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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.

Rioters go on the rampage in Barcelona over cutbacks
30 September 2010

Up to 100,000 people marched through Brussels to the EU headquarters, with action also taking place in Ireland, Greece, Spain, Slovenia and Portugal.

In Barcelona, tourists watched in horror as rioters rampaged on Las Ramblas, the main boulevard, as part of Spain's first general strike in eight years. Police fired rubber bullets and charged with batons as a patrol car and rubbish bins were set on fire, shop windows were smashed and officers attacked.

At least 40 people were arrested across Spain, with marches also taking place in Madrid and Santander.

In Dublin, a man blocked the entrance to Parliament with a cement truck daubed with Toxic Bank Anglo, in protest at the bank bailouts.

The protests were aimed at budgetslashing, tax-hiking, pension-cutting austerity plans governments have imposed to control debts after the banking crisis.

John Monks of the European Trade Union Confederation said: "How is a regime of punishment going to make the situation better? It is going to make it worse."

Unions say EU workers may be the biggest victims of a financial crisis set off by bankers. Many Brits also endured travel misery in the Spanish strike. Ryanair axed 69 flights to Spain and all internal flights, while easyJet grounded half of flights and BA warned of delays. Buses and trains were also badly disrupted. Among those hit were Man Utd fans going to the Champions League tie against Valencia.

Read more: http://www.mirror.co.uk/news/top-stories/2010/09/30/rioters-go-on-the-rampage-in-barcelona-over-cutbacks-115875-22596928/#ixzz1111BaWDj


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Moody’s cuts Spain’s credit rating over growth fears
30 September 2010

Moody’s, the credit rating agency, downgraded Spain’s government bonds on Thursday, citing weak economic growth, a deterioration of financial strength and higher borrowing needs.

The downgrade by Moody’s by one notch from its top rating of AAA to Aa1 makes it the last of the three big rating agencies to downgrade Spain as a result of the global economic crisis.

The downgrade, which was also applied to Spain’s Fund for Orderly Bank Restructuring, known as Frob from its Spanish initials, comes with a stable outlook.

“Over the next few years, the Spanish economy is likely to grow by only about 1 per cent on average,” Kathrin Muehlbronner, a Moody’s vice-president and lead analyst for Spain, said in a statement issued by the agency.

Read the full article at ft.com



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Spain's Credit Rating Set for Moody's Cut as Economy Suffers
29 September 2010

Spain’s top Aaa credit rating, held since 2001, probably will be cut one level by Moody’s Investors Service as the euro region’s fourth-biggest economy struggles to grow, according to investors managing about $700 billion.

Five out of eight money managers surveyed predicted a one- step reduction to Aa1, with the rest forecasting a two-level cut to Aa2. The decision may come this week after Moody’s put Spain’s debt on review for a possible downgrade on June 30, saying it would conclude the analysis within three months.

Moody’s said then it will take several years for Spain’s economy to recover from the collapse of its real estate boom, predicting gross domestic product will expand an average of “slightly above” 1 percent between 2010 and 2014. A one-step cut would put Moody’s ranking on par with Fitch Ratings, which has a AA+ classification for the Iberian nation, while a two- level reduction would equal Standard & Poor’s.

“The market is pretty shaky so if they get downgraded by two, then that could have an impact,” said Andrew Balls, London-based head of European portfolio management at Pacific Investment Management Co., which runs the world’s biggest bond fund. “We keep an eye on what rating agencies do, sometimes as a lagging indicator, as something that can be important in terms of market sentiment.”

Yields Decline

Spanish borrowing costs have declined since the Moody’s announcement, with the yield on the 10-year bond falling to 4.23 percent today from 4.56 percent at the end of June, as stress tests in July showed the nation’s banks needed less than 1.8 billion euros ($2.5 billion) in new capital. Yields also dropped as the government of Prime Minister Jose Luis Rodriguez Zapatero implemented austerity measures to trim the budget deficit.

Spain’s central government budget deficit narrowed by 42 percent in the first eight months of the year as tax revenue surged and spending cuts took effect. The shortfall fell to 3.3 percent of gross domestic product from 5.7 percent a year earlier, the Finance Ministry said two days ago.

Bonds of so-called peripheral euro-region nations plunged this year as a debt crisis that started in Greece spread to other nations, prompting the European Union and International Monetary Fund to put in place a $1 trillion financial backstop for its members. Yields on Ireland’s 10-year bonds rose to a record 454 basis points above benchmark German bunds today on concern the nation’s banks may need additional funding. The Portuguese-German bond spread reached a euro-era high of 441 basis points yesterday.

‘Deteriorating’ Prospects

S&P said yesterday that Ireland’s bailout of Anglo Irish Bank Corp. may cost more than 35 billion euros, exceeding its previous estimate. Moody’s downgraded the senior debt of Anglo Irish on Sept. 27 to the lowest investment grade and said it may cut it to junk unless the government guarantees bondholders against losses.

Moody’s cited Spain’s “deteriorating” growth prospects in June, the challenge of implementing spending cuts and increasing borrowing costs. The nation is likely to lose its top credit rating, Steven A. Hess, senior credit officer at Moody’s, said on July 30.

Spain grew just 0.2 percent in the second quarter and 0.1 percent in the first three months of the year as unemployment stayed above 20 percent, the highest in the euro-region. The economy will shrink 0.4 percent this year, before growing 0.5 percent in 2011 and 1.4 percent the following year, according to the median of as many as 23 economist estimates compiled by Bloomberg.

Spanish debt may have a muted response to a downgrade, because Moody’s has signaled its intentions ahead of time, said Toby Nangle, director of asset allocation at Baring Asset Management in London.

‘Well Flagged’

“When a downgrade is really well flagged, about 80 percent of the price action tends to come through before the decision,” said Nangle, who doesn’t hold any Spanish debt. “After the announcement another 20 percent occurs.”

Concern about Spain’s banking system eased this month as the nation’s lenders reduced their reliance on the European Central Bank. They cut borrowing to 3.5 percent of assets in August from 4.1 percent a month earlier, according to ING Groep NV. Irish banks increased liabilities to 5.7 percent of assets from 5.4 percent, while Portuguese banks stayed at 8.8 percent, ING figures showed.

Zapatero faces a general strike today as unions protest the government’s spending cuts and changes to labor rules. Finance Minister Elena Salgado presents the nation’s budget to parliament tomorrow. The ruling Socialists don’t have a majority and are negotiating for support of its spending plan.

“Spain has been trading like AA debt for a while,” said Robin Marshall, who oversees about $20 billion of fixed-income investments at Smith & Williamson Investment Management in London, and who added to his holdings of Spanish debt last week. “The market has got it right on Spain so far, gravitating it toward Italy and away from Ireland and Portugal.”

Source: Bloomberg



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Spain flights chaos as strike takes hold
29 September 2010

Air passengers are facing severe disruption on flights to and from Spain because of a 24-hour general strike by Spanish workers.

Budget airline Ryanair scrapped most of its flights to Spain and all of its internal ones in the country, while easyJet cancelled around half its Spanish flights.

British Airways also warned of delays and changes to its Spanish schedule due to the industrial action, which finishes at midnight on Wednesday.

EasyJet said it had written some days ago to passengers planning on flying to Spain, offering them the opportunity to change their travel plans.

Ryanair, which last week was forced to axe 250 flights due to strike action by French air traffic controllers, called on EU leaders to act against those disrupting flights.

The disruption will also affect Spanish islands such as Majorca, Ibiza and the Canary Islands.

Source: Yahoo/ITN



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Flights Scrapped Ahead Of Spanish Strike
28 September 2010

Many flights to and from Spain have been cancelled and one airline has told passengers to bring hand luggage only ahead of a major strike.

Airlines are warning of major disruption for passengers as the Spanish workers' walkout looks set to bring the nation's transport hubs to a standstill.

Easyjet has already scrapped dozens of flights while rival Ryanair has told passengers they will not be allowed to check in suitcases if their flights to or from Spain go ahead tomorrow.

"Ryanair plans to operate all flights on that day, but as the action may impact our third party baggage handling services, we will be unable to accept checked baggage on all flights to/from Spain," the airline said.

Customers on both airlines, plus other affected carriers such as British Airways, have been given the option to change their booking free of charge to another day in a specified period.

The strike called by Spanish transport unions comes just days after the government in Madrid passed an "austere" budget for 2011 which will see civil servant salaries slashed by 5% and state spending dramatically reduced.

Spain's trade unions including the General Workers' Union (UGT) have argued that the cuts are socially unjust and a backward step for the nation's economy.

While encouraging all Spaniards to strike, they have nonetheless agreed a timetable of basic services that transport firms will be able to run on Wednesday so that people's "essential travel requirements" can be met.

Spanish airline Iberia said it would be able to operate 35% of its flights and that passengers who were due to travel on these services should check in and board as normal.

Meanwhile, Ryanair called for the EU to clamp down on striking Spanish workers, even suggesting that air traffic control (ATC) staff who walk out should be fired and replaced.

Ryanair's Stephen McNamara said: "Action must be taken at EU level to ensure that the ‘right to strike’ is removed from essential services such as ATC and competition must be introduced across Europe’s ATC providers to ensure that a strike in one country is not be allowed to disrupt million of passengers’ travel plans."

Source: Sky News



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Spain mayors in court for Marbella property scam trial
28 September 2010

Some 95 defendants have packed into a court in southern Spain for the opening of one of the country's biggest-ever corruption trials.

The suspects include two former mayors and the former planning chief of the resort town of Marbella.

They are accused of taking bribes in return for granting planning permission in a multi-million euro scam.

Marbella's council was disbanded and temporarily replaced by auditors in 2006 after the scandal was uncovered.

Prosecutors have asked for a 20-year sentence for Marisol Yague, who served as mayor between 2003 and 2006.

Her predecessor as mayor, Julian Munoz, faces 10 years in jail if found guilty.

The former head of urban planning, Juan Antonio Roca, is accused of masterminding the operation and faces up to 30 years in jail.

They have been charged with various corruption and money-laundering offences and with misusing public funds.

Former town hall officials, lawyers and business representatives are also among the accused.

Source: BBC News



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Spain Borrowing Costs Rise as Moody’s Decision Looms
28 September 2010

Sept. 28 (Bloomberg) -- Spain auctioned 3 billion euros ($4 billion) of Treasury bills at rising borrowing costs as a decision by Moody’s Investors Service on lowering the country’s credit rating looms.

Spain sold 1.17 billion euros of three-month bills at an average yield of 0.685 percent, compared with 0.624 percent at the last auction on Aug. 24. It sold 1.81 billion euros of six- month bills at a yield of 1.18 percent, compared with 1.037 percent in August, the Bank of Spain said. It had set a maximum target for the auction of 3.5 billion euros.

Moody’s said on June 30 it may cut Spain’s Aaa rating when it completes a review within three months. The government is also due to announce its borrowing plan for 2011 on Sept. 30 as it presents to parliament the most austere budget in three decades, which aims to cut the deficit in half in two years.

“There is a risk of a two-notch move, or one-notch with some warnings that they could go lower is feasible,” said Harvinder Sian, a senior bond strategist at Royal Bank of Scotland Plc in London. “A two-notch probably isn’t priced in.”

The spread on Spanish 10-year debt rose to 191 basis points at 11:14 a.m. in Madrid, compared with 187 basis points yesterday. The extra yield investors demand to hold Portuguese and Irish debt surged to euro-era records today, increasing pressure on Spain.

Fitch Ratings cut Spain to AA+ on May 28, citing concerns over economic growth. Standard & Poor’s ranks the nation AA after stripping Spain of the top rating in January 2009.

Moody’s Downgrades

Moody’s downgraded Greece on June 14 by four steps to non- investment grade, citing “substantial” risks to economic growth from austerity measures tied to a 110 billion-euro European Union-led aid package. The company cut Portugal’s rating on July 13 by two notches to A1. S&P cut Ireland to AA on Aug. 24, its third cut in two years, citing the possible costs of supporting the nation’s financial sector.

Spain’s cabinet approved on Sept. 24 the 2011 budget, which aims to reduce spending 3 percent compared with this year and includes an increase in income tax on workers earning more than 120,000 euros a year. The plan goes to parliament on Sept. 30 where Prime Minister Jose Luis Rodriguez Zapatero needs to win votes from smaller parties to pass the plan. The country’s two largest unions are planning a general strike on Sept. 29, to protest the austerity measures and changes to labor law.

The Socialist government aims to cut the budget shortfall to 6 percent of gross domestic product in 2011 from 11.1 percent last year, bringing it within the European Union’s 3 percent limit in 2013. To achieve the reduction, the government is cutting public wages 5 percent this year, raising taxes, reducing spending on infrastructure and freezing pensions.

Source: Bloomberg



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From Malaga to Mecca: Full speed ahead
27 September 2010

MALAGA - HIGH speed AVE trains being built in Los Prados, Malaga, could be used by passengers making their pilgrimage to the city of Mecca – the holiest meeting  site in Islam – in Saudi Arabia. This follows a visit from a delegation of Saudis to the works site of the AVE in Malaga to decide if they will award the €6,500 million contract to a Spanish consortium led by Renfe, one that would be the first international order for the Spanish rail company.

Renfe’s main rival for the lucrative deal is a French group of companies headed by Alstom, whose instalations were also visited previously by the Saudi delegation.

Nevertheless, the Spanish are reportedly optimistic their bid for the contract will be successful. The rail line up for grabs – dubbed the ‘desert AVE’ – would be the 444 kilometre stretch linking the cities of Medina, Yeda and Mecca.

The only requisite by Saudi Arabia is that the model of train be the Talgo 350 model known as ‘Pato’ and not the Talgo Avril prototype, supplied and built by Talgo for the AVE network in collaboration with Canadian company Bombardier.

The 12 year contract offer up for grabs includes the management of the trains, and all engineering, and electricity installations.

At the Los Prados facilities in Malaga, 240 people are currently building 14 ‘Pato’ trains, as well as another 100 who work in the maintenance of AVE trains.

If the Spanish bid is successful, it is expected that at least part of the work will be carried out in Malaga.

Source: Euro Weekly News



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Ryanair and Comet among big brands 'using web dirty tricks' to clean up
27 September 2010

Big-name companies which allegedly use online ‘dirty tricks’ to lure unsuspecting customers into paying more are being named and shamed by a web design consultant.

Ryanair and Comet are among the high-profile brands exposed for practices that expert Harry Brignull claims are designed to make users do or buy things unintentionally.

Tactics include trick questions, hidden charges and ‘sneaking’ products into web shopping baskets, said Mr Brignull.

Now he has listed a string of these techniques – which he calls ‘dark patterns’ – in an attempt to make web-users more clued-up.

‘They are the digital equivalent of a supermarket manager putting something in your trolley when you are not looking,’ he said.

‘They are taking all the principles of good design and inverting them for nefarious purposes. There are quite a number of big brands who are using dark patterns like dirty tricks.’

The practices rely on the fact that web shoppers often ‘scan read’ sites and may miss added items or conditions.

Others may be in a rush or are simply internet novices, Mr Brignull said.

‘These things rely on an element of human error,’ he added. ‘They are targeting people who are perhaps less savvy on the web.’

The companies are not being accused of anything illegal but Mr Brignull wanted to expose the cunning methods from an ‘ethical point of view’.

He said: ‘Aggressive business practices have been around since business has and this is the online version of it.’

Companies contacted either dismissed the suggestions or insisted users were given the information to realise what they were buying or signing up to.

Source: Metro



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Spain’s largest ever corruption trial
27 September 2010

THE biggest corruption trial there has ever been in Spain is due to begin on September 27, and will see 95 people in the dock, two of them former mayors. Four-and-a-half years ago, the scandal was uncovered, and although it all began in Marbella, there are links to most of Spain and several locations abroad.

In total, the public prosecution is looking at sentences amounting to more than 450 years and fines of more than €4bn.

The mastermind behind the whole thing is believed to be former Urban Planning Councillor, Juan Antonio Roca, who was already around in the days of Jesus Gil. He managed to amass a fortune of €200m in ten years.

Amongst his personal assets were several properties, a hotel, works of arts, planes, cattle ranches and purebred horses. Police estimate that some €240m were laundered through 71 societies linked to his name. He faces 30 years in prison and a fine of €810m.

Also accused are former mayors Julian Muñoz and Marisol Yague, Muñoz’s partner, the renowned Spanish singer, Isabel Pantoja, and his ex-wife, Maite Zaldivar.

Muñoz is believed to have used Pantoja’s economic activities to divert the money he was gaining illicitly from his dealings with Roca. Pantoja claims she knew nothing of this, but Marbella Town Hall and the prosecution think otherwise.

At the trial, the town hall will be appearing as the private accusation and wants Muñoz, Pantoja and Zaldivar to receive prison sentences and hefty fines. Between 1997 and 2003, the Muñoz-Zaldivar couple spent €300,000 more than they officially earned, and although the couple divorced, Zaldivar continued to receive money from Muñoz, protected by her brother, who also received money, and the then manager of Cajamar in Marbella, Benjamin Martinez.  The couple’s daughters are also under suspicion.

When his relationship with Pantoja began, she bought an apartment, a chalet and cattle and large sums of money were invested in companies that she owned and paid into her private accounts. Reports suggest they amounted to €1.1m.

Source: Euro Weekly News



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Spain braced for general strike, but impact may be limited
27 September 2010

MADRID — Spain's Socialist government, forced to impose unpopular measures to fix a battered economy, faces a general strike on Wednesday with unions angry over what they see as a policy U-turn.

But many view the government's tough labour reforms and belt-tightening moves as inevitable, and even necessary, and a low turnout is expected.

A poll published Friday in the newspaper Publico said only 18 percent of workers backed the strike, and 71 percent believed it would not force the government of Prime Minister Jose Luis Rodriguez Zapatero to change course.

"The aim of the strike is not to force him to resign, but to change his policies ... to drop this new avatar, this reincarnation," said Candido Mendez, the head of the UGT union.

"The prime minister, in his heart of hearts, is aware that he must change," said Ignacio Fernandez Toxo, the head of the other main union, CCOO.

But Labour Minister Celestino Corbacho vowed Sunday that there would be no reversal of the sweeping overhaul of Spain's rigid labour market which received final approval by parliament on September 9.

"It is the law and there is no going back, that must be clear," he told conservative daily newspaper ABC.

"It introduces elements of flexibility that will allow our companies and economy to gain competitiveness and it bets decisively on the creation of more stable work," he said.

The labour market reforms cut Spain's high cost of firing workers and give companies more flexibility to reduce working hours and staff levels in economic downturns.

Zapatero, a member of the UGT, maintained a cosy relationship with the two unions after he first took office in 2004.

But that turned sour when he entered his second term in 2008, and the economy slumped into recession as the once-booming property sector collapsed.

It only emerged in the first quarter of this year with tepid growth of 0.1 percent.

The recession has sent the country's unemployment rate soaring to more than 20 percent, the highest in the 16-nation eurozone.

The rise in joblessness has in turn jacked up government spending on unemployment benefits, pushing Spain's public deficit to 11.1 percent of gross domestic product last year, the third highest in the eurozone after Greece and Ireland.

The government argues that the labour market reform will help fight the high unemployment levels, following the collapse of a property bubble at the end of 2008.

"They have the right to strike but the government has the duty to change things to generate more employment and create opportunities for young people," Zapatero told a party rally on Sunday in Zaragoza in eastern Spain.

The government on Friday approved a tough austerity budget for 2011 aimed at reassuring nervous markets over its ability to rein in the massive public deficit.

The proposals, which include new tax hikes for the wealthy, must go to parliament where the government does not hold an absolute majority but is hopeful of ensuring its successful passage.

"It is the most austere budget in recent years," Finance Minister Elena Salgado told a news conference.

It envisages an overall cut in government expenditure of almost eight percent compared to this year.

The government in May passed a 15-billion-euro (19-billion-dollar) austerity plan to shore up public finances amid investor concerns it could follow Greece into a financial crisis.

It included an average state employee salary reduction of five percent and a pensions freeze.

That was on top of a 50-billion-euro package of spending cuts announced in January designed to progressively slash the public deficit to the eurozone limit of three percent of gross domestic product by 2013.

The International Monetary Fund has said labour reforms are "absolutely crucial" if Spain is to cut its jobless rate and rein in its massive public deficit.

But the UGT and CCOO, which together represent around two million workers, slammed the measures as a "backward step" and an about-face by Zapatero, who had vowed to protect social policies despite the economic crisis.

In June they announced a 24-hour general strike for September 29 in protest. They are also angry over the spending cuts and plans to gradually raise the retirement age to 67 from 65.

It will be Spain's first general strike since 2002 and the first since Zapatero took office.

Source: AFP



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Spanish cabinet approves austerity budget for 2011
26 September 2010

MADRID — Spain's government on Friday approved a tough austerity budget for 2011 aimed at reassuring nervous markets over its ability to rein in a massive public deficit and fix its battered economy.

The proposals, which include new tax hikes for the wealthy, must now go to parliament, where the government does not hold an absolute majority but is hopeful of ensuring its successful passage.

Failure to pass the budget by the end of the year could bring down the six-year-old government of Prime Minister Jose Luis Rodriguez Zapatero and force new elections.

"It is the most austere budget in recent years," Finance Minister Elena Salgado told a news conference following a cabinet meeting.

It envisages an overall cut in government expenditure of almost eight percent compared to this year.

It calls for a hike of one percentage point in income tax for those who make more than 120,000 euros (160,000 dollars) a year and of two points for those earning over 175,000, measures apparently aimed at easing concerns over the austerity package among the general population.

Ministerial expenditure will also be slashed by 16 percent.

"The government adopted a budget that advances fiscal consolidation and lays the groundwork for economic recovery," the finance ministry said in a statement.

It said the proposals were aimed at ensuring the government meets its target of narrowing the public deficit to 6.0 percent of gross domestic product next year.

Markets have been jittery over Spain's high public deficit in recent months, fearing the country could suffer the same fate as Greece, which needed a bailout from the European Union.

Salgado said the government had revised downward its deficit for 2009 to 11.1 percent of GDP from 11.2 percent.

Spain's economy, Europe's fifth-largest, fell into recession in late 2008 as the global financial meltdown accelerated a collapse of the once-booming property sector.

It only emerged in the first quarter of this year with tepid growth of 0.1 percent.

The recession has sent the country's unemployment rate soaring to more than 20 percent, the highest in the 16-nation eurozone.

Salgado said government had forecast an unemployment rate of 19.3 percent of the work force in 2011, up from the previous estimate of 18.9 percent as "the recovery in employment is slower than we would like."

The rise in joblessness has in turn jacked up government spending on unemployment benefits.

In a bid to shore up its public finances, the government in May passed a 15-billion-euro austerity package that included an average state employee salary reduction of five percent and a pensions freeze.

That was on top of a 50-billion-euro package of spending cuts announced in January designed to progressively slash the public deficit to the eurozone limit of three percent of gross domestic product by 2013.

Spain's parliament on September 9 also gave final approval to a sweeping overhaul of a rigid labour market that will make it easier and cheaper for employers to hire and fire workers.

Spain's two main unions have called a general strike for September 29 to protest the measures.

Zapatero's minority government indicated on Wednesday that the Basque Nationalist Party (PNV) would back the budget when it comes up for a vote this year in return for concessions on employment in the Basque Country.

With 169 seats in Spain?s 350-member assembly, Zapatero?s Socialists are seven short of a majority and pass legislation on a vote-by-vote basis with the backing of smaller parties whose support has become increasingly uncertain.

But the PNV has six deputies and, even with their support, the Socialists would still need to find the extra seat.

The main conservative opposition Popular Party and a Catalan regional party, the Convergencia and Union, which has 10 seats, have already indicated they will not support the budget.

Source: AFP



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Spain's burnt out 'babysitter grandparents' urged to strike
26 September 2010

Union tells Spanish grandparents to down tools if they're tired of caring for their grandchildren for days on end. 

It is the most unlikely of generational revolts, but one that older Britons might just relate to. A call has gone out for grandparents around Spain to down tools this Wednesday and go on strike – because they're sick to the teeth of all that childcare.

For a country where half of all grandparents look after their grandchildren every day – one in eight for more than nine hours a day – the strike call threatens to disrupt the working lives of a significant proportion of the population and expose the extent to which this unpaid work is propping up the economy.

"We want grandparents to strike to prove they are a key part of the way this country functions," said Manuel Pastrana, leader of the UGT general workers' union in the southern region of Andalucia. "Learn to say no" and "don't feel guilty" are the slogans, aimed at so-called "babysitter grandparents".

The call is part of a wider attempt to bring the country to a halt with a general strike. But it has also struck at one of the key elements of Spanish society – where grandparents provide the childcare that working parents cannot give and the state does not offer.

"It is a growing problem because grandparents are cheaper than childminders and they are an easy option when the economy is as bad as it is now," said Dr Jaime Rodríguez, of Spain's Society of Gerontology. "That is probably fine for most of them, but some cannot cope."

One Madrid grandmother, Manuela Martin, 73, looks after seven-year-old granddaughter Antía all week, only giving her back to her parents for the weekend.

"She comes back to me on Sunday night and stays until Friday," she said. "Her parents start work at 7am so they can't get her to school during the week."

Spanish working hours are partly to blame. Long lunch breaks mean office workers have to work late. An office culture of not leaving before the boss goes home keeps some there even later. And with part-time or flexible jobs a rarity, many families with two working parents simply cannot function without a grandparent.

"Here they are full-time," says María Teresa López, a professor at the economics faculty of Madrid's Complutense University. "They are filling in for parents, effectively bringing their grandchildren up and that is quite a different role to being a grandparent."

It is not just Spain's working classes who depend on their relatives. "We are there when we are needed," says Juan José, 67, as he walks his three and five-year-old grandsons to a private nursery school in Madrid. "In the summer we have them at our home near the beach for almost the whole three months of the holidays while my son and his wife work. We love it, but our parents did not do this for us."

Doctors say being involved with grandchildren keeps most grandparents healthy and active, but those who do not enjoy the work will not admit it. Few are prepared to criticise either their own children, or their grandchildren. "I don't mind helping, but we have already brought up our own children and now we deserve some space of our own," said one grandmother, who did not want to be named.

But few said they would heed the call to strike. "What do they think we are going to do with [our grandchildren]?" asked Martin. "Do they want us to dump them in the street?"

Source: The Guardian



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Spanish PM says European debt crisis 'has passed'
23 September 2010

MADRID — The European debt crisis which pummeled the euro and rattled global markets is over, Spanish Prime Minister Jose Luis Rodriguez Zapatero said in a newspaper interview published Wednesday.

"I believe that the debt crisis affecting Spain, and the euro zone in general, has passed," he told the Wall Street Journal.

The Socialist prime minister said one lesson learned from the recent market turbulence in the eurozone is that a single monetary policy is not enough for the 27-nation European Union.

"We require further convergence to boost competitiveness and stronger principles to implement balanced economic and fiscal policies," he said.

The European debt crisis crystalised late last year when Greece's new Socialist government said the country 2009 public deficit would be equal to 12.7 percent of gross domestic product, more than twice the previously published figure.

The announcement sparked investor doubts over the ability of Greece and other highly indebted nations of the eurozone such as Portugal, Spain and Italy to slash their deficits, rattling stock and bond markets around the globe.

Since then European nations have introduced austerity measures, including tax hikes and public sector pay cuts, to slash their public deficits.

Earlier this year, Zapatero implemented the sharpest spending cuts since Spain returned to democracy following the death of dictator Francisco Franco in 1975.

The cuts aim to bring the public deficit down to the eurozone limit of 3.0 percent of GDP by 2013 from 11.2 percent last year.

The government has also introduced labour market reforms which cut Spain's high cost of firing workers and gives companies more flexibility to reduce working hours and staff levels in economic downturns.

The government argues the reform will help reduce an unemploymebt rate that has soared to 20 percent due to the collapse of a real estate bubble but unions have called a general strike for Wednesday to protest the measure.

"It's evident that the Spanish government has taken decisions that, in our opinion, are essential to confront the challenges that the Spanish economy faced during the crisis," he said.

Zapatero's socialists are seven seats short of a majority and are currently in talks with smaller, regional parties whose support he will need to pass a budget for next year that includes many unpopular austerity measures.

He said the negotiations are well advanced in parliament and the government plans to submit its proposed budget to the assembly in the coming days.

The government plans to cut spending at its ministries by 15-16 percent next year, the prime minister said.

Zapatero said the publication of EU-wide bank stress tests at the end of July along with the progress the country has already mad ein reducing its deficit had helped restore market confidence in the country.

"In spite of the real estate crisis, banks stood like rocks due to solid provisioning and the strictest bank supervision within the euro zone," he said.

"There's a contradiction in perceptions, because Spain's financial system has been among the best resisting the crisis within the euro zone."

All eight major Spanish banks passed the EU's bank stress tests on their ability to weather a crisis although five out of 19 regional lenders failed.

Source: AFP



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Spanish unions seek to halt flights
23 September 2010

Unions have asked for permission to halt all international flights in Spain on September 29th, the day set for the country's first general strike in eight years to protest at government austerity cuts and labour reform.

The unions also want to halt all medium and long-distance trains and cut back local train services.

Under Spanish law, workers in certain sectors must provide a minimum level of services and the unions must agree with the government on what minimum levels should be.

Spain's public works ministry said it would now review the unions' proposals on transport and make a decision in the next few days.

A spokeswoman for airline Iberia said it would get in touch with any affected passengers once minimum levels of service were announced.

The scale of transport stoppages is likely to be a major factor in the level of disruption caused by the strike as they could prevent many non-strikers from getting to their place of work.

A poll for El Pais by Metroscopia on September 5th showed while 58 per cent of Spaniards thought the strike justified, only 9 per cent definitely planned to take part.

However, some analysts thought the actual take-up on the day was likely to be higher and significant disruption would be caused in large cities by union demonstrations in the main streets and cancelled buses, metros and trains.

Source: Irish Times



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Spanish general strike looms ahead
23 September 2010

WITH less than a week to go until Wednesday’s general strike – due to affect both the public and private sectors – it remains unknown to what extent it will be followed by workers in Spain. A meeting held on Monday ended without an agreement being reached over the minimum services which will be provided on Wednesday September 29 during the country-wide strike called by unions in protest of stringent government labour cutbacks.

In Madrid, unions were pushing for a complete shut-down in the education sector and for health sector to maintain only emergency and the most necessary services..

At the time, they were not well-received by the government, when Jose Maria Aznar was prime minister, but it was later approved by the courts. Once the Ministry of Public Works has made a decision, it will call the union representatives to a meeting to reach an agreement.

Leire Pajin, secretary of governing PSOE socialist party, said the government “will do what it has to in order to guarantee minimum services during the strike and to make sure that transport services will not be interrupted.”

Although the strike is perfectly legal, she added, citizens could not be denied the services they required. However, she said that the government was not afraid this lack of consensus would affect the future elections.

Source: Euro Weekly News



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Brits facing Spain strike travel mess
23 September 2010

Thousands of British tourists face travel chaos next week as workers in Spain plan a huge strike.

Holiday spots such as the Canaries and Majorca face a virtual shutdown next Wednesday, during the country's first general strike since 2002.

Unions protesting at reforms to labour laws, plan to disrupt all international flights plus train and coach travel. Only planes taking off before midnight Spanish time on Tuesday will be allowed to land.

In Majorca roadblocks are planned between Palma airport and resorts.

Spain's two biggest unions hope hundreds of thousands of workers will support the strike over government reforms to slash 20% unemployment.

Union boss Manuel Pastrana said: "September 29 should be a day without consumption."

The two sides were yesterday in talks.

Read more: http://www.mirror.co.uk/news/top-stories/2010/09/22/brits-facing-spain-strike-travel-mess-115875-22578878/#ixzz10LlmVCI4

 



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Disney in Manilva
17 September 2010

For years now, there have been rumours of Disney building a massive theme park in Manilva.  During the property boom, real estate agents were using this rumour to hype and sell property in the Manilva area.  Even though the whole idea is a load of rubbish, I still here people talking about it.  Only last month I was talking to people in Manilva who were convinced this was true and that it was going to happen.  I think this latest news from Disney regarding the expansion of its Euro Disney theme park in Paris surely kills this whole rumour stone dead.  Why would Disney invest so much in Paris if they were planning to build a park in neigbouring country Spain?

At least it looks like the Paramount theme park in Murcia was not just a rumour after all!

Here's a snippet from the FT regarding Euro Disney's planned expansion:

Lossmaking Euro Disney  has been given more time by the French government to develop a third theme park, after signing a new 20-year pact with public authorities that own the undeveloped land east of Paris.

The agreement, signed on Tuesday, gives Euro Disney until 2030 to build a third park in the Marne-la-Vallée region to add to the Disneyland Paris park, opened in 1992, and the adjoining Walt Disney Studios, a smaller film-themed park, which opened 10 years later.

It also increases the amount of land available for Euro Disney to develop from 1,943 hectares to 2,230 hectares.

Euro Disney, in which the Walt Disney Company owns 40 per cent and Prince al-Waleed, the Saudi investor, 10 per cent, will celebrate its 20th anniversary in 2012. Philippe Gas, chief executive, said: “We are committed to developing our tourist destination and supporting France’s tourism leadership, while addressing the challenges of sustainable leadership.”

The projects include a third theme park, a housing development and a new eco-tourism resort, the last in partnership with Pierre & Vacances, the French leisure company.

The projects are expected to generate 70,000 new jobs, directly and indirectly, and represent a total investment of €8bn ($10.4bn). Of this amount, €1.8bn will be into the Pierre & Vacances-operated Villages Nature holiday project.

The financing for the nature village will come from property investors. It is proposed to open in 2015.



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Paramount to open theme park in Murcia, Spain
11 September 2010

MADRID — Paramount Pictures said Friday it has reached a deal to open its first theme park in Europe in Spain, the world's third most visited country, which will create thousands of jobs.

In a statement, Paramount Licensing said it "will not be an investor in the project but will licence intellectual property from its vast library of films and provide conceptual master planning and design for the project."

The park will be located in the southeastern region of Murcia on the Mediterranean coast at a yet-to-be disclosed date, it added.

"More details about the project will be announced in the next few months," the statement said.

Paramount Pictures is a unit of US-based media conglomerate Viacom Inc.

Rival US media conglomerate Time Warner runs a theme park, Warner Bros Park, in the town of San Martin de la Vega located just south of Madrid which opened in 2002.

Spanish media reported that Paramount's planned theme park will create some 20,000 jobs and will attract nearly three million tourists each year.

Spain's unemployment rate hit 20.09 percent in the second quarter, the highest level in the 16-nation eurozone and its highest reading since 1997 as the collapse of a property bubble continued to take its toll.

Spain received 52.2 million visitors last year, making it the third most visited country in the world after France in the United States, according to data from the Madrid-based United Nations World Tourism Organisation (UNWTO).

Source: AFP



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Easyjet passenger attacked steward on flight from Glasgow to Spain
11 September 2010

Colin Coats was convicted of punching the man and a passenger on board the Glasgow to Alicante flight.

A raging passenger assaulted a cabin crew member on an EasyJet flight as it flew from Glasgow to Alicante.

Colin Coats had been segregated to the rear of the plane after an earlier incident in which a fellow passenger was punched on the face, a court heard.

When he learned that police had been summoned to board the aircraft on its arrival, he leaned forward and whispered into the steward's face, saying that if police came on board he would kill him.

Minutes later, as officers entered the cabin, Coats kicked the steward George Barron's legs, began clawing at his face and neck and striking him on the back. Police had to pin him horizontally at the back of the cabin to try and force him to calm down.

He also shouted abuse at a woman steward and threatened to burn her house down. Coats also asked if she had children then said he would burn them too.

Paisley Sheriff Court heard how there was an air of fear onboard the aircraft as the drama unfolded.

Scared

Rosaleen O'Donnell, 39, told how she was crying and scared when Coats started the abuse.

She said: "My mother saw him with his arm around the steward in a grip and told him to leave him alone. He said he knew gangsters and would find out where I lived.

"He said he would burn me and burn members of my family too. He was angry and out of control. I was scared."

Steward Darren Donaldson said he intervened after the initial incident and saw the other passenger with a lump on his face the size of an egg.

Mr Donaldson said that Coats had been moved to the rear of the plane for others' safety and he tried to calm him down.

"He told me he had worked for Air Traffic Control," and "should have known better".

He added: "He seemed very angry. He was breathing deeply and shaking. He apologised then started a tirade of abuse towards other passengers.

"It was extremely violent. He said to one he would 'throw acid on your face' and said 'I'm Colin Coats. I'm a gangster, Do you know who I am?' "

Mr Donaldson said It was only when members of the Spanish Civil Guard boarded the plane to take over that he felt safe.

He said that Coat's girlfriend had been "desperate to come back to Glasgow for her own safety".

Coats, 40, of Crow Road, Glasgow, denied conducting himself in a disorderly manner, uttering threats of violence and committing a breach of the peace by placing others in a state of fear and alarm, and assaulting George Barron in the manner described.

He told the court he had no recollection of the flight and his first memory was of waking up in his Spanish villa one of two days later and being told of reports in the media that suggested he had acted in the manner described onboard the aircraft. It put me in a state of shock and disbelief," he said.

'Spiked' drink

A friend told the court Coats had bumped into him at a bar earlier. He said he passed him a glass of coke which he later believed had been spiked with acid, as the company he was with had been involved in "high jinks" that included drug taking.

He said he saw other drinks being laced with LSD at the table and when he later found out what had happened to Coats, he concluded that the soft drink he gave him must have been one of those.

Defence agent Siobhan Ramage asked Sheriff Neil Douglas to accept that her client could not have been responsible for his actions due to "automatism" through the drink being spiked.

The Sheriff rejected that describing the evidence produced as "incredible" and convicted Coats.

Sentence was deferred for background reports and a community service assessment as Coats had previously been placed on probation and made the subject of a Community Service Order at Glasgow Sheriff Court.

He was told to return to learn his fate on October 5.

Source: STV



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O'Leary: Co-pilots are unnecessary
11 September 2010

Ryanair boss Michael O'Leary has turned his focus on the cockpit as part of his ongoing drive to save costs at the budget airline.

He said he intends to write to aviation authorities for permission to use only one pilot per flight because he believes co-pilots are unnecessary in modern jets, the Financial Times reported.

Mr O'Leary, who has previously considered standing tickets on flights as well as charging for the use of toilets, conceded that two pilots would be needed on long-haul flights, but said on shorter trips flight attendants could do the job.

Source: The Press Association



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Zapatero says no further cuts planned
11 September 2010

Madrid, Spain (CNN) -- With a general strike looming on September 29, Spain's prime minister said Friday the government does not plan new cutbacks to shore up the sagging economy.

"We do not plan any additional cuts. There is no need, objective need, to, as of today," Zapatero said in his first interview in months, with Spain's leading SER radio network.

"The pace of deficit reduction is being met and we need to continue with the reforms," Zapatero said.

Some of those reforms are what led Spain's two-largest trade unions to convene the first general strike since Zapatero, a Socialist, took office six years ago.

On Thursday, the Socialist Party was isolated in parliament as it provided the sole votes to approve a controversial labor market reform that would make it significantly cheaper to fire workers, which has enraged unions.

The aim is to give businesses more flexibility that they have demanded, and the government hopes it will build in more productivity to the economy and cut Spain's 20 percent jobless rate, the highest among the nations using the euro as a currency.

The isolated Socialists got the measure through parliament only due to abstentions from some of their allies in smaller parties.

As the vote occurred, several thousand union leaders meeting in an auditorium across town from the parliament shouted loudly for Zapatero to resign.

But in the interview on Friday, Zapatero projected an optimistic note, insisting that Spain's deficit reduction plan is working, and that economy is improving.

He said the Spain is on target to cut the public deficit, which was 11.2 percent of gross domestic product in 2009.

The government aims to cut the public deficit to 9.3 percent this year and 6 percent next year.

He said many Spaniards and companies remain heavily indebted due to the country's worst recession in decades, after the booming construction and housing sectors screeched to a standstill.

But Zapatero said Spanish banks have recently been able obtain funds on international markets, a sign of increasing confidence in Spain's ability to recover.

Source: CNN



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Spain says labour market reforms will stay
11 September 2010

The Spanish government has approved labour market reforms that make it cheaper and easier to lay off workers.

A package of reforms designed to help shake up Spain's struggling economy was first agreed in June and have been in effect since then.

They were in force as an emergency measure, which will now become permanent.

Reformers believe the measure is essential in helping to bring down Spain's 20% unemployment rate.

The International Monetary Fund has said the labour market reforms are "absolutely crucial".

The country has the highest jobless count in the 16-nation eurozone and the Spanish Prime Minister, Jose Luis Rodriguez Zapatero, had called the moves "vital".

But unions have hotly contested the changes and have called a general strike for 29 September.

Many economists blame the high jobless rate on the cost of firing workers in Spain, which makes employers reluctant to hire permanent staff and encourages the use of temporary contracts that have few benefits and rights.

One of the changes would mean a cut in severance pay for workers on full-time staff contracts, which currently gives 45 days pay for each year worked. That would fall to 33 days.

The Minister of Public Works and Transport, Jose Blanco, said the move was "positive for all workers, for those that have jobs as well as those who are trying to find them".

Austerity measures already in train include wage cuts of 5% or more for civil servants and big reductions in public investment plans, as the government aims to reduce its public sector deficit from 11% of GDP to 6% by 2011.

Source: BBC News



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Spanish miners block highway, railway
11 September 2010

BEMBIBRE, Spain — About 150 miners and their supporters temporarily blocked a highway and railroad in northern Spain Friday with burning tires and other objects to protest against unpaid wages.

The protesters placed rocks and set fires to several car tires sending black smoke billowing into the sky on a stretch of the railway near the town of Bembibre, an AFP photographer on the scene said.

The protest caused delays for three regional trains transporting over 200 passengers, railroad officials said.

The miners also blocked traffic on a nearby highway by sitting on the road and overturning heavy metal carts used to move coal in the mines before police arrived and they dispersed.

Miners in several parts of Spain are protesting over unpaid wages and to demand government aid to the coal industry.

Fifty miners have since September 2 refused to leave a coal mine 500 metres (1,650 feet) underground near Guardo in the northern Palencia province until they receive the salaries they are owed for August from mining company Union Minera del Norte (Uminsa).

They are also calling for a guaranteed level of coal purchases so as to ensure that Spanish coal-fired power stations buy domestic coal rather than imports.

Source: AFP



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Easyjet passenger numbers soar as customers chose foreign holidays
07 September 2010

Budget airline Easyjet (up 4.7p at 381.1p) saw passenger numbers soar last month as customers rediscovered their appetite for foreign holidays.

The company said it flew 5.2million passengers in August, a jump of 8.4 per cent on the same month last year. Each plane was even more packed than usual, with flights 92.3 per cent full on average, up from 91.8 per cent last summer.

The airline said the suggestion that the public is not taking holidays abroad appears to be unfounded.
A spokesman said: 'The demand for going abroad remains strong. People might be avoiding the expensive holidays that cost thousands of pounds, but a budget European flight is the option people seem to be taking.' The news comes as rival Ryanair also saw a sharp increase in numbers for August. The airline carried 7.6million people, up 12 per cent, with 89 per cent of seats filled. By comparison, BA (down 2.2p at 220.8p) saw further falls in passenger numbers.

For August, the flag carrier's passenger figures dropped slightly to 3.2million, with all destinations apart from Europe dropping.

Read more: http://www.dailymail.co.uk/money/article-1309603/Easyjet-passenger-numbers-soar-customers-chose-foreign-holidays.html?ito=feeds-newsxml#ixzz0yqHMetpe

 



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Support for Spanish general strike shrinks, poll shows
06 September 2010

MADRID, Sept 5 (Reuters) - Just 9 percent of Spaniards definitely plan to take part in a general strike against wage and pension cuts planned for Sept. 29, down from 15 percent in a July poll, a poll showed on Sunday.

The percentage who believe the strike is justified grew to 58 percent of those polled by Metroscopia for El Pais newspaper, up from 51 percent in July. But those who said a strike is not appropriate grew by 15 percentage points to 56 percent.

Prime Minister Jose Luis Rodriguez Zapatero has approved 15 billion euros ($20 billion) of spending cuts and carried out a reform of labour laws making it easier to hire and fire as part of measures aimed at renewing faith in Spain's economy.

Spain's two biggest unions, traditional supporters of the unpopular ruling Socialist party, have called for a general strike in September against austerity measures, in coordination with other unions in Europe.

The opposition centre-right Popular Party increased its lead over the Socialist PSOE in approval ratings to 8.9 percentage points, the poll showed.

Source: Forexyard/Reuters



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Zara takes the plunge into crowded online market
03 September 2010

MADRID — Europe's largest clothing retailer, Spain's Inditex, is taking its flagship Zara brand online, but it can expect stiff competition from other giants of high-street fashion already well-established in cyberspace.

Zara's virtual boutique will be available on Thursday in selected European markets: Spain, Germany, France, Italy, Portugal and Britain.

From 2011, it will be expanded to the United States, Japan and South Korea.

But it will enter an already crowded sector, where its main rivals in low-cost fashion have been operating for years.

US retailer Gap, which has been online in the US since 1997, expanded the service to 55 countries on August 16.

Sweden's H&M, Europe?s second-largest clothing retailer, has been selling online since 1998 in seven countries, including Germany, and plans to move into another major market, Britain, on September 16.

Zara's late entry to the market may be a surprise, but it may also have anticipated a boom in cyberspace clothes shopping.

Clothing sales represented just 2.5 percent of online commerce in Spain last year, and 5.6 percent in France, according to industry experts in these countries.

Another high-street brand, Mango, has been online since 2009, but receives only about 1.0 percent of its revenues in this way.

Gap has performed better, pulling in 1.1 billion dollars in online sales last year, or 7.7 percent of its total.

But a recent poll by the Nielsen institute in 55 countries showed that clothes are now the second most popular products online, after airline tickets but before books.

Mango's aim of multiplying its online sales seven-fold in three years is one indication that the market may be about to take off.

Zara's arrival "is eagerly awaited, as we are in the middle of boom in Internet clothing sales," said Nathalie Gennerat, a consultant at the French Fashion Institute.

She pointed to Britain, where almost 10 percent of clothing is purchased online.

Previously people were reluctant to buy clothes online because it is impossible to try them on first.

"There was also the question of shipping costs" and the problem of returns, said Jacqueline Anderson, an analyst with Forrester Research.

But companies now pay closer attention to some of these concerns, offering to pay a certain amount of the shipping charges or making exchanges easier, she said.

Zara said it wants to "reproduce the buying experience of its boutiques on the Internet," with 100 percent of its products available at the same price of its high-street stores, and extend its website to the 77 countries where it is already present.

It has already prepared the ground.

Its Facebook page, launched last year, now has 4.4 million fans. Its IPhone application has been downloaded some two million times. And, even though you can't yet shop there, its official website received 33.5 million visits last year.

Inditex, which owns seven other brands including Massimo Dutti and Bershka, sees the move as a "major strategic step" which will boost sales rather than eating into the earnings of the shops themselves.

Source: AFP



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Santander worst for banking complaints
03 September 2010

Santander has emerged as the bank with the highest proportion of customer complaints in the UK, with gripes about its banking service flooding in at the rate of one every minute during the first half of this year.

The Spanish-owned bank received 216,158 complaints in the six months, making it the institution with the highest ratio of complaints to the number of customer accounts. Barclays was next with 195,956.

Read the full article at ft.com



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Spain Homeowners Face Squeeze as Mortgage Rates Rise
03 September 2010

Sept. 1 (Bloomberg) -- Spanish homeowners will face higher mortgage repayments after the benchmark rate for loans last month posted its first annual gain since October 2008.

The benchmark rate for most of the country’s home loans, 12-month Euribor, rose to 1.42 percent in August from 1.33 percent a year earlier, the Bank of Spain said today on its website. That will further stretch the finances of Anabel Ruiz, who already spends two-thirds of her 1,000 euro ($1,271) monthly salary on making payments on a 30-year mortgage that runs until 2036.

“It’s going to make a desperate situation even more critical,” said Ruiz, 43, who works in an accounts department. “It could mean I lose my apartment and we all end up living under a bridge.”

Because almost nine out of every 10 new Spanish mortgages are floating rate, increases in Euribor may start to squeeze demand in an economy struggling to emerge from the deepest recession in 60 years. Higher mortgage payments as loans start to reset come as Spanish households adjust to an increase in sales taxes and a jobless rate above 20 percent.

“It’s another headwind for Spain among many,” said Kenneth Wattret, chief euro-area economist at BNP Paribas. “The turning point for interest rates can present a problem.”

Repossession petitions handled by the Spanish courts jumped to 27,621 in the first quarter, from 23,433 a year earlier and 5,688 in the same period of 2007, according to data from the General Council of the Judicial Power.

Rate Increases

Repayments on a mortgage of 171,000 euros, the average size of a home loan in Madrid according to the government’s statistics institute, would rise by 7 euros a month as a result in the increase in Euribor, assuming a 20-year repayment term and a spread for the loan of 50 basis points over Euribor.

Euribor may rise to 2 percent over the course of next year, said David Cano, a partner at Analistas Financieros Internacionales, a Madrid-based economic consultancy firm in a phone interview. At 2 percent, mortgage repayments would increase by about 50 euros a month, according to a simulation calculator on the website of the Spanish mortgage association.

“In macro-economic terms the impact probably is not going to be significant,” said Cano. “The risk is that it has a psychological effect.”

After reaching a record high of 5.39 percent in July 2008, the Euribor rate plunged to 1.22 percent in March this year.

Construction Boom

Spanish mortgage lending soared during Spain’s construction boom, surging more than fivefold from 1999 to 626 billion euros at the end of March this year, according to central bank data.

As much as 87 percent of new Spanish mortgages are floating-rate, meaning they reset according to increases or declines in benchmark interest rates.

In the U.K., the proportion is 54 percent, according to the European Mortgage Federation. While mortgage loans classed as “dubious” fell to 2.7 percent of total home financing in March, from 2.9 percent in December, that remain seven times higher than levels at the end of 2005, according to data from the Spanish mortgage association.

Higher rates come as government austerity measures and the withdrawal of public works programs threaten to undermine Spain’s economic recovery. The International Monetary Fund predicts a 0.4 percent contraction in the Spanish economy this year, after shrinking 3.6 percent in 2009.

While rates will climb, the increases shouldn’t be too “frightening,” said Raj Badiani, an economist at IHS Global Insight in London.

“You can’t expect Euribor to stay at the current low levels for ever and what really matters now is the rate of ascent,” said Badiani. “The last thing Spain needs now is Euribor rising rapidly over the next year.”

Source: Business Week



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China agrees to step up trade with Spain
03 September 2010

BEIJING — China is willing to work with Spain to increase trade and investment between the two countries and help push the European nation towards greater growth, Prime Minister Wen Jiabao said Tuesday.

Wen made the remarks to visiting Spanish Prime Minister Jose Luis Rodriguez Zapatero during a meeting in Beijing, China Central Television reported.

"China is willing to work with Spain to adopt more measures to push forward bilateral trade and sustainable mutual investment and to seek balanced growth," the report quoted Wen as saying.

China is also willing "to jointly safeguard financial market stability in the European Union and around the world and raise world confidence in the EU economy and the euro."

Wen also urged reform of the global financial system and efforts to fight trade protectionism, it said.

On Monday, Zapatero, accompanied by Foreign Minister Miguel Angel Moratinos, wowed Chinese visitors at the Shanghai World Expo by bringing the FIFA World Cup.

The trophy became the latest treasure put on show in Shanghai, lining up alongside Denmark's Little Mermaid, French impressionist paintings and a Rodin sculpture, as well as a work by Italian Renaissance master Caravaggio.

Spanish exports to China have grown fourfold since 2000 to more than two billion euros (2.5 billion dollars) last year, but Chinese exports to Spain totalled 15 billion euros in 2009, according to Spanish government figures.

Spain entered its worst recession in decades at the end of 2008 as the global financial meltdown compounded a crisis in the once-booming property market, returning to growth in the first quarter this year with a gain of just 0.1 percent.

Source: AFP



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Spanish traffic cops urged to halt ticket slowdown
03 September 2010

MADRID — Spanish highway patrol officers who are issuing fewer speeding fines to protest a pay cut have heard the magic word from their boss: Please, cut it out.

Interior Minister Alfredo Perez Rubalcaba gave no figures, but says the number of fines is definitely down since Civil Guard traffic officers had their wages cut 5 percent along with other civil servants as part of austerity measures imposed in May. Official Civil Guard figures released last month show fines fell in June by one-half compared to June 2009.

"I hereby ask formally that they please enforce the law, as they always have and have done very well," Perez Rubalcaba said Wednesday as he presented figures on highway fatalities for this summer vacation season.

These were actually down to 364, their lowest level since 1962, despite concerns among some Spaniards that the traffic officers' actions might lead motorists to drive less carefully, thus making roads more dangerous in one of Europe's top tourism destinations.

Civil Guard traffic officers, who make about euro1,600 ($2,100) a month, are livid over the 5 percent wage reduction imposed on them and other government workers as part of austerity measures enacted in May to help chip away at Spain's bloated deficit.

Perez Rubalcaba insisted his appeal was not about getting revenue flowing back into depleted government coffers, but about guaranteeing motorists' safety.

In the short term, the officers' actions have had little effect on safety, he said. But if it continues, Spaniards would "get the impression that they can run a stop sign or change lanes illegally and nothing will happen to them."

AUGC, an association of the 10,000-strong Civil Guard traffic department, dismissed the minister's comments as ignoring other gripes they have been pressing for years. These include salaries lower than those of other police units and unfulfilled government promises to hire more officers.

Source: The Associated Press



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Spain halves deficit with painful austerity cuts
03 September 2010

MADRID — Spain's deficit is down sharply thanks to an unpopular cocktail of tax hikes and austerity cuts — good news for a government fighting to ward off fears it might need a bailout like the one that saved Greece from bankruptcy.

Still, with a fifth of the work force out of a job and businesses struggling to survive, the spending cuts that are helping the budget are likely to keep any economic recovery subdued.

The Finance Ministry said in a report Tuesday that through the end of July, the central government's deficit totaled 2.4 percent of gross domestic product, half of what it was for the same period of 2009.

The figures do not include spending by regional governments, however, which will be key to helping the government meet its stated goal of cutting the deficit from 11.2 percent of GDP last year to 3 percent in 2013.

The report says revenue rose 10.4 percent through July, largely due to a higher VAT rate, a tax on goods and services.

The stock market's IBEX 35 index closed 3.51 percent up at the close of trading Wednesday.

But this is a one-time boost widely attributed to Spaniards rushing to buy big-ticket items like refrigerators and washing machines before those tax rates rose on July 1.

On the spending side, the government saved money by eliminating a euro400 ($500) tax rebate it granted to most taxpayers in 2008 and cutting civil servants' wages by 5 percent as part of an austerity plan approved in May.

But other numbers show the uphill battle Socialist Prime Minister Jose Luis Rodriguez Zapatero still faces as he tries to resurrect an economy that collapsed two years ago after a real estate bubble burst and is now saddled with a 20 percent jobless rate: tax revenue from businesses is down 9.8 percent in the first seven months of the year.

Consumers, meanwhile, remain cautious — car sales dropped 24 percent in August compared from a year earlier to reach their lowest level since 1989, two associations of manufacturers and dealers reported Wednesday. The government had been providing cash aid to boost sales as part of a stimulus package but that money ran out in July.

Indeed, Zapatero has a difficult autumn ahead of him. Unions plan a general strike Sept. 29 to protest labor market reforms that seek to make companies less wary of hiring by lowering the cost of firing people. The unions are also angry over government plans to extend the retirement age from 65 to 67 and change the way pension schemes are calculated, with the result that most people will get a bit less in their golden years.

Zapatero runs a minority government with very few allies remaining in Parliament and dwindling support among Spaniards.

A poll released Wednesday by Cadena Ser radio said that if elections were held now, the conservative Popular Party would win by eight percentage points. The margin of error was three points. Less than 28 percent of those polled said they approve of the prime minister's performance.

As Spaniards return from summer vacation, Zapatero's first task is to pass a lean budget for next year. Officials say average government ministry spending will be cut to 2006 levels.

Zapatero now has his very top people wooing a Basque nationalist party whose support would give him enough support to pass a budget, but at a price. In return, the already largely autonomous Basques want more self-rule in economic issues.

El Pais reported that some lawmakers think that if Zapatero fails to pass a budget, something which has never happened in post-Franco Spain, he could face early elections. As it stands, Zapatero's second term runs through March 2012.

Source: The Associated Press



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Spain needs pain for better future: Zapatero
01 September 2010

Spain's Prime Minister Jose Luis Rodriguez Zapatero said Wednesday his nation needed to accept temporary pain for a better economic future, but said Spanish workers were unwilling to be flexible.

"All countries make sacrifices today for a better tomorrow," he told a press conference in Tokyo when asked how he will sell unpopular reform policies to his country, which is mired in soaring unemployment.

A general strike has been called for September 29 after Zapatero's government said it would press ahead with labour market reforms that would make it easier to hire and fire workers.

"Even if a general strike takes place on September 29, I will continue dialogue with the labour union the following day," Zapatero said through an interpreter.

The general strike will be Spain's first since 2002.

Zapatero, who became prime minister six years ago, noted work hours had been slashed in both Germany and Spain in the past but German unions had agreed to pay cuts.

"Spain was unable to achieve the flexible reform and change that were possible in Germany," he said

The International Monetary Fund (IMF) and the government argue the reform would help reduce Spain's unemployment rate, which sits at around 20 percent.

They also point out that it would reduce government spending on jobless benefits. But unions object to seeing workers' rights weakened.

They are also unhappy with government plans to raise the retirement age to 67 from 65 and austerity measures that will cut civil servants' wages.

Zapatero, who is in Japan until Thursday to promote economic ties, said the Spanish economy was recovering from a severe recession faster than other European Union countries.

"We do not need assistance from the EU or IMF and we have never thought it will be necessary," he said. Given confidence in the Spanish banking system, he said there was no need to inject more public funds into banks.

All eight major Spanish banks, including Santander, the eurozone's biggest bank by market capitalisation, passed recent eurozone stress tests, as did 14 other regional savings banks, known as "cajas", that were analysed.

However, five regional banks failed the tests on weak core capital levels.

Markets have been jittery over Spain's high public deficit, which peaked at 11.2 percent of gross domestic product last year, fearing the country could suffer the same fate as Greece, which needed an EU-IMF bailout.

But Spain has recently seen firm demand for its bonds issuance on abating investor concerns over the nation's ability to cut its fiscal gap.

Spain plunged into its worst recession in decades at the end of 2008 after the real estate bubble burst, and only returned to tepid growth this year.

Source: AFP/Yahoo



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