Julius Baer Research | The potentially shortest Spanish legislature is bound to come to an end on 26 June 2016 when Spain will elect a new parliament for the second time within six months. Since the politicians have failed to form a new government after the last general election in December 2015, King Felipe VI has dissolved the parliament and called for new elections.
There was a time, during the Spanish property boom, when Spain was capable of taking in six millions of inmigrants and build more than Germany, France Italy and UK together, in which cement consumption also beat records: more than the whole of the US. Now that public works have hit a soft –and hopefully- temporary bump it has descended.
Fernando Barciela and F.G. Ljubetic | So finally, the urban legend which was created around Spanish Sicavs is beginning to have the results everyone expected; namely that their owners have either begun to close them down, put the brakes on their investments or even consider the possibility of moving to more temperate climes to be found in locations like Luxembourg, Geneva or London.
It has been revealed this week that Spain’s public debt has exceeded 100% of GDP for the first time, reaching 1.095 billion euros. According to the Bank of Spain, this figure represents about 101% of GDP. Almost at the same time, Bloomberg published a graph showing that this level had not been seen since 1909, as well as the level of debt during the Spanish Civil War. With just one month to go to new elections in Spain is this graph oportunistic?
Spain’s exports now account for 33% of GDP, 10 percentage points higher than in 2008. There is nothing better than focusing the magnifying glass on the desired point, leaving everything else out of the picture, to behave like a perfect Pangloss. As you know, Pangloss is that character from Voltaire’s Candide who said that we lived in the best of all worlds because there was none better.
The extreme left-wing manifesto issued by the Podemos-IU coalition aims, in earnest, to completely change Spain. And it would endow it with a Third World country status. By promising to secure a minimum income close to the current average wage, who on earth would put up with the hardship of working all day long?
Spain depends on Europe, but in a rather odd way, because Europe is a carcass without a head and without any initiative. Europe has left us in doubt over our deficit because we were in an electoral period. And this brutal wear and tear, which has not been good for us, on the contrary, has not ended. After June 27, whatever happens, the government will be even weaker, whichever it is.
Ofelia Marín-Lozano | All the banks have seen a sharp decline in their profitability compared with a decade ago. This is partly due to the heavy provisions made to offset the impact of the property crisis (over 300 billion euros in accumulated terms). But it is also the result of the decrease in pre-provisions operating profit and the requirement for the lenders to raise their capital in line with assets.
The government has designed an infrastructures and housing programme, but not one sector expert or professional believes that Spain will see a return to the level of public works investment of, for example, 2007. The PITVI (The Infrastructure, Transport and Housing Plan), in force until 2024, does not contemplate building large infrastructures but rather maintaining the existing ones.
AXA IM | Four months after the elections, negotiations to form a government officially failed and new elections will be organised on 26 June. However, it remains very unclear that their outcome will be more favourable, though probably conducive to a government as a third round of elections would be a tremendous failure. Fiscal consolidation and Catalonia’s independence will be top priorities.