Spain’s crisis will be over by 2013

Jaime García-Legaz
“light at the end of the tunnel” – Jaime García-Legaz

This year will be “the last of the crisis” in Spain and there is “light at the end of the tunnel”, according to Spanish Secretary of State for Trade, Jaime García-Legaz.

In an interview with Spanish radio network, COPE, García-Legaz also said that if government plans to raise VAT went ahead they would also lower social security contributions to restore the balance.

He was keen to point out that along with the government many of Spain’s biggest companies are also predicting growth in 2013 along with the International Monetary Fund who now forecast that Spain’s crisis will be over by next year.

This doesn’t mean an end to spending cuts or austerity measures though and García-Legaz stressed that cuts “will have to follow” and that Spain must “persevere” with them if it is to meet deficit targets and it’s commitments to Europe.

“If we do not comply, we will lose the confidence of international investors. It is therefore essential to continue with the adjustment of public spending,” he said.

If Spain is to see growth then spending cuts must be implemented, the minister added, saying that at this point Spain must understand that more spending does not bring economic growth. Growth, he said, “will not come from expenditure, but from structural reforms”.

In the event of  a VAT increase the minister said social security contributions would be rolled back as compensation and that this was a measure that the business sector had been discussing for some time.

“This is what is called fiscal devaluation. If we lower the contributions and they are offset by the VAT, the cost of goods will lower. It is a gain in competitiveness for our products and without a doubt that is something that we need”, he said.


Fitch predict zero-growth for Spain

Ratings agency Fitch has today lowered its outlook for economic growth in Spain and now suggests the country’s economy will experience zero-growth in 2012 followed by  just 1.5% growth in 2013.

The agency had previously predicted growth of 0.5% for 2012 and says this new reduction is in part due to Spain’s high and increasing unemployment numbers which the Ministry of Employment in Spain confirmed as 4,422,359.

Fitch also added that the unemployment problem in Spain could cause further issues for the banks and hinted at the possibility of further reductions in ratings for some of Spain’s major financial institutions such as Banco Santander, Banco Popular and BBVA.

Less than three months ago the agency reduced the ratings of Banco Santander, Banesto, BBVA, CaixaBank, Banco Popular y Banco Sabadell.

“The deepening of the crisis in the Euro-zone, the deterioration of the macroeconomic atmosphere in Spain and Europe and an increase in the volatility of the market and the desire to get away from risk, could have a negative effect on the credit profile of the banks,” the agency said adding that the Spanish banks “are unlikely to return to the cheap funding costs that were available to them in the past”.

Senior tourism grows in Andalucia

Andalucia has had a good year for tourism from all age groups and, thanks to the Senior Tourism Europa Programme, over 30,000 over 55’s  visited Andalucia for their holidays. The programme has been running since 2009 aimed at people between 55 and 80, an age group which make up about 17.4% (127 million) of the population of the EU.

The oldest population can be found in Germany followed by Italy, France and the UK. Age is no longer a factor when travelling and Andalucia, the Canary Islands, Valuencia and the Balearic Islands aim to take advantage of this, especially as this age group usually has higher spending power than younger tourists. They take holidays over an average of 7.7 days and spend an average of €323, not including the hotel cost.

Andalucia’s coastal areas have been taking part in the programme including Almeria, Cadiz, Granada, Huelva and Malaga. The most popular destinations for the over 55’s has been Benalmadena with 29% of visitors

The Junta de Andalucia is also promoting the programme to Eastern Europe. The third edition of the programme, which finishes in April, is aiming at travellers from Poland, Estonia, Lithuania, Austria, Luxembourg, Romania and the Czech Republic. More traditional markets including France, Italy and Bulgaria are also included in the programme.