The European Union’s three victims-so-far of the global financial meltdown have, not incorrectly, been described as the economic bloc’s periphery. Their economies are relatively small and, though at times worries about their debts have undermined the euro currency, their problems – even taken in combination – are hardly likely to bring the bloc to its knees. Individually, they were sick from a debilitating cocktail of similar problems: bed-ridden with debt and weak from a bad diet of profligate government spending and loan-happy banks. Nothing, it seemed, that a dose of bailout money from the EU and IMF could not cure with a trip to the emergency ward. Spain is showing similar symptoms. … [Read more...] about Spain: Too big to fail?
spain economy
Common sense prevails as Bildu is allowed to run in elections
Just as the campaign leading up to the May 22 local elections was starting, the Constitutional Tribunal ruled on Friday that the Bildu Basque nationalist coalition should be allowed to take part. A vote of six votes to five reflects the intense political pressure surrounding this landmark vote. While there will inevitably be outraged voices in Madrid, the ruling is an encouraging sign that Spain’s highly politicised courts can take tough decisions based on the evidence before them, rather than vague suspicions that ETA terrorists must be at work behind the scenes. The izquierda abertzale, the pro-independence Basque left, has made substantial moves to prove its own democratic … [Read more...] about Common sense prevails as Bildu is allowed to run in elections
With almost five million out of work, Spain’s unemployment crisis rages on
In January 2009, Spain’s then Labour Minister Celestino Corbacho declared confidently that the number of jobless people in Spain would not surpass the four million mark. It took only three months for him to eat his own words as unemployment shot past that psychologically significant level. It has continued to tick upwards ever since. Corbacho lost his job in October last year. Now another minister, Elena Salgado, who holds the economy portfolio and serves as second deputy prime minister, is also putting her credibility on the line. In a press conference on Thursday, she said five-million plus job seekers is not on the cards. “In the opinion of the Economy Ministry that figure will not … [Read more...] about With almost five million out of work, Spain’s unemployment crisis rages on
Spanish home prices fall faster on tax changes
The income tax filing season for the 2010 tax year, which began on April 4 and ends June 30, will be the last in which the vast majority of Spanish homeowners will be able to write off on their tax returns 15 percent of the interest and capital they pay on their mortgages up to a cap of €9,000. As of this year, only homeowners earning less than €17,000 per year will be able to benefit from the full extent of the tax break, while those earning up to €24,000 will find that the amount they can deduct has been progressively capped at much lower levels than before. Higher income earners will be able to deduct nothing. More than a third of tax payers will no longer benefit from the tax … [Read more...] about Spanish home prices fall faster on tax changes
A shift in the Basque Country despite Sortu’s prohibition
On the face of it, the Supreme Court’s March 23 decision to deem the new Basque nationalist party Sortu illegal was yet another instance of Spain’s justice system refusing to give an inch to those it suspected of having links to the terrorist group ETA. Sortu had hoped to represent the birth of new hope for those wanting an independent Basque Country. The new formation unveiled itself in February, insisting it was not simply a continuation of Batasuna, ETA’s outlawed political wing. To prove this, the party’s statutes explicitly rejected the use of violence, including that of ETA, an unprecedented move for a group representing the izquierda abertzale, or radical Basque left. But on … [Read more...] about A shift in the Basque Country despite Sortu’s prohibition
Zapatero was damned if he did and damned if he didn’t
The Spanish prime minister’s announcement that he will not run as the Socialist candidate in the 2012 general election was, by the time he made it on April 2, hardly a surprise. Rumours and reports to this effect had been leaking out of the party camp for weeks. But while this decision clears the air of any lingering uncertainty about José Luis Rodríguez Zapatero’s future, that of his party remains very much shrouded in mystery. According to the Socialists, their leader’s calculated withdrawal puts them on the front foot as the May 22 local elections approach. Zapatero, they reason, has taken the initiative, choosing when to go rather than allowing events to dictate his course. This is … [Read more...] about Zapatero was damned if he did and damned if he didn’t
Spain and Portugal’s right shun austerity and Brussels – for now
It’s easy to see parallels between the governments of Spain and Portugal of recent years. José Luis Rodríguez Zapatero and José Sócrates were both fresh-faced Socialists when they took power in 2004 and 2005 respectively, promising social reforms as well as economic stability. Both were voted in for second terms before running aground on the challenges that arose following the world economic crisis. Like their Socialist counterpart in Greece, Georgios Papandreou, both men have been forced by circumstances to repress their political instincts and introduce heavy spending cuts and painful reforms. In Portugal, where the economic outlook is worse, the opposition’s withdrawal of support for a … [Read more...] about Spain and Portugal’s right shun austerity and Brussels – for now
Inditex: fast fashion for crisis-proof profits
With unemployment around the world high, cash tight and job prospects dim, you would think that buying a new wardrobe would be the last thing on consumers’ minds. But Inditex, the Spanish owner of clothing brands such as Zara, Massimo Dutti and Bershka, still managed to get consumers to open their wallets last year. And open they did. The company, based in Galicia, Spain, reported a net profit of €1.73 billion for its full fiscal year ending January 31, a year-on-year increase of 32 percent. Sales rose 13 percent to €12.52 billion in the 12-month period. The seemingly unstoppable growth of the almost 50-year-old company comes two years after Inditex overtook US chain Gap to become the … [Read more...] about Inditex: fast fashion for crisis-proof profits
A new slowdown in Spain
The government wants motorists to reduce their speed to cut Spain’s fuel bill amid rising oil prices. But will forcing drivers to go 10 kph slower save anyone any money and, more to the point, cushion the impact of the North African uprisings on the Spanish economy, as the government evidently hopes? Though physics dictates that drivers would indeed see some savings, economics, unlike physics, is not an exact science and chances are that the lower speed limit on Spain’s highways, effective from today, will do little to protect the economy from rising energy costs. Instead, the rush to impose a new law reducing the highway speed limit from 120 kph to 110 kph smacks of desperation. Not … [Read more...] about A new slowdown in Spain
Bye-bye to Spain’s savings banks
Once there were 45, now there are 17. And within a few months there could be even fewer. Spain’s savings banks, or cajas, a common feature of the country's financial landscape for almost two centuries, are becoming an endangered species. The smallest and weakest have fallen first, gobbled up in a series of inter-bank mergers and acquisitions triggered by their exposure to the worst of the fall-out from the international financial crisis and the popping of the Spanish property bubble. New rules introduced by the Spanish government will ensure the consolidation continues apace. The government will require all lenders to raise core-capital levels to 8 percent by September. … [Read more...] about Bye-bye to Spain’s savings banks