The Trade Ministry released figures for foreign investment in Spain in the nine months to September, which showed a 42.9% year-on-year increase to 15.763 billion euros, excluding divestments. This good news coincided with a sharp fall in the IBEX 35 after the result of Sunday’s general elections.
Last Sunday’s electoral results in Spain have cast a gloomy outlook on prospects for securing a stable government. Markets were deeply disappointed as their bet for a centre-right coalition melted down. Ciudadanos performed worse than expected while Partido Popular scored a win but failed to secure enough support.
Fernando G. Urbaneja | One of the values of Spain’s democracy over the last forty years has been left behind following the general elections: namely, political stability. Now the Spanish political scenario resembles more that of Belgium than Germany. The results obtained on December 20th have disappointed all parties’ expectations for putting together a parliamentary model, leaving all the hipotheses on how to form a stable government in the dark.
The Spanish Treasury sold €2.102 billion worth of bonds at its last auction of the year, meeting its issuance target for 2015 of €139 billion. Its average issuing period in 2015 was 9.1 years, not seen since 2010, and it paid an average yield of 0.87%. This has meant that the average cost of debt in circulation has fallen to a record low of 3.16%.
Spain will go to the polls on Sunday and expectations have certainly been met for a more interesting race to the finishing point than in 2011. New kids on the block, centre-right Ciudadanos and anti-austerity Podemos, have put an end to the over 40-year two-party dominance of the Popular Party (PP) and the Socialists. The new government could implement more reforms with expected positive economic impact, but the downturn in markets such as Latin America is likely to weigh more on Spain’s stock market.
BARCLAYS | Spain has undergone considerable structural changes over the past four years. Stronger banks, more competitive firms and a labour market in recovery mode all support a brighter outlook.Ahead of the 20 December general election, we review the near- and medium-term growth and evaluate progress in the labour market, the private- and public-sector deleveraging process and the country’s international competitiveness.
Abengoa’s expulsion from Spain’s Ibex 35, after finding itself on the brink of bankruptcy, has provoked a tough fight amongst companies and sectors which consider they have the right to belong to this exclusive index. One of the most active sectors is real estate, now recovering from its 2008 collapse.
Miguel Navascués | Junk labour contracts in Spain were created by the former Socialist Prime Minister Felipe González in 1984. At that time, González fought against the trade unions to introduce the temporary work contract. This proved to be of no use, as unemployment had increased to about 23% by the end of his term in office in 1993.
In the last six years, the Spanish banking sector’s return on equity (ROE) has fallen by 6.8 percentage points from 12.1% to 5.3%, mainly due to increased capital requirements. But the drop would have been even greater if it had not been for the ECB’s policies. This ROE data coincides with a complaint from Banco Popular chairman, Angel Ron, who said the regulation affecting the financial industry is “abrasive.”
Fernando Barciela | Spanish unemployment fell again in November, reversing a three-month upward trend. Last month, 27,000 fewer people were registered as jobless than in October, taking the total number of unemployed to 4.15 million. This is good news, given that at the peak of Spain’s economic crisis, the jobless rate reached a record 26.9%. There has also been a rise in Social Security affiliations, which increased from 16.3% in 2013 to 17.2% in October 2015.