Spain’s motorway tolls increased by 7.5%

Drivers face higher charges
Drivers face higher charges

Public motorway tolls have gone up by 7.5% with immediate effect and it is set to increase even more when the IVA/VAT rate is put in place on 1 September.

The move follows the government’s decision to reduce the subsidies granted to the motorway concessionaries.

In particular the AP-7, which runs from Cataluna down the Mediterranean coast, the AP-2 and C-33 will be affected.

Joana Ortega, Deputy President of theCataloniagovernment has criticised the decisions.

“Every Friday (After the cabinet meeting inMadrid) there are new measures which punish Catalonia and go against what the country needs,” he said.

Article source: The Olive Press

Record-low Euribor will cut mortgage payments by up to 20%

Euribor rate is good news for borrowers
Euribor rate is good news for borrowers

In times of recession, social and wage cuts and rising unemployment, good news is scarce. But those citizens whose mortgages are due for review will at least reap the benefits of the descent of the Euribor. Falling interest rates and, according to analysts, the prospect that the European Central Bank are to lower them again, have led to this European mortgage index dropping to its lowest level since it began trading in 1999.

This week, the daily Euribor rate stood below 1%. Using the available data, (in the absence of data for the last two sessions confirming the last thousandth), it is calculated that the monthly index will close July at 1.062%, which means that mortgages with the longest terms will benefit from a discount of up to 20.5%.

The Euribor, which is the rate at which banks lend to each other, has now registered nine consecutive months of declines. The biggest drop, however, has been in the last month, going from 1.219% to 1.062% after the ECB decided to lower interest rates from 1% to 0.75%. Any changes in this indicator impacts on citizens who pay a mortgage, especially those who bought before the start of the crisis, and now mortgage holders whose loans are due for review can breathe a sigh of relief.

The mortgage holders who will benefit most from the falling rate are those with longer-term loans. If the loan has a duration of 30 years, for an average loan the payments will fall by 13.9%, for 40 years they will fall by 17.4% and for those who signed loans of 50 years, by 20.5%.

There is particular benefit from the descent in the Euribor, for those who signed their loan before the real estate sector began to collapse, since mortgages contracted at that time were subject to lower spreads of between 0.40 and to 0.75 points.

This won’t be the case for those who have contracted their loans in recent years or are about to do it now, because analysts believe that the much higher differentials applied to these contracts, swallow up any drop in the Euribor.

Even so, Professor of Applied Economics at the University Pompeu Fabra, José García-Montalvo, stated that in the past two months “we are seeing a contention and even a decrease in the risk premium over the Euribor”. According to the National Statistics Institute, the average interest rate at which mortgages were granted in the month of May was 4.32%, which represented a decline from the previous month.

El Pais reported that whoever buys a house now will at least have the consolation that the prices of apartments are continuing to fall, at an even faster pace, and are now 23.6% cheaper than in 2008, and that if they buy before the end of the year they may still benefit from VAT of 4% and tax relief. Nor shall they have a ground clause included in their contract, which prevented the lowering of the Euribor from a specified level.

García-Montalvo believes that the monthly Euribor will fall below 1% and notes that this circumstance will increase the disposable income of families saddled with a mortgage. However, that gain may be diminished by rising unemployment.

Member of International Financial Analysts (IFA), David Cano, said that the decline is mainly due “to cuts in interest rates and the expectation that they will fall further”, to 0.5%. Cano predicted that the index will continue to relax in the “next six to nine months,” although, in his view, the minimum levels to which the interest rates are heading, also significantly depletes the fall of the Euribor.

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Puerto Al-Thani plans suffer setback

Port plan requires changed before approval is given
Port plan requires changed before approval is given

The plans submitted to the ayuntamiento (town hall) for the redevelopment of Puerto de la Bajadilla have suffered a setback.

Part of the plan included a 200 room, 5 star hotel, with a footprint of 20,000m2, to be situated in the port but the department respoinsible for the sustainability of the coast and ports refused to approve the building as current legislation does not allow this type of construction at a marina and because it could hinder “access to the marina”.

The decision to refuse the application was based on a restrictive interpretation of the Coastal Act of 1988, which is still in force. Article 25 prohibits within the easement area “buildings for a home or rooms.”

However, there are precedents in other port areas where the possibility of building hotels was allowed through its inclusion in special programs.

One possible solution that came from discussions was the possibility of reserving the plot of land for “future development” pending any future legislative changes. If this was allowed the rest of the development could go ahead.

The issue of access to the marina is easily remedied. “They are negotiating a number of defects, corrections and clarifications, as a prerequisite for approval,” a spokesman said.

The decisions from the Department of Sustainability of the Coast and the Sea, which imply a negative rating for the ports infrastructure, has not yet been officially announced and the parties involved are yet to be officially notified. However, according to sources, a verbal warning has been given to the Public Ports Agency of Andalusia, which officially denies any knowledge of the matter.

A solution to this is a prerequisite for approval of the main redevelopment plans.

France and Germany determined to protect euro

France and Germany "determined" to save Euro
France and Germany “determined” to save Euro

Researchers have discovered that Britons have an average of six keys on their key-ring. They use five of them regularly but can’t remember what the sixth is for. Now imagine how many keys there are for Wembley stadium. There must be hundreds of them. You’d need a wheelbarrow to move them around. But somebody has nevertheless managed to lose them. And there’s only the one set because they can’t be copied. It will apparently cost £50k to replace the locks and make the place secure.

It will cost orders of magnitude more than that to make the euro secure. Even so, the leaders of France and Germany have given their support to the European Central Bank’s determination to do “whatever it takes” to save the single currency. In a joint statement at the weekend they said “Germany and France are deeply committed to the integrity of the eurozone. They are determined to do everything to protect the eurozone”.

They did not specify whether or not that integrity would necessarily involve Greece, only that “member states … must fulfil their obligations”. Chancellor Merkel is opposed to any new bailouts for Athens and her economic minister Philipp Rösler warned ominously at the weekend that “If Greece does not fulfil its obligations there can be no more money. Then Greece would be insolvent.”

Despite that apparent intransigence, Berlin is said to be giving consideration to debt forgiveness. When the restructuring of Greek government debt went on earlier this year private sector bondholders lost around 70% of their original investment. EU central banks and the ECB received preferential treatment, suffering no write-down at all. The thought now is that those central banks will share the pain, writing off another €70bn of Greece’s obligations.

Writing off more of Greece’s debt will not of course do anything to improve investors’ appetite for Spanish or Italian government bonds. The financial world is expecting to see serious action by the ECB this Thursday to rebuild that appetite; either another dose of cheap three-year money for banks to spend on government bonds or the direct purchase of bonds by the ECB itself.

In the meantime investors are holding their fire. Following the euro’s rapid ascent last Thursday it has gone almost nowhere. Compared with Friday’s opening levels the euro, the US dollar and the Japanese yen are unchanged this morning. Sterling is firmer against them all by about a third of a cent.

Friday’s German inflation (1.7%), US economic growth (0.4% in Q2) and Michigan consumer confidence index (72.3) had minimal effect on exchange rates. Today’s ecostats have equally little potential. UK monthly mortgage approvals will probably not be far from 50k, as has been the case for two and a half years. Euro land business confidence seldom attracts much comment. The CBI’s distributive trades survey of UK retail sales is unlikely to come close to last month’s 42% reading.

This morning the Italian government will sell up to €5.5bn of 10-year bonds. Will investors be inspired by the determination of the EU leadership to preserve the euro or will the yield be above 6%?


Moneycorp – or telephone +34 951 319 700

GDP falls for third consecutive quarter

GDP contracts for third consecutive quarter
GDP contracts for third consecutive quarter

According to the latest figures released by the National Institute of Statistics Spain’s GDP contracted for a third consecutive quarter confirming the country is still in recession. A technical recession is commonly defined as two consecutive quarters of economic contraction.

Gross Domestic Product (GDP) generated by the Spanish economy registered a real variation of –0.4%, one tenth lower than the previous quarter.

The interannual GDP variation was –1.0%, as compared with 0.4%, for the first quarter. This behaviour was due to the more negative contribution by domestic demand, partly compensated by the positive contribution of foreign demand and order similar to that recorded in the previous quarter.

Euro group leader Jean-Claude Juncker has called on the ECB to step in to help cut Spain’s debt costs.

“We will work in close agreement with the ECB, and we will, as ECB President Mario Draghi said, see results,” Mr Juncker said speaking to press.

“I don’t want to drive expectations, but I must say, we have reached a decisive phase.”

Spain’s consumer price index also increased with an increase of 2.2%, year-on-year. The increase was higher than expectations due to the increase in medicine costs put in place by the government to save money and reduce the deficit.

Economists warned price hikes, and especially a 3% rise in sales tax due, would distort consumer prices while the deepening recession reflected slower domestic demand.

Spain loses €240 billion in tax evasion

240 Billion Euros lost to tax evasion
240 Billion Euros lost to tax evasion

A quarter of all financial transactions in Spain are being done ‘under the table’ according to tax workers.

These tax evasion schemes are costing Spain approximately €240 billion a year.

The report by tax workers union Gestha found the construction and property sectors are the worst offenders.

An estimated €8.6 billion is lost in fraud involving the sale of property, while another €2.1 billion is lost to illegal rentals.

Nearly six out of 10 rental agreements – estimated to be over a million – are made without contracts.

And most tax evasion occurs within the small business sector – in large part because accounts do not have to be audited, making fraud easier.

The union is calling for stricter government regulation to crack down on tax evasion, estimating that it would bring in at least €25 billion for the Treasury.

Article source: The Olive Press

Spanish unemployment up to 24.63%

Unemployment now at 24.63%
Unemployment now at 24.63%

According to the latest figures released by the National Institute of Statistics unemployment in Spain increased slightly to 24.63% during the second quarter of 2012.

The INE summarise the main points  as follows:

  • Employment in the second quarter of 2012 registers a decrease of 15,900 persons, reaching a total of 17,417,300 employed persons. The quarter on quarter employment variation rate stands at –0.09%.
  • The economically active population increases by 37,600 persons this quarter. The number of unemployed increases by 53,500 persons, standing at 5,693,500.
  • The unemployment rate grows 19 hundredths, standing at 24.63%. In turn, the activity rate rises at 60.08%. This quarter, the loss of employment increases 70,000 persons among men, whilst decreases in 16,400 among women.
  • The employment increases 14,600 among women, whilst decreases 30,600 among men.
  • Employment increases in 42,800 persons in Services and in 6,200 in Construction. The employed persons decreased 44,000 in Agriculture and 21,000 in Industry.
  • Wage-earners with a permanent contract increase by 4,400, and wage-earners with a temporary contract do so by 18,300.
  • The number of households with all of their active members unemployed increases by 9,300 this quarter, standing at 1,737,600.
  • By Autonomous Community, the unemployment rate fluctuates between 14.56% in País Vasco and 33.92% in Andalucía. The activity rate fluctuates between 52.50%, recorded in Principado de Asturias, and 67.54%, registered in Illes Balears.
  • The Autonomous Communities that most increases their employment are: Illes Balears (60,400 persons), Comunidad de Madrid (7,500), Región de Murcia (6,800), Castilla y León (5,600) and Comunitat Valenciana (4,900). In contrast, the Autonomous Communities that registered the greatest decreases in employment this quarter were: Andalucia (23,300 fewer employed persons), Castilla – La Mancha (19,500 fewer), Cataluña (19,100), Galicia (16,800) and Canarias (12,400).
  • The greatest decreases in unemployment persons are registered in Illes Balears and Cataluña. In turn, Andalucía, Castilla – La Mancha, País Vasco, Comunidad de Madrid and Galicia registered the greatest increases in the number of unemployed persons.

Economically active population and activity rate 

The economically active population experienced a decrease of 37,600 persons in the second quarter of 2012. The number of economically active persons stood at 23,110,400 persons. In interannual terms, the number of economically active persons decreased by 26,400 persons.

The general activity rate increased 14 hundredths, up to 60.08%. The female activity rate remained at 53.35%, while the male rate increased 29 hundredths and reached 67.15%.

The general activity rate of Spaniards rose 27 hundredths, while the rate of foreign nationals decreased 73 hundredths, this quarter. The distance between the activity rates of Spaniards and foreign nationals exceeded 17 points, in favour of the latter, this circumstance being explained by the different age structures of both populations.


The number of employed persons decreased by 15,900 persons in the second quarter of 2012, standing at 17,417,300. The interannual employment variation rate stood at –0.09%.

The drop in employment affected men (30,600 employment fewer) exceeds the increase in the occupation of women (14,600 employment fewer). By nationality, the number of employed foreign nationals increased by 9,100, while that of Spaniards decreased by 25,000.

By age, employment grew in persons older than 54 years old in 49,900 persons. The greatest decreases were observed in men between 40-44 and 25-29 years old (23,700 and 21,900 fewer respectively), Among women, the group of 20-24 years old experienced the greatest drop (11.500).

The number of employed persons increased in Services, registered 42,800 more employed persons and Construction with 6,200. The employment decreased in Industry (21,000 fewer) and Agriculture (44,000 fewer).

The increase in the number of employers this second quarter (15,000 more employers) did not compensate for the decrease in independent workers (12,900 fewer) and in the remaining self-employed workers (2,600).

The number of wage earners decreased by 13,900. Those with a permanent contract decreased by 4,400, while the number of wage earners with temporary contracts decreased 18,300. The temporary employment rate decreased one tenth, standing at 23.66%.

Part-time employment increased by 94,300 persons this quarter, whilst full-time employed persons decreased by 110,300. The percentage of persons working part-time increased more than half point, up to 14.93%.

The interannual variation of employment was –4.48%, almost nine tenths lower than that registered the previous quarter. Employment experienced a decrease of 885,800 persons in one year, 895,200 of whom were wage-earners and 10,100 of whom were self-employed workers.

The drop in the interannual employment among men (570,100 fewer) were higher than those women (315,700).

Unemployment and unemployment rate

The increase in unemployment was 53,500 this quarter, standing at 5,693,100. In the last 12 months, the total figure of unemployed persons increased by 859,400 persons.

The unemployment rate rose 19 hundredths, as compared with the first quarter of 2012, standing at 24.63%.

The male unemployment rate increased 48 hundredths, up to 24.57%, whilst the female rate decreased 15 hundredths, and stood at 24.71%. The composition of unemployment observed since the year 2008 remained, with relatively little distance between the male and female rates, and a greater number of unemployed men than unemployed women.

By nationality, the unemployment increased 113,300 among Spaniards and decreased 59,700 among foreign nationals. The unemployment rate for the foreign population was 35.76%, 13 points higher than that of persons with Spanish nationality.

Unemployment decreased in Construction (40,500 fewer) and in Services (84,500 fewer). In contrast, unemployment increased in Industry (23,500 more) and in Agriculture (11,400 more). Unemployment also increased among those persons who lost their job over a year ago (107,400 more), and among those seeking their first job (by 36,100).

The number of unemployed persons increased in all sectors in the last 12 months.

You can read the complete press release here: Economically Active Population Survey – Second quarter of 2012

Most Spaniards unconcerned with Gibraltar disputes

Not important to many Spaniards
Not important to many Spaniards

SIX out of ten Spaniards do not think the dispute over Gibraltar is important enough to be part of the country’s foreign policy, according to a survey.

The findings come at a time of heightened tension between the UK and Spain over the issue of the Rock’s sovereignty and ongoing legal wrangling over fishing rights.

Half of right-wing voters rated the dispute with Gibraltar as ‘quite’ or ‘very’ important in Spain’s foreign policy, although this figure dropped below 30 per cent for voters on the left.

The poll, by the Real Instituto Elcano, also suggests a split in public opinion over the handling of the fishing dispute, with 44 per cent preferring to see an end to the hostilities.

However, 60 per cent of voters on the right want diplomatic pressure to be increased, while 51 per cent of liberal voters want tensions to be reduced.

Article source: The Olive Press

The white elephants that dragged Spain into the red

By Pascale Harter
BBC News, Spain

The white elephants that dragged Spain into the redEurope has already bailed out Spanish banks, now Spain’s regions are clamouring for money from central government – and one of the reasons for this is their lavish spending on white elephant building projects, such as the airport at Ciudad Real, south of Madrid.

It has one of the longest runways in Europe but today there are no planes, only hawks and falcons gliding in the still heat over the arid yellow landscape of Don Quixote’s Castilla La Mancha.

Rabbits pop up around the state-of-the-art terminal, built of steel, glass and gleaming white concrete.

The airport of Ciudad Real opened in 2008 but it closed in April 2012. The luggage trolleys are now trussed together in the car park gathering dust and cobwebs.

It is not the only white elephant to stomp across Spain’s landscape. It is merely one of the herd, a monument to the country’s burst construction bubble which brought down its banks.

When a local construction magnate came up with the idea of an airport in Ciudad Real, money was sloshing around Spain for public works.

It was the 1990s and every town in every region had a grand project to set itself apart and bring in the visitors. Bilbao was getting its own Guggenheim museum, so why shouldn’t Ciudad Real have its own airport?

“We had an attack of wealth, we didn’t know how but suddenly we were rich,” says Miguel Angel Bastenier, senior columnist at the left-of-centre daily El Pais. “There was such a frenzy for investing money and people got inebriated.”

The airport in Ciudad Real was to be a private project, for private profit, but the business people behind it had no problem getting political support.

Before their collapse, Spain’s local savings banks (the cajas), were different from other banks in one crucial way – local politicians sat on the board. So companies needed political support for large projects to encourage the cajas to invest.

Both the main political parties were in favour says Santiago Moreno, a spokesman for the socialist PSOE party which controlled the regional government at the time.

“Expert studies commissioned by the airport investors said it would create 6,000 jobs and a boom for the economy. There would have been a before and after for Ciudad Real.”

But the airport opened its runways to a world in the worst recession for nearly 100 years. Caja Castilla La Mancha became the first of Spain’s local savings banks to go under in the crisis, with a rumoured 70% stake in direct and indirect investment in the airport.

Many more of Spain’s cajas have since had to merge or be taken over, exposed to toxic debts. Should they have been speculating on Spain’s construction boom? The Bank of Spain has fined two of the politicians who sat on the board of Caja Castilla La Mancha for what it calls “serious violations”.

“You might think the airport failed because of the crisis, but I am convinced that the shareholders never thought it (the airport) would work. The only profit in this airport was the building of it,” says local investigative journalist Carlos Otto.

The official bankruptcy report for the airport seems to back this up. It says:

“The loans taken out were enough to cover the construction phase but no thought was given to the investment needed to make the airport function as a business.”

Banks approached by the shareholders for further loans said they didn’t think the business model for the airport was viable, the report says.

It goes on: “The construction itself of the airport provided the first profit for the investors because they signed contracts with their own construction companies.”

“It was never run as a proper business,” said a former worker at the airport who wanted to remain anonymous. He hasn’t found another job and worries he won’t get one in Ciudad Real – where everyone knows everyone – if he speaks out about how the airport was run.

“We had races on anything that had wheels,” he told us. “We even had races on the floor-polishing machines – we were all so bored. Some people used to go out to pick asparagus or catch rabbits…”

There was little to do. There were international flights from London Stansted, and within Spain from Barcelona and Palma de Mallorca. But in its last year not even one flight a day landed on the 4.2km runway, designed – ambitiously – to service the new Airbus 380, the world’s largest passenger airliner.

Carlos Otto believes the private investors who pushed the airport project assumed the regional government would ensure its profitability by subsidising airlines to fly there.

The regional government is now controlled by Spain’s Popular Party which accuses its predecessor of wasting millions of euros. It is still not known how much the whole airport venture actually cost. Estimates run from 356 million euros to one billion euros.

This lack of transparency is one of the problems that led to Spain’s economic crisis according to David Cabo, representative of Civio, a foundation that lobbies for freedom of information.

“Public servants are not used to being monitored, their accountability isn’t common in Spain. It’s terrible because you have many opaque layers of government and each of those control public money.”

Juan Jose Toribio, an economist with Spain’s IESE business school, says that to tackle Spain’s problem of white elephant projects you first have to tackle the country’s sacred cows – the semi-autonomous regions.

“Regional governments enjoy the possibility of spending and inaugurating public works but they don’t run the political risk or cost of raising taxes. Someone should be held responsible for this and perhaps we should return to a much more centralised system.”

But even with an absolute majority in parliament, the Popular Party may find centralisation harder to achieve than austerity.

At Cruz Prado school in Ciudad Real, daily drop-off resembles a picket line, with parents letting off fire-crackers and shouting through loud-hailers. They are demonstrating against the local government for failing to finish construction of a new canteen and playground. For the last two years the project has remained a wreck of rubble – stalled because the money has run out for the next generation.

One of the parents, Milagros Coronado, says she feels angry – and guilty.

“I shouldn’t because it wasn’t my decision to build the airport, but I feel guilty for having liked the idea so much. I would like to have an airport, I would like to have everything, but I definitely, definitely need a proper school for my children.”

From the central square of the village of Ballesteros de Calatrava, you can see the airport. During the building of it, the now-deserted streets here were abuzz with expectation – people thought this huge project would bring jobs and a better life. Carmen Delgado, who lives here, says people were pressured to sell their land, and some of her family’s fields were expropriated for the airport.

“Land is everything for us. If you have land you can have potatoes, tomatoes, animals, olives to make oil… And now? We’ve been robbed of our way of life, and for what?”

Article source: BBC News

Europe and its Institutions need to be more credible, says Montoro

Treasury Minister Cristobal Montoro
Treasury Minister Cristóbal Montoro

Spain’s Minister for the Treasury and Public Administration Services, Cristóbal Montoro, said that “we must improve the credibility of Europe and its institutions”, and defended the need to step up the reform of certain European bodies in order for them to act. The minister added that the economic crisis “has been caused by a lack of budgetary and financial discipline in several countries within the eurozone that were not warned of the risk behind such borrowing, and the failure to apply discipline”.

Cristóbal Montoro said he believes there is a need “to promote reforms in Spain and in the European institutions that do not favour opportunist operations”. The Spanish political project must fit into that “reformed and integrated” European scheme “that will lead to growth. We wish to commit ourselves to stability within that Europe”, said the minister.

In his speech in the Lower House of Parliament during the debate on the budgetary expenditure ceiling for 2013, the Minister for the Treasury said that “today, we are talking about creating a competitive Spain, with no internal imbalances, that does not depend on foreign financing and all within the framework of the European Union”. Regarding the great single currency project, he said “we are talking about strengthening the euro because Europe makes no sense without its currency”. “Europe will be created with the currency or it won’t be created at all”, added Montoro.

La Moncloa reported that, according to Montoro, next year will be the last year of recession. “There is no more time left for financing inefficient public administration services”, he said. 2013 will be “a tough year of adjustments, although the fall in activity will be more moderate” than in 2012.

A budget for recovering from recession

The minister stressed that the budget for next year is solely aimed at ending the economic recession in Spain and at setting an expenditure ceiling, “which involves each and every one of the regional governments for the first time ever”, and that forms part of the structural reforms needed by Spain. “It is not a question of losing anything but rather of gaining a present, capacity and a future”, he added.

Cristóbal Montoro also highlighted in his speech that the public deficit will be corrected in order to achieve growth and create jobs. He said there is a need to stop obtaining financing from other countries, which is what has caused the economy to falter. “We need to grow on the basis of our own financing, our own savings”. To that end, he recalled that the Government is committed to correcting the public deficit while bolstering economic activity and without incurring further job losses.

The Minister acknowledged that the risks hanging over the economy are grave, and said that “we are once again holding out a hand to the political groups. We believe in consensus, we recognise the gravity of the situation. We need to agree, commit to flexibility and to dialogue”.

The expenditure ceiling

The limit on non-financial spending by the State in 2013 was set at 126.79 billion euros, an increase of 9.2% due to the effort needed to service debt that will increase by 9.11 billion euros, and the additional 6.69 billion euros that will be needed by the Social Security system.

If these items were excluded, the expenditure ceiling would drop by 6.6% to 73.26 billion euros.

Forecast non-financial revenue for the State in 2013 amounts to 124.05 billion euros and the financing of regional governments through the expenditure budget amounts to 35.31 billion euros.

Expenditure made available to ministerial departments will be reduced by 12.2% to 31.06 billion euros.

Article source: