The outcome of the recent general elections in Spain was such a patchwork that the job of forming a cabinet has become a nightmare. The Socialist leader taking on this awesome task finds himself trapped. Both the middle-of-the-road Ciudadanos party and the extremist Podemos movement flatly refuse any joint agreement to secure enough support in Parliament.
Ofelia Marín-Lozano | Since 2014, Spain’s economy has been recovering and this has been apparent in almost all sectors, but unevenly. One example is the retail sector, with big names like Mercadona, El Corte Inglés, Inditex and Carrefour. All four companies increased their sales in Spain in 2014 (by 2%, 5%, 2.6% and 0.1% respectively).
The Spanish banks’ non-performing loans (NPLs) ratio fell to 10.35% in November (10.56% in October), with total bad loans standing at 138.894 billion euros. But this simple figure encapsulates the eternal problems of statistics. The fact is that the average NPL figure provided by the Bank of Spain does not reflect the significant differences between the banks.
President Rajoy loves to say that Spain is the country with more GDP and employment growth in the EU. And, of course, he is right. When the PP took office in December 2011, unemployment was increasing at a rate of 7.9 per cent a year. Now, four years later, as the PP’s leader has recalled, ‘it’s dropping at an annual rate of 8 per cent.’ But the most common concern for foreign analysts is the low quality of the jobs being created in Spain.
If Spain wants to continue to be one of the leaders in the global economy, it has to persevere with reforms in areas such as the labour market, education, and the university system. For example, in the last 40 years, Spain has had an average jobless rate of 16%, some 10 percentage points higher than that of our main partners.
BARCLAYS | Santander was just above breakeven in the quarter due to one offs and underlying earnings 25% light as a result of higher provisions and weaker costs. Negative one offs of €1,435m include €600m for PPI and €683m for intangible asset write offs. Even before this Santander’s Q4 earnings were 24% below expectations mainly due to higher provisions but also costs.
It’s good news for Spain’s automobile sector. And it’s not only because sales grew 20% to 1.034.232 units in 2015 from a year ago, leaving behind the bad memory of 2008 when they started what would be as much as a 50% drop from their peak.
The political parties in Spain seemed unwilling to break the deadlock one month after the general elections had taken place. Then there was a dramatic emergence from the doldrums last Friday, when Podemos made a surprise call for a left-wing coalition headed by the Socialists.
In December, the number of jobless in Spain fell by 55,790 people, bringing the total number of unemployed for the full-year to 4.039 million. So the government’s hopes that the jobless number would fall below 4 million in 2015 were dashed. And those who were expecting a significant slowdown in the labour market in the second part of the year, after the strong rise in the first half, were proven wrong.
It looks as if 2016 will be the first year to bring some normality to Spain’s banking sector in terms of capital requirements since the start of the deep financial crisis. The most important consquence of this crisis has been the sharp drop in the industry’s profitability – a 6.8% decline in return on equity (ROE) to 5.3% in six years. But AFI analysts estimate that the Spanish banking sector’s profitability will be around 6-7% over the next few years.