One of the candidates to replace Merkel proposed fiscally incentivising investment in stocks, as a complement to the public pension. The idea got little support in a country with a savings rate of 10% but an enormous aversion to risk, where variable income seems reserved for the highest income.
Growth in Spain remains strong but the country can withstand some political instability before the results of snap elections that will be held on 28 April. As reported by analysts at Julius Baer, “polls are indicating a hung parliament, but shifts in party policies could enable both a centre-left and a centre-right coalition government to be formed.” The spread difference between Portugal’s and Spain’s 10-year government bonds currently stands at 30 basis points.
According to data published by the Bank of Spain, the debt accumulated by all Spanish Public Administrations during 2018 increased by 26.536 billion euros, an increase of 2.3%, to reach a total of 1,170.961 billion euros by the end of the year, a new record in absolute terms. In relevant terms, however, the debt fell because the Spanish economy continues to grow.
According to data of the International Labour Organisation (ILO), which links the increase in poverty to the length of contracts, in a comparison of 18 European countries, Spain has registered the largest proportion of contracts of 6 months or less. According to its forecasts, Spain’s unemployment rate will fall from 15.5% in 2018 to 14% in 2020.
Spanish PM Pedro Sánchez called snap elections for April 28th after holding an extraordinary cabinet meeting in Madrid. The ballot follows Sanchez’s defeat in parliament over his 2019 fiscal plans. Madrid avoids May 26 “Super Sunday,” with local, regional and EU elections the same day.
On Tuesday Banco Santander announced that it will not exercise the repurchase of its contingent convertible bonds (CoCos) – the AT1 – of 1.5 billion euros and coupon of 6.25%. The bank, which referred to financial reasons, had already warned in its presentation of results that it would only make the call if conditions were adequate.
Red Eléctrica, the company which manages Spain’s high tension electricity cables, has agreed to buy 89.68% of Hispasat, the largest operator of satellite infrastructure by volume in Spain and Portugal, for 949 M€ from Abertis Infraestructuras. REE had already tried to buy Hispasat at the beginning of last year, even reaching a pre-agreement with Abertis. But the deal was frustrated by the corporate operations in Abertis and the disagreement of the previous government.
Fernando G. Urbaneja | A short list of urgent and possible reforms to regenerate and modernise Spanish democracy would include improving the quality and reputation of state institutions, especially the administration of justice and those entities described as independent, with the Bank of Spain at the front of the queue.
Joan Tapia (Barcelona) | BBVA says that Spain could grow 2.4% this year (it grew 2.5% in 2018) and 2% in 2020. This would create 800,000 jobs over the two years and unemployment would fall to 12.6% (compared to 15.3% in 2018). Yet, BBVA also warns that the probability of an accident has increased. Spain’s public debt is 12 points above the eurozone average, around 100% of GDP. Moreover, the Catalan situation is explosive as it represents 16% of the population and 19% of GDP.
House sales have been posting double-digit figures for the past three years, there is strong growth in construction and prices are clearly on the up. What will the future bring? As explained in the next report from Caixabank Research, this positive trend is expected to continue in the sector, both because of the Spanish economy’s good performance and also the healthy state of the industry itself.