy, but Mariano Rajoy knows that this year will be just as challenging. The big problems facing his government in the coming months are, for the most part, those that dominated 2012: the markets and a pending bailout; rising unemployment; lack of growth; social unrest; and Catalonia’s push for independence. The bailout presents perhaps the most vexing problem for Rajoy, because it demands decisiveness from a notoriously equivocal politician. Although Spain’s borrowing costs have dropped from their alarming levels last summer following Mario Draghi’s assurances … [Read more...] about 2013: Another rough ride for Spain
Euro gains in spite of Spain’s bailout
Here is my latest update of the euro exchange rate, covering the 8th to 15th June 1012. This is intended as a brief guide to what’s affected the exchange rate this past week, to help you decide if now’s the best time for you to change currencies. Exchange rates: GBPEUR: 1.2264 (-1.54%) USDEUR 0.7973 (-1.36%) You can’t have missed it, but the big news this week was Spain’s acceptance of a €100bn bailout for its banks from the EU, and the ensuing doubt about whether this would be enough to solve Spain’s problems. But in spite of there being every chance that the crisis will continue, the euro gained against both the pound and US dollar this week, as crisis fatigue set in. Why has … [Read more...] about Euro gains in spite of Spain’s bailout
Catalonia’s immigrants face lonely road ahead
Sitting across the table from Xavier Alonso Calderón, Catalonia’s head of Immigration and Labour Relations, it was hard not to feel for everyone within a hundred paces of his office. In one of many sweeping cuts to government spending since coming into office late last year, the Partido Popular-led national government had slashed Spain’s immigration and integration fund to nearly nothing. Established under the Zapatero government in 2005, the fund had set aside up to €200 million to be distributed to Spain’s autonomous communities to help finance programs aimed at reporting, educating and integrating the country’s foreign-born population – a group that had exploded over the past decade, … [Read more...] about Catalonia’s immigrants face lonely road ahead
Five things Mariano Rajoy has learned in his first 100 days
1. Blaming the previous government can only get you so far. The Socialists left the public accounts in mess, let unemployment soar, and failed to acknowledge the crisis in the first place…We’ve been hearing all that for the last two years or so from the Partido Popular (PP). And turning the Spanish economy around in the near future, given the state it was in at the end of 2011, is a tough –some would say impossible- task. So far the governing party’s own support has remained steady, according to polls, even if Rajoy’s has slipped slightly. But at some point very soon, Spaniards are going to stop thinking about Zapatero’s feeble economic legacy and start focusing exclusively on the … [Read more...] about Five things Mariano Rajoy has learned in his first 100 days
Is Spain set to follow Greece?
Even without fully grasping the situation in Greece right now, it’s difficult to read the list of austerity measures being imposed on it without feeling shocked. Public workers like teachers must return wages, because the debt deal is backdated to November. The government must cut €300m from public pensions, leaving people in and approaching retirement destitute. Greece must auction its €110 billion gold reserves in the event it fails to meet targets, removing the absolute last means of funding itself when all others are exhausted. For its pains, in all likelihood Greece will be forced to return to Brussels in 12 months to request more funds, because these same demands are pushing it … [Read more...] about Is Spain set to follow Greece?
Even Spanish TV feels the pain
As part of swingeing spending cuts being implemented at the behest of the European Central Bank, the Spanish government is to slash state broadcaster RTVE’s budget this year by €200 million to €1.2 billion. RTVE’s board says the cuts will have a “devastating impact” on its programming, predicting that its audience figures for its two channels La 1 and La 2, will drop by 8 percent. La 1 frequently tops audience ratings thanks to hugely popular programs such as Cuéntame como pasó — a long-running drama telling the story of a family from the Franco era up to the present day— or fantasy saga Águila roja, and post-Civil War soap opera Amar en tiempos revueltos. But the channel says that the … [Read more...] about Even Spanish TV feels the pain
Tax hikes to hit residents
From the most recent Agencia Tributaria bulletins we have been told that 85% of that €6.2 billion tax bill is to come from resident income tax. This affects the employed, self-employed, people with savings and retired people receiving income from outside of Spain such as pensions. It will be administered as a complimentary income tax in addition to the current 24% + income tax that residents already pay. As you might have guessed this tax is on a sliding scale according to how much your income is: Tax range Complimentary income tax €0 – €17.707 0.75% €17.707 – €33.007 2% €33.007 – €53.407 3% €53.407 – €120,000 4% The increases … [Read more...] about Tax hikes to hit residents
A short honeymoon for Spain’s Rajoy
When Deputy Prime Minister Soraya Sáenz de Santamaría announced the new Spanish government’s battery of cuts worth €8.9 million plus tax increases, there were plenty of questions in the air. Why such heavy cuts? How will the new tax increases work? Will there be more cuts? The deputy prime minister’s answer to the first query was that the cuts are extreme because the 2011 deficit is 8 percent of GDP, rather than the 6 percent the outgoing Socialists had estimated. Public Administrations Minister Cristóbal Montoro offered detail about the tax rises. And the fact that the 2012 budget has yet to be presented means yes, there will be more austerity measures later in the year, although … [Read more...] about A short honeymoon for Spain’s Rajoy