There is no doubt Spain has some serious specific long-term problems, which cannot be sorted out in a couple of afternoons by a government which doesnt’ have a big enough majority or the support of the people. What I mean is that it’s not good enough that two parties outline a programme with 150 points which, after it was outvoted, they later reject as if it was a pile of empty words.
The lack of investment alternatives, coupled with the fact that prices and returns are good, are two strong enough reasons for people to take their money out of bank deposits and fixed income securities and buy property.
Spain’s pensions ‘nest egg’ is bleeding cash. Figures show this. But when included in a ranking which compares it with other countries, then the result is even worse. The Social Security’s Reserve Fund has gone from 67th place in the world ranking of pension funds by volume of assets to not even being in the top 100, explains BS Markets.
Experts in tax issues are busy these days trying to explain what has happened with corporate tax, the revenues from which have fallen no less than 85% in the January-July period. The Tax Office only raised 433 million euros compared with 3.011 billion in the first six months of 2015.
The PP and Ciudadanos reached an agreement to incorporate a “guaranteed wage supplement” in the package of measures which allowed Albert Rivera’s party to support Rajoy’s bid for a second term in office. (This measure would mean an increase in spending of more than 7.5 bilion euros over the next legislature). Meanwhile, Pablo Iglesias continues to fight for a rise in the minimum wage to 950 euros a month in 2020 – currently it stands at 655,20 euros.
Caretaker Prime Minister Mariano Rajoy is stubbornly holding on to his target-promise that Spain can create 20 million jobs by 2020 if the current economic policy is maintained. But the reality of the Spanish economy is just as obstinately demonstrating that there are very considerable holes.
Spain’s socialist party PSOE doesn’t seem to be too worried about the fact the country may not have a 2017 Budget. But it’s increasingly clear to all of us that the lack of a budget will not be without a cost. On the contrary, it will greatly affect a large part of Spanish society. Almost all economists believe that the impossibility of drawing up new accounts, and updating certain items, could mean that the amount spent on civil servants’ salaries will be maintained.
As we have already said there are moments when the economic and political cycles don’t go hand in hand. Yesterday, the investiture of caretaker Prime Minister Mariano Rajoy got underway, with very slight possibilities of his being able to win enough votes to return to office with a majority. But the Ibex 35 blue chip index didn’t even move: in fact it posted a nearly 1% gain.
The Spanish right and centre parties have brokered an agreement for breaking the current political deadlock. The caretaker Cabinet has held office for nine agonizing months as two general elections failed to produce an outright winner. Even if the settlement reached between the caretaker Popular Party government and Ciudadanos marks a sizeable step forward, it will still fail to deliver enough parliamentary support for securing a stable government. The Socialist Party continue to firmly hold the key to power.
Spain’s caretaker Prime Minister Mariano Rajoy will this afternoon make his investiture speech to parliament, ahead of a key vote on Wednesday to secure support for his conservative Popular Party to form a new government. The PP have already brokered an agreement for breaking the current political deadlock with centre-right party Ciudadanos, led by Catalonian lawyer Alber Rivera. As a result, Rajoy can probably rely on the support of 170 MPs. But he needs 176 votes (out of a total of 350) if the PP is to win an absolute majority.