By Juan Pedro Marín Arrese, in Madrid | The Spanish government publicly claims success in limiting damage after having boldly taken the step to revise upwards the deficit target. But privately, it recognises that being forced by partners in the Eurogroup to trim it down came as a nasty surprise. Overconfidence had led Madrid to believe that the understanding attitude shown over Spanish budgetary problems would be enough to shore up…
Before someone else sets sight on this graph and rolls out the Armageddon tale about the fall of the euro empire because of Spain’s disgrace, we would like to make available this explanation, which came via Madrid-based Link Securities. Is this chart indicative of a trend change in terms of buyer appetite of investors? “We think not. The abundance of liquidity in the system and its channelling by the banks (mainly residents) into assets with a profitable spread, should serve to maintain the strength of demand in future Spanish…
MADRID | Spanish Finance minister Luis de Guindos bears the unpleasant task of playing the wet blanket, being realistic, not promising anything but selling a future. His role is that of the victorious Caesars’ companion, who had to whisper in their ears: “remember you are mortal”. In the government and in front of the citizens, he is the one who spoils the fun. For that he needs a great deal of…
MADRID | Cesuras and Oza agreed this week the first merger between towns in Spain. The villages will become one local authority in a decision that was pushed by the need of public spending rationalisation, and that is likely to trigger a municipal restructuring in the region of Galicia. In fact, the president of Galicia’s province of A Coruña, Diego Calvo, admitted there are at least nine other towns currently…
Long term refinancing operation 2 or liquidity injections into Spanish credit entities via the European Central Bank rose in February to €152.432 billion from €133.177 in January. But, contrary to what most European banks seem to be doing, that is, parking capital in the central bank’s deposit facility, Spain’s banks prefer to take advantage of the rate gap and let slip in profits by purchasing sovereign debt. Bond holdings have…
MADRID | Privatisation of Canal de Isabel II, the company that manages water services in the autonomous region of Madrid, attracted this week one more potential investor. Insurance firm Mutua Madrileña has expressed its intention to officially bid for the water company. The insurer, chaired by Ignacio Garralda, has confided in Mediobanca to advise on the operation. Esperanza Aguirre, president of the Community of Madrid, and the Spanish capital’s mayor Ana Botella have…
By Fernando Rodríguez, in Madrid | Maite Ballester is president at the Spanish Venture Capital Association ASCRI, which is a non profit entity born in 1986 to develop and promote temporal investment in private companies. She also is managing director at 3i. In what way will Spain’s venture capital sector be affected by the financial system reform and more stringent rules on bank capital reserves? In the short term, these two factors will mean less…
Catalan economist Vicenç Navarro delivers view points whose argument sounds completely contrarian at this stage. While austerity may be debated over –at which degree should it be imposed and how quickly, so further spikes in sovereign debt can be avoided?–, the consensus bears little doubt: public investment must be dramatically lowered. It is the right medicine. But confronted with an increasingly stalled productivity and a disquieting unemployment rate, those of…
By Juan Pedro Marín Arrese, in Madrid | The way the data on the Spanish deficit snowballed from 6% in mid-December to 8% a few weeks later and to 8.51% now, has led many to raise their eyebrows in utter disbelief. Even allowing for some benign neglect shown by the out coming government, such a huge deviation adds little credit to budgetary figures outside central administration boundaries. It not only proves…
By Luis Arroyo, in Madrid | I give you today a couple of graphics, which measure how the process of internal devaluation is going in that peripheral crown, Spain. First, the industry labour costs (wages, red line) and producer prices. Then, industrial production. Everything in annual variations. As readers can see, the boom years were not quite as buoyant in terms of industrial production. Meanwhile, wages were well above the prices, at 4%, trimming production margins. It is a reflection of the brick-and-morter boom, which revitalised wages and sturdy houses…