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Spanish Business News

The latest business, economic,property, stock market and financial news from Spain. Keep up to date with what is happening with the Spanish economy, stock market, the economic crisis, the euro zone debt sovereign debt crisis and the Spanish property market.

Recession hits sales of Spain's 'El Gordo' Christmas lottery
22 December 2009

MADRID — Ticket sales for Spain's annual Christmas lottery, the world's richest in terms of prize money, which was drawn on Tuesday fell for the second consecutive year due to the recession.

Sales for "El Gordo", or "the Fat One", were down around 3.0 percent on last year at 2.7 billion euros (3.9 billion dollars) but the total prize money remained the same at 2.32 billion euros, the state lottery agency said.

While other lotteries have bigger individual top prizes, "El Gordo" is ranked as the world's richest for the total sum paid out.

Instead of a single jackpot, the lottery -- which is always held on December 22 -- is designed so that as many people as possible across Spain get a windfall in time for the holidays.

The top prize this year went to the 1,950 tickets bearing the number 78294. Each holder of a ticket with this number won 300,000 euros.

All of the tickets bearing this number were sold in a lottery office in the working-class residential district of Tetuan in central Madrid which is home to many Latin American immigrants.

Sabino Calderon, a 50-year-old unemployed bricklayer from Ecuador, was one of the lucky holders of a winning ticket.

"With the money, the first thing that I am going to do is visit my wife and my children who live in Ecuador," he told reporters at the lottery office that sold the winning tickets, adding he had not seen his family in three years.

Just as excited was Manuela Romero, an unemployed publicist whose mother Visitacion Mayordomo also bought one of the winning tickets.

"We are very happy and want to spend all the money, we are not going to save anything!" she said through tears.

The winning numbers are drawn by pupils of Madrid's Saint Ildefonso School, a former orphanage, who take turns to sing out the winning numbers and the amount won in a nationally televised draw lasting over three hours that brings Spain to a virtual standstill.

Co-workers, friends and relatives pitch in to buy tickets together are then glued to the television and radio as the prize numbers are called out.

Shops, bars and cafes sell shares in their tickets to their customers. The state lottery agency estimates each Spaniard spent around 60 euros on the lottery this year. Tickets cost 20 euros each and they go on sale in July.

The lottery has been held since 1812 and it is considered the kickoff to the Christmas season.

According to national statistics, 80 percent of Spaniards play "El Gordo", using half their annual lottery spending on the festive draw.

Spaniards often choose lottery numbers matching significant dates. One of the most requested ticket numbers this year was 25609, which corresponds to June 25, 2009, the day pop star Michael Jackson died.

The number proved to be unlucky as it was not drawn in the lottery.

Spain's unemployment rate has doubled over the past two years to hit 19.3 percent in October, the second highest rate in the 27-nation European Union behind Latvia.

The Spanish economy, Europe's fifth biggest, entered into its worst recession at the end of last year as the international credit crunch hastened a correction which was already under way in its key property sector.

Source: AFP

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Global Insight: Spain’s economic skies darken
21 December 2009

The pre-Christmas mood in Madrid is a curious mixture of pessimism and cheeriness.

On the one hand, anxious Spaniards are told they are suffering the worst economic crisis in 50 years and fear for their jobs. On the other, those still in employment have rarely had more money to spend. It is not surprising that the city’s restaurants are packed with noisy but neurotic diners as the holiday season approaches.

The reasons for this odd combination of economic gloom and robust personal consumption are no secret. Unemployment has risen sharply – to 18 per cent of the workforce in Spain – but emergency measures around the world to avert another depression have kept economies flush with liquidity and cut interest rates (and monthly mortgage payments) to historically low levels. Inflation is low or negative.

As Barcelona-based economist Edward Hugh put it last week: “Two-thirds of Spanish society has never had it so good.” And Spain’s splurge of fiscal stimulus is in essence no different from what was done in the UK or the US.

Yet skies above Madrid – and Washington, London, Athens and Dublin – grow darker each day.

Read the full article at

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Scotland's biggest airline collapses
16 December 2009

Flyglobespan, Scotland's biggest airline, has this evening collapsed with hundreds of jobs likely to be lost.

The group, which has persistently denied stories written by the Independent that was in financial peril, has had its licence to operate revoked by the Civil Aviation Authority, the airline industry regulator.

The group confirmed that it entered into voluntary administration this afternoon.

PricewaterhouseCoopers, the accountants, has been appointed as administrator to the collapsed airline, which is run by Tom Dalrymple, one of Scotland’s wealthiest men.

It's believed that Globespan, which was spared administration at the 11th hour last month, failed to receive payments from Halcyon Investments, a Jersey-based special purpose vehicle.

It is understood the payment was linked to funds owed to the airline by E-Clear, a credit-card processing firm.

Globespan Group, which was founded in 1970, has around 900 staff and operates a fleet of more than 10 planes primarily from Scottish airports to destinations such as Alicante in Spain and Orlando in the US.

The firm also operates baggage and check-in facilities for rival budget airline FlyBe at Glasgow and Edinburgh airports. And last year the company won contracts from the Ministry of Defence to fly to the Falkland Islands and Qatar from RAF Brize Norton in Oxfordshire.

Last month the group staved off collapse with a last-ditch cash injection.  Administrators were lined up to handle the airline's collapse but directors at Globespan Group managed to secure new funding at the 11th hour.

Source: The Independent

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Spain tops ‘misery index’
15 December 2009

Spain tops a new "misery index" that combines unemployment rates with budget deficits, according to forecasts from Moody’s Investors Service.
Ireland appears in fourth place on the sovereign-risk outlook for 2010, behind Spain, Latvia and Lithuania.
Of the Group of Seven economies, the UK is set to be the most miserable, in sixth position, edging out the United States by two places.
The Moody’s gauge follows a tool created by US economist Arthur Okun in the 1970s which adds unemployment and inflation rates to grade how miserable an economy is.
The new method is “a good measure of the challenges facing some economies in the coming decade,” the Moody’s economists wrote in the report.
Spain, once the driver of European employment, accounts for almost half of the euro region’s increase in unemployment over the past year.
The European Commission predicts its unemployment rate will reach 20pc next year and its budget deficit will total 10.1pc of gross domestic product, compared with a jobless level of 8.3pc and a budget surplus two years ago.
Spain’s economy, forecast to continue contracting next year even as the rest of the region grows, also fares poorly using the traditional misery index, according to Bloomberg data. While Venezuela tops that list of 59 economies, Spain is in sixth. Malaysia is the least miserable.
Of the 16 economies studied by Moody’s, the Czech Republic, Italy and Germany were forecast to be the least miserable.


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Property owners to claim back overpaid tax
13 December 2009

UK property owners who sold houses in Spain could be eligible to claim back thousands of euros in overpaid tax.
The European Court has ruled that the Spanish practice of charging 15 per cent capital gains tax (CGT) on houses sold by Spanish residents and 35 per cent CGT on those sold by non-residents infringed the freedom of the movement of capital. This rule existed in Spain until December 2006.
The judgment is good news for many who lived in their own home in Spain, but who have since sold that property. “If a property was purchased in 2000 for €89,000 and sold in 2006 for €199,000 non-residents would have had to pay €38,500 in CGT while residents would only pay €16,500. The difference of €22,000 could potentially be reclaimed,” said Richard Mannion, tax director at Smith & Williamson, the accountancy and financial services group.


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Zapatero says Spain will meet 2013 budget target
11 December 2009

Spain is committed to bringing its fiscal deficit within the maximum level of 3 per cent of gross domestic product stipulated by European rules in time for a 2013 deadline, José Luis Rodriguez Zapatero, prime minister, said on Thursday.
“The return to growth and the expected fiscal consolidation will allow us to reach the stability pact objectives by 2013,” Mr Zapatero said in a speech on the year’s economic performance one day after Standard & Poor’s, the credit rating agency, lowered Spain’s debt outlook.
Standard & Poor’s pessimism on the Spanish economy is the second blow this week to the reputations of the eurozone’s weaker members.
S&P, which had stripped Spain of its triple A sovereign credit rating in January, affirmed the country’s current ratings but revised the outlook to “negative” from “stable”, blaming the likelihood of more prolonged economic weakness and greater deterioration of public finances than previously expected.

Read the rest of the article at the Financial Times

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Spain credit rating downgraded to negative
10 December 2009

Spain has had its credit outlook cut to negative from stable by the ratings agency Standard & Poor's.
The agency said Spain faced a deeper deterioration in public finances and a longer period of economic weakness than it had previously expected. The news rattled European markets, which were already unsettled by Tuesday's decision by another ratings agency, Fitch, to downgrade Greece.  Stock markets in London, Paris and Frankfurt all closed lower.
"Reducing Spain's sizable fiscal and economic imbalances requires strong policy actions, which have not yet materialised," Standard & Poor's said in a statement.  Spain is still in recession and the government has launched a massive public works programme to try to keep unemployment under 20%.  "We don't agree with this decision," a spokesman for the Spanish economy ministry said of S&P's move.  Spain's debt is expected to hit 67% of gross domestic product next year, according to S&P, compared with 125% forecast for Greece.  Meanwhile, the Greek prime minister has promised to shore up the country's public finances.
"Either we eradicate the debt or the debt will eliminate the country," George Papandreou said, copying a phrase first used by his father Andreas, who also served two terms as prime minister.

Source: BBC News

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Ryanair says likely to shelve 200-plane Boeing deal
08 December 2009

BRUSSELS (Reuters) - Ireland's Ryanair is likely to shelve plans to buy 200 Boeing aircraft because the U.S. plane maker wants to change the delivery conditions, Ryanair Chief Executive Michael O'Leary said on Tuesday.

"We have effectively almost reached agreement on price for a 200-aircraft order ... but the deal is unlikely to take place because now they want to go back and change delivery conditions," O'Leary told Reuters in an interview.

O'Leary, renowned in the industry for driving hard bargains, already warned last month that talks on ordering 200 aircraft for 2013-16 delivery had progressed little and that he might slow down Ryanair's rapid growth from 2013.

"Last week we had pretty much reached agreement with them on price, then over the weekend they wanted to change delivery conditions," he said.

"We're going to make a final decision at the board meeting next Thursday. Unless there's some change in their position over the next week, it's off."

O'Leary said he had no alternative plan to buy aircraft from Boeing's European rival, Airbus.

"We're not even talking to Airbus now," he said. "Airbus don't believe we would buy Airbus aircraft, but they're wrong."

He ruled out a repeat offer to buy Irish flag carrier Aer Lingus, which plans to cut jobs and routes.

Source: Yahoo Finance/Reuters

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Passenger numbers up 12% at easyJet
07 December 2009

Budget airline easyJet today showed it was weathering the economic storm, with a 12% increase in bookings last month.
Passenger traffic in November rose by almost double October's 6.6% increase, to 3.35m.
There was also evidence of the airline operating closer to capacity as its load factor climbed almost one percentage point on a year ago, to 84.8%.
Rival Ryanair also saw passenger numbers increase by 15% last month, in further good news for the airline industry.
However Aer Lingus this week announced the loss of around 1,000 jobs as it battles to cut costs and retain its independence.
EasyJet became one of the few airlines to post a profit last month, saying it had made a 'resilient performance'.
But profits were down 65% for the year to 30 September – from £123.1m to £43.7m – which the airline blamed on higher fuel prices.
The airline has warned of a 'tough winter' ahead as rising unemployment takes its toll on demand.
EasyJet said it had made market share gains at Paris, Gatwick, Milan and Madrid.
During the year, the 'no frills' airline cut 28 underperforming routes but opened a further 70 including Rome to Milan and Paris to Barcelona.
As easyJet is a no-refund airline, today's numbers do not take into account whether passengers turn up for their flights.
They also include seats provided for promotional purposes and to staff for business travel.

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Ryanair's latest card trick is tough to master
06 December 2009

The budget airline is demanding that from January passengers who book flights with Electron cards also pay transaction fees.

Ryanair customers who have taken out Visa Electron cards to beat the airline's sky-high card charges will from next month face the same £5-a-leg fee as customers using conventional debit and credit cards.

From 1 January, the only way to buy a flight without incurring transaction fees will be through a MasterCard prepaid card. Electron users will face the same £5-per-passenger charge for each journey on all flights booked using conventional credit or debit cards, meaning two adults booking return flights face charges of £20 even if the flights are paid for on the same card during the same transaction.

Ryanair says the decision to introduce charges on Visa Electron is because it is being phased out in the UK. Last week Abbey confirmed it would not be issuing Electron cards to customers from 14 December.

The airline claims that the card charges when booking flights are not a revenue stream for the company but are spent on its website.

The problem for budget-conscious travellers is that there are currently no free-to-use prepay cards, so anyone buying a Ryanair flight in future is likely to have to make some sort of card payment.

Ryanair says 30% of its customers use Electron cards to buy seats, so there will be a scramble to find the lowest-cost prepaid card before 1 January.

Stephen McNamara, the airline's chief spokesman, described his customers as "cute hoors" (Irish slang for whore, more generally used to mean rogue or sneaky person), who will use the time between now and 1 January to line up the best prepaid deal.

MasterCard prepaid cards are available through some banks, as well as other financial organisations, such as Virgin. The cards are pre-loaded with cash, so people do not need to be credit-checked to get one, but they come with a range of charges, including a set-up fee, a monthly service charge, a loading fee and cash withdrawal or purchase fees.

Read the rest of the article here

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Spain PM Zapatero Proposes Series Of Labor-Market Reforms
05 December 2009

MADRID (Dow Jones)--Spanish Prime Minister Jose Luis Rodriguez Wednesday proposed a series of labor-market reforms as government policy shifts gear to start tackling some of the root causes of the country's deep economic crisis.

"Now that there are signs of recovery, the government will focus on encouraging it by accelerating the necessary reforms," Zapatero said in Spanish parliament.

Zapatero proposed changes to Spain's rigid labor-market regulations include more flexibility for collective wage-bargaining practices, revisions to hiring incentive schemes and measures to reduce the widespread use of temporary job contracts.

Earlier Wednesday, Spain's labor ministry said November jobless claims were up 29% on the year to just under 4 million. Eurostat Tuesday said Spain had a 19.3% unemployment rate in October, the second highest in the EU behind Latvia.

Source: Wall Street Journal


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Spanish jobless claims rise for fourth month
04 December 2009

Jobless claims in November may have rose by 1.6 percent or 60,593, but is now lower than the previous three months.

Madrid – Spanish jobless claims rose by 60,593, or 1.6 percent, in November, the fourth monthly increase running, the government said on Wednesday as the country remained stuck in its worst recession for decades.

The number of people seeking jobless benefits rose by nearly 900,000 or 29 percent on the year to reach 3,868,946, the labour ministry said.

"The jobless rise has been less than the previous month and much lower than the same month last year," employment secretary Maravillas Rojo said in a statement.

Jobless claims rose on a monthly basis by 2.6 percent in October, 2.2 percent in September and 2.4 percent in August, after three months of declines.

Spain's gross domestic product contracted 0.3 percent in the third quarter, its fifth straight quarterly decline, even as the entire eurozone officially joined the United States and Japan in emerging from recession during the same period.

Europe's fifth-biggest economy has proved especially vulnerable to the global credit crunch because growth relied heavily on credit-fuelled domestic demand and a property boom boosted by easy access to loans that has collapsed, leaving around one million new homes unsold.

Spain provides only quarterly data on the unemployment rate but according to the European Union statistics agency Eurostat it stood at 19.3 percent in October, the second highest rate in the bloc behind Latvia.

The unemployment rate across the 16 nations that use the euro single currency stood at 9.8 percent in October, according to Eurostat.


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Spain turns down the air conditioning to save power
02 December 2009

Spaniards and holidaymakers sweltering in the summer heat might not be too impressed, but desperate times — and a deep recession — call for desperate measures. The Spanish Cabinet agreed yesterday to reduce energy consumption by limiting the use of air conditioning.

Madrid has decided to establish minimum and maximum temperatures for public buildings and thus shops, bars, airports, cinemas, railway stations and airports cannot be cooled below 26C (79F) in summer. During winter, moreover, heaters cannot be turned up above 21C.

The Economic Sustainability Law is designed to reduce Spain’s overreliance on imported energy, but this may not figure highly in the priorities of anyone gasping for breath in August.

It is not the only new direction taken by Spain as it seeks a path to better economic times: under new rules, banks and all publicly listed companies will have to disclose how much they pay their leading executives. Elena Salgado, the Economy Minister, said: “There will be more transparency, particularly in terms of top executives’ pay.” Shareholders should vote on executive pay at banks and listed companies at annual shareholder meetings, she said.

After a decade-long building boom, Spain is mired in its worst recession in decades. Unemployment stands at nearly 18 per cent, double the European Union average, and while the broader eurozone has climbed out of recession, Spain is not projected to do so until at least 2010.

The thrust of the reform is to try to wean Spain off its dependence on bricks and mortar and to introduce a more sustainable model of growth. Thus José Luís Rodríguez Zapatero, the Prime Minister, unveiled a ten-year plan to revamp the economy. A cornerstone of the new Bill will be greater investment in renewable energy, something that Mr Zapatero is known to favour over the nuclear power option. During the past five years, Spain’s Socialist Government has invested heavily in solar, wind and hydroelectric power.

Mr Zapatero has hinted that his Government may not renew the licences of old nuclear power stations, a move that has provoked opposition from within the nuclear industry and from the conservative Opposition.

Source: The Times

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Euro zone unemployment stable in Oct
01 December 2009

BRUSSELS (Reuters) - Euro zone unemployment remained stable at an 11-year high in October but September jobless numbers were higher than previously reported, showing the labour market has yet to feel the effects of nascent economic recovery.

Unemployment in the 16-country area totalled 9.8 percent of the workforce, unchanged from September's upwardly revised reading, the European Union statistics agency said.

"In addition to the euro zone's return to growth in the third quarter and improved business confidence, the rise in unemployment is currently being limited to some extent by government jobs support ... most notably in Germany," said Howard Archer, economist at IHS Global Insight.

It was still the highest unemployment rate since the 9.9 percent registered in October 1998, Eurostat said.

Economists polled by Reuters had on average expected a 9.8 percent rate in October against 9.7 percent for September.

A total of 15.567 million people were unemployed in the euro area in October, up by 134,000 against September.

In the whole European Union of 27 member states, the unemployment rate rose to 9.3 percent from 9.2 percent in September. This meant 22.510 million people were out of a job, 258,000 more than in September.

"Euro zone unemployment still seems likely to rise significantly higher, thereby weighing down on growth prospects over both the near and medium term," Archer said.

In France, the euro zone's second-biggest economy, unemployment rose to 10.1 percent from 10.0 percent. In Italy, the third-biggest, the figure increased to 8.0 percent from 7.8 percent and in Spain, to 19.3 from 19.1 percent.

In Germany, the region's biggest economy, joblessness fell to 7.5 percent from 7.6 percent.

Unemployment is a lagging indicator, slow to react to economic developments. Analysts expect it to peak around 11 percent next year and have said it will remain a drag on the economy as joblessness dampens wage growth, curbing demand.

"This reinforces the case for the ECB (European Central Bank) to only very gradually withdraw its emergency liquidity measures, and to keep interest rates down at 1 percent until deep into 2010," Archer said.

Source: Yahoo Finance

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