It's the very stuff of negotiating. There are the red lines which cannot be crossed, which cannot be conceded, but then there are the negotiables, the ones that give the opponent some of what is sought while at the same time not weakening one's own position and perhaps even strengthening it.
When Francina met Mariano it was just conceivable that the latter would have sent the former away with a flea in her ear. Told her never to darken the doors of the Moncloa again. To take herself to the nunnery of the Balearics and to enter, along with the citizenship, a life of penury and asceticism, praying to the Lord for deliverance.
Whatever one thinks of Rajoy, he isn't stupid. He couldn't afford Francina returning to Mallorca as the failed and humiliated victim of his "aggressions" towards the Balearics, but a heroine nonetheless, the martyr of Partido Popular vengeful parsimony. Francina would have been able to take herself off to the La Beata procession in Santa Margalida on Sunday, her head held defiantly high, trailing behind the the simulator of the ascetic Saint Catalina as she defies the destructive force of the devil. Such symbolism.
Rajoy and others at PP high command might have given up on Bauzá long before the electorate did, but this doesn't mean they've given up on the Balearics. There are votes to be had, even in lands that turned their backs on Bauzá's version of the regional PP and placed into boxes their fateful electoral envelopes of PSOE, Més and Podemos. Notwithstanding a shift to the left at the regionals and the constant media reminders that the days of two-party politics are over, high command has reasons to not be totally fearful of how the Balearics might vote at the general election. The awkward squad having ensured that Bauzá was spirited away to the Senate, the PP has a potential new look, even if it will be wearing a familiar brown suit. Not everything that Mateo Isern does is for the best, such as his fashion sense, but Palma's one-time mayor, a darling of some at high command and a popular enough figure in the Balearics, despite the PP, could give the party a boost at the head of the list of candidates for Congress and a consequent boost to Rajoy as well.
Not long after Armengol finally managed to scrape a government together, her finance minister, Catalina Cladera, was despatched to Madrid with instructions to issue a broadside to national finance chief, Cristobal Montoro. The Balearics aren't going to put with PP lack of finance any longer. So there. It was all stirring stuff and all bound to fail, and everyone knew it would, including Francina and Catalina. But Francina had, after all, been on the point of losing the support of Biel Barceló and Més during their own little negotiation fandango. An improvement to financing for the Balearics was a demand from Biel, he also knowing full well that there wouldn't be one. Nevertheless, and for appearances' sakes - those of their respective parties and the general public - Catalina marched off, brandishing her sword and discovering that it was made of plastic rather than metal.
When Montoro said no, everyone was able to blame him and Rajoy. Face was not lost by Francina, Catalina (or Biel). It was all Rajoy's fault, and even the local PP was inclined to agree. For weeks since, Francina has uttered the same mantra. Every day, it has seemed. Deficit this, deficit that. Statutory investments here, special regime for the Balearics there. Rajoy knew exactly what was coming. No, Francina, he would not cross the deficit red line and allow the Balearics to plunge into the red and incur the wrath of watching Europeans in the process. But statutory investments that hadn't been paid? Take a look at the special regime again? Agree that the financing model needs revising, but not this year? Sure. Why not? Rajoy had nothing to lose except the money that Madrid has been withholding and a great deal to win by showing wavering PP voters in the Balearics that he wasn't the devil in disguise.
So the heavy-booted steps on the dance floor of the pre-meeting weeks have ended in the tango of Madrid, Mariano conceding what he was happy to. There was no surprise because, despite Catalina shouting at Montoro, he had some while ago conceded that the Balearics needed better treatment. It was a done deal before Francina got on the plane.
Rajoy says that Balearic financing does need modifying, but it won't be looked at until next year. For Francina, financing and the eco-tax came as a package. Get better financing and the tax could be dropped. Because of the other negotiations, those with Biel, the tax has now become more likely. There are some things you can't give way on.
Showing posts with label Deficit. Show all posts
Showing posts with label Deficit. Show all posts
Thursday, September 03, 2015
Thursday, September 19, 2013
The Green, Green Tax Of Home (And Only Home)
"It would be amazing were these green taxes to come before parliament again and be ratified. The government says that they will be debated once more in September with an intention to introduce them at the end of the tourism season. But what would have changed to make business more inclined to stomach them? The next election would in fact be that much closer; this is about all that might have changed."
I wrote the above in early June this year. The Balearic Government had announced then that taxes on car hire, on food and drink packaging and on large retail centres - the green taxes - were not going to be introduced as the government had intended. President Bauzá has now said that, despite a promise to bring the taxes back for debate in parliament, there will be no taxes. Not for one moment did I ever imagine that there would have been such a debate or that the taxes would have been introduced.
Bauzá has avoided taking the issue before parliament at all. His announcement came at a briefing for business leaders. There may have been little point in having a parliamentary discussion, but he might at least have afforded the parliament a touch of courtesy and made the announcement to it rather than to a private gathering.
But of course the people he was addressing would have included just those people who objected to the taxes - business leaders. It was they who put the kibosh on the taxes. When the mighty retailers gathered and threatened legal action against the taxes, the government's game was up. A president who knows which side his bread is buttered doesn't bother with announcements to parliament but to those who are the real powers in the land, of which he isn't one.
The spin behind the announcement, though, tells a rather different story. The taxes are not being reconsidered because the economy is improving; hence there is no need for new sources of tax revenue. The deficit requirement placed on the regional government by Madrid has given the Balearics a bit of wriggle room as well and given the government a further reason not to bring in the taxes.
Maybe we should just consider, however, what this economic improvement entails. Growth of 0.3% in the second quarter, excellent hotel occupancy rates and increased tourist spend. I think I have dealt with the latter two of these in a previous article. As for second-quarter growth, it is positive, but let us wait until the winter quarters and see if there is genuine and consistent growth and not just that brought about by seasonal factors.
We should also consider the original motives for the green taxes. One was to raise revenue, the other was to act as "an incentive for greater environmental responsibility". The finance minister and vice-president at the time, Josep Aguiló, conceded that these taxes went counter to the "ideology of the Partido Popular" (a point which has now been reiterated by the party's spokesperson Mabel Cabrer), but one has to ask, therefore, why they were ever conceived. The government's sudden discovery of a previously absent greenness was fiscal imperative wrapped in environmental foliage.
It might be recalled that there was one other green tax. It is the one that has been introduced. It has resulted, in some instances, in householders' water bills doubling. If this ran counter to PP philosophy, then will it now be scrapped? One very much doubts it.
The green taxes were announced right at the end of last year's tourism season. So, despite the revenues from tourism (being repeated this year), the government still felt compelled to invent some new taxes. Oddly though, at the start of this year the government was able to announce that its tax revenues for 2012 had risen unexpectedly. Regardless of this, and running counter to the party's ideology, the green taxes were still to be introduced.
The fact is that they would have been had it not been for pressure from big business, the typical supporters of the PP. They would have been up for introduction now were it not for the same pressure, while there is one other good reason why the government does not intend to consider the taxes again. The government doesn't want to be fighting on too many fronts. It has a fight with the teachers, one it will believe it can handle and depict as leftist, Catalanist agitation. It doesn't want one with an opponent it cannot handle. That which helps put it into government. Big business.
Any comments to andrew@thealcudiaguide.com please.
I wrote the above in early June this year. The Balearic Government had announced then that taxes on car hire, on food and drink packaging and on large retail centres - the green taxes - were not going to be introduced as the government had intended. President Bauzá has now said that, despite a promise to bring the taxes back for debate in parliament, there will be no taxes. Not for one moment did I ever imagine that there would have been such a debate or that the taxes would have been introduced.
Bauzá has avoided taking the issue before parliament at all. His announcement came at a briefing for business leaders. There may have been little point in having a parliamentary discussion, but he might at least have afforded the parliament a touch of courtesy and made the announcement to it rather than to a private gathering.
But of course the people he was addressing would have included just those people who objected to the taxes - business leaders. It was they who put the kibosh on the taxes. When the mighty retailers gathered and threatened legal action against the taxes, the government's game was up. A president who knows which side his bread is buttered doesn't bother with announcements to parliament but to those who are the real powers in the land, of which he isn't one.
The spin behind the announcement, though, tells a rather different story. The taxes are not being reconsidered because the economy is improving; hence there is no need for new sources of tax revenue. The deficit requirement placed on the regional government by Madrid has given the Balearics a bit of wriggle room as well and given the government a further reason not to bring in the taxes.
Maybe we should just consider, however, what this economic improvement entails. Growth of 0.3% in the second quarter, excellent hotel occupancy rates and increased tourist spend. I think I have dealt with the latter two of these in a previous article. As for second-quarter growth, it is positive, but let us wait until the winter quarters and see if there is genuine and consistent growth and not just that brought about by seasonal factors.
We should also consider the original motives for the green taxes. One was to raise revenue, the other was to act as "an incentive for greater environmental responsibility". The finance minister and vice-president at the time, Josep Aguiló, conceded that these taxes went counter to the "ideology of the Partido Popular" (a point which has now been reiterated by the party's spokesperson Mabel Cabrer), but one has to ask, therefore, why they were ever conceived. The government's sudden discovery of a previously absent greenness was fiscal imperative wrapped in environmental foliage.
It might be recalled that there was one other green tax. It is the one that has been introduced. It has resulted, in some instances, in householders' water bills doubling. If this ran counter to PP philosophy, then will it now be scrapped? One very much doubts it.
The green taxes were announced right at the end of last year's tourism season. So, despite the revenues from tourism (being repeated this year), the government still felt compelled to invent some new taxes. Oddly though, at the start of this year the government was able to announce that its tax revenues for 2012 had risen unexpectedly. Regardless of this, and running counter to the party's ideology, the green taxes were still to be introduced.
The fact is that they would have been had it not been for pressure from big business, the typical supporters of the PP. They would have been up for introduction now were it not for the same pressure, while there is one other good reason why the government does not intend to consider the taxes again. The government doesn't want to be fighting on too many fronts. It has a fight with the teachers, one it will believe it can handle and depict as leftist, Catalanist agitation. It doesn't want one with an opponent it cannot handle. That which helps put it into government. Big business.
Any comments to andrew@thealcudiaguide.com please.
Thursday, March 14, 2013
The Recovery Will Not Be Realised
Alfredo Pastor is professor of economics at the IESE Business School. He is also a former secretary of state for the economy - in the last PSOE government of Felipe González. It was interesting, therefore, to find an article of his in "The Bulletin", one entitled "Reasons to believe Spain's recovery is not far away". The reasons why Professor Pastor believes recovery might be in the offing include greater competitiveness through lower labour costs, a growing export market and some hints of business confidence creeping back.
There are some signs of recovery and it would be wrong to talk down the possibility of an improvement in the overall economic picture if not this year then next. BBVA bank has suggested that negative growth of minus 1.1% in 2013, slightly less bad than had been predicted, will be matched by plus 1.1% in 2014. It wouldn't be a huge improvement, but it would still be an improvement. BBVA, like Professor Pastor, emphasises export performance, but the economist Edward Hugh, generally a pessimist rather than an optimist, has made a comparison with the experience in Hungary where, despite good export performance, its economy keeps slipping back into recession. In Hungary, the country's current account balance is in the black. Spain's is moving this way, too, which sounds like a reason to be cheerful, but this disguises the size of the country's external debt.
Because of this debt, gains that are made from having a trade surplus thanks to export performance are used to service the debt. Greater competitiveness because of lower labour costs (internal devaluation) leads to better export competitiveness but doesn't necessarily mean economic growth, or growth that is anything other than small or even sustainable.
The Spanish Government is pinning its hopes on there being some growth, even if it is very moderate, and on this having a positive impact on the 26% unemployment rate. But unless export growth were to be more spectacular, it remains difficult to see how this unemployment is going to be tackled. Despite Professor Pastor's belief that confidence may be coming back, even if it is only trickling back, is this confidence among exporters or among those involved with the domestic market? The retail sector, for instance, is depressed and is likely to stay depressed. It may even become more depressed. And the reason for this is that there are potentially more recessionary measures yet to be taken.
The EU's budget enforcer, Olli Rehn, has suggested that Spain's deficit targets, ones that the government keeps missing anyway, could be eased, but the fact is that the country's fiscal position is currently unsustainable. More cuts and more tax increases are going to be needed at some point. Indeed, the EU has also suggested that there is room for a further rise in IVA (if not to the higher, general rate then to the lower rate, the so-called tourist rate). The political fallout from a rise in the tourist rate might prove too much for the government and for its supporters in the tourism industry who would desert it. But if the higher rate were to rise, then demand would be squeezed even more, meaning a further brake on any possible growth.
The miserable truth is that although taxes have been raised, although cuts have been swingeing, the deficit targets are still not being met, while, as a consequence - and perversely enough - of attempting to curb the deficit as swiftly as the government has been attempting to, the economy has been contracting because of the squeeze on demand.
Growth may return next year but as the government has been hell-bent (mainly because it had no other option) on pursuing a policy of internal devaluation through lower costs, this will also, both in the short and longer-term, have a depressive effect. Salary and wage reductions, some in the order of up to 40%, mainly in the public sector but certainly not exclusively, will do nothing to stimulate demand, and with credit squeezed as well (though movements on banks' recapitalisation may just takes the brakes off to a degree), it is almost impossible to see from where growth, other than any from exports, is likely to come and even more impossible to see how it might be sustained.
Professor Pastor is optimistic that the political situation re Catalonia will not lead to violence (and one can interpret this how one wants). Let's hope he's right. I happen to agree with him, but can there be the same optimism where social discontent is concerned? There is only so much a people can put up with, and while the financial economy might be showing an improvement, in the real world, there is none.
Any comments to andrew@thealcudiaguide.com please.
There are some signs of recovery and it would be wrong to talk down the possibility of an improvement in the overall economic picture if not this year then next. BBVA bank has suggested that negative growth of minus 1.1% in 2013, slightly less bad than had been predicted, will be matched by plus 1.1% in 2014. It wouldn't be a huge improvement, but it would still be an improvement. BBVA, like Professor Pastor, emphasises export performance, but the economist Edward Hugh, generally a pessimist rather than an optimist, has made a comparison with the experience in Hungary where, despite good export performance, its economy keeps slipping back into recession. In Hungary, the country's current account balance is in the black. Spain's is moving this way, too, which sounds like a reason to be cheerful, but this disguises the size of the country's external debt.
Because of this debt, gains that are made from having a trade surplus thanks to export performance are used to service the debt. Greater competitiveness because of lower labour costs (internal devaluation) leads to better export competitiveness but doesn't necessarily mean economic growth, or growth that is anything other than small or even sustainable.
The Spanish Government is pinning its hopes on there being some growth, even if it is very moderate, and on this having a positive impact on the 26% unemployment rate. But unless export growth were to be more spectacular, it remains difficult to see how this unemployment is going to be tackled. Despite Professor Pastor's belief that confidence may be coming back, even if it is only trickling back, is this confidence among exporters or among those involved with the domestic market? The retail sector, for instance, is depressed and is likely to stay depressed. It may even become more depressed. And the reason for this is that there are potentially more recessionary measures yet to be taken.
The EU's budget enforcer, Olli Rehn, has suggested that Spain's deficit targets, ones that the government keeps missing anyway, could be eased, but the fact is that the country's fiscal position is currently unsustainable. More cuts and more tax increases are going to be needed at some point. Indeed, the EU has also suggested that there is room for a further rise in IVA (if not to the higher, general rate then to the lower rate, the so-called tourist rate). The political fallout from a rise in the tourist rate might prove too much for the government and for its supporters in the tourism industry who would desert it. But if the higher rate were to rise, then demand would be squeezed even more, meaning a further brake on any possible growth.
The miserable truth is that although taxes have been raised, although cuts have been swingeing, the deficit targets are still not being met, while, as a consequence - and perversely enough - of attempting to curb the deficit as swiftly as the government has been attempting to, the economy has been contracting because of the squeeze on demand.
Growth may return next year but as the government has been hell-bent (mainly because it had no other option) on pursuing a policy of internal devaluation through lower costs, this will also, both in the short and longer-term, have a depressive effect. Salary and wage reductions, some in the order of up to 40%, mainly in the public sector but certainly not exclusively, will do nothing to stimulate demand, and with credit squeezed as well (though movements on banks' recapitalisation may just takes the brakes off to a degree), it is almost impossible to see from where growth, other than any from exports, is likely to come and even more impossible to see how it might be sustained.
Professor Pastor is optimistic that the political situation re Catalonia will not lead to violence (and one can interpret this how one wants). Let's hope he's right. I happen to agree with him, but can there be the same optimism where social discontent is concerned? There is only so much a people can put up with, and while the financial economy might be showing an improvement, in the real world, there is none.
Any comments to andrew@thealcudiaguide.com please.
Saturday, January 12, 2013
MALLORCA TODAY - Balearics will see minimal growth in 2013
The regional government in the Balearics has admitted that there will be barely any growth of the economy during 2013: at most by an increase of 0.3%. Employment is not expected to show a significant rise until 2014. The region has failed to meet a target of reducing its deficit to 1.5% in 2012, but the government says that the deficit is not as much as 2%.
See more: Diario de Mallorca
See more: Diario de Mallorca
Tuesday, May 01, 2012
MALLORCA TODAY - Balearic Government cuts costs by over 250 million euros
The Balearic Government announced cuts yesterday amounting to 263 million euros and an anticipated increase of 83 million euros in its effort to reduce the region's deficit. The cuts will include the closure of two hospitals - the General and Joan March. There will also be adjustment to times of opening of local health centres (they will be reduced), the regional health authority losing in all 68 million euros from its budget.
Saturday, March 31, 2012
Strike! No one noticed
So, another day and another general strike has come and gone. How was this one for you? Did you notice it any more than the last one? It was hard to tell that there was one on. There were two separate rubbish collections, so Muro wasn't on strike in any event. I spent a short time seeking out evidence of strikers, thinking that the port in Alcúdia would be a likely venue for a few pickets. There wasn't a single one, but I had timed my run either too early or too late; there were some and even more police.
There weren't even any chaps with loudhailers and banners roaming along the main road from the Donuts roundabout (Magic) in Puerto Alcúdia, as there had been last time. Possibly because the season hasn't started yet, so there were no actual workers around to strike. In the absence of any great outbursts of street protesting, it felt like a fiesta day, even if everything was open and the post office moto was doing its usual spluttering rounds.
Most of the local strikers probably went on a day out to Palma (probably not taking public transport). 60,000 of them took to the streets there in an evening protest; considerably fewer, according to the government. Local journalists and reporters had clearly been detailed to cover all the information regarding competing numbers of strike participants and street protesters being pumped out by the unions, interior ministries and police, as there was precious little other news yesterday.
The most positive thing you can say about the general strike is that it was a bonanza for the media; it wasn't positive in any other way. The unions described it as a great success, but then they would. Buoyed by this apparent success, there is now a threat of a "hot" first of May, i.e. bang on the start of the tourism season. This is the great worry, though the impact on tourism of Thursday's media bonanza was minimal; flights weren't that badly affected, there was transport available and most tourists seemed to be unaware of what was going on or, as last time, were standing around taking photos with their mobiles and uploading them to Facebook. Assuming they saw any evidence of the strike, that is.
The strike has achieved nothing. Any further strike would only do so were it to be for a prolonged period, which will not happen. Apart from anything else, workers might be prepared to give up one day's pay but not any more.
As is usual on such occasions, there was the odd nutty element that made a nuisance of itself. "Radicals" - as the media-bonanzaing media like to call them - were involved in a run-in with the police in Barcelona, but there will always be some nutty boys who muscle in on these events. There wasn't much by way of violence anywhere; you wonder if there really is the stomach for a fight amongst the workforce of Mallorca and Spain, that which is in work of course.
One senses that there is more an air of resignation. Whether Mallorcans and Spaniards as a whole really grasp the enormity of Spain's problems is questionable, but most will probably just carry on in their own sweet way, blaming anyone but themselves for whatever these problems might actually be. A country and a population that has been on the receiving end of so much generosity and managed to blow it all is ill-prepared psychologically to understand that it might itself need to accept a share of the blame.
The population will probably take in its casual stride to the next bar for a coffee the news that the government has announced measures to cut 27 billion euros of spending. The amount is so enormous, rather like all the largesse that had once been directed towards Spain, that it doesn't mean a great deal. It may do for public sector workers who are caught up in cuts that average 17%, but otherwise ...?
But look at these cuts and they should really make everyone fearful. While commentators believe the government's measures do not go far enough in meeting its deficit-reduction requirement, others might well ask where is any growth to come from that might help in raising the tax revenues the government seems to believe that it will receive. Cuts to the tourism and budget of over 30%, for example, don't make for great news for an industry that is constantly referred to as the motor of the economy.
No one is convinced, no one that is who casts a critical eye over Spain's economy. Brussels isn't convinced, the Italian prime minister isn't convinced (though he has apologised for his critical remarks), "Le Monde" in France has described Spain as Europe's great problem. No one is convinced and partly because Rajoy is so unconvincing. As a prime minister he lacks any sense of leadership or vision. He is an automaton politician, one without the personality to inspire confidence. He might just get away without there being huge expressions of public discontent, but only because the public is so apathetic. Or maybe he won't.
Any comments to andrew@thealcudiaguide.com please.
Index for March 2012
Andalucía regional election - 27 March 2012
Balcony diving - 5 March 2012
Beach bars - 12 March 2012
Catalan defence - 11 March 2012
Círculo Fortuny: luxury promotion - 29 March 2012
Cricket in Spain - 13 March 2012
Environment, coasts, building and tourism - 4 March 2012
European tourism trends - 15 March 2012
Gay tourism - 7 March 2012
General strike - 31 March 2012
German cyclist death - 28 March 2012
Jaume Matas guilty - 22 March 2012
Joan March anniversary of death - 9 March 2012
Llucmajor scraps tourism promotion - 3 March 2012
Magalluf: change of name? - 25 March 2012
Magalluf: concerts this summer - 2 March 2012
Nature parks: self-financing - 17 March 2012
New Order in Mallorca - 16 March 2012
Oil exploration in Canaries - 26 March 2012
Palm Sunday - 30 March 2012
Public space: invasion of - 10 March 2012
Puerto Alcúdia best beach destination - 8 March 2012
Real Madrid Resort Island - 24 March 2012
Recession and tourism - 1 March 2012
Social media and tourism promotion - 6 March 2012
Spring starts in Mallorca - 20 March 2012
Tapas - 18 March 2012, 23 March 2012
Tourism organisation in Mallorca - 21 March 2012
Travel writing - 19 March 2012
Youth unemployment in Spain - 14 March 2012
There weren't even any chaps with loudhailers and banners roaming along the main road from the Donuts roundabout (Magic) in Puerto Alcúdia, as there had been last time. Possibly because the season hasn't started yet, so there were no actual workers around to strike. In the absence of any great outbursts of street protesting, it felt like a fiesta day, even if everything was open and the post office moto was doing its usual spluttering rounds.
Most of the local strikers probably went on a day out to Palma (probably not taking public transport). 60,000 of them took to the streets there in an evening protest; considerably fewer, according to the government. Local journalists and reporters had clearly been detailed to cover all the information regarding competing numbers of strike participants and street protesters being pumped out by the unions, interior ministries and police, as there was precious little other news yesterday.
The most positive thing you can say about the general strike is that it was a bonanza for the media; it wasn't positive in any other way. The unions described it as a great success, but then they would. Buoyed by this apparent success, there is now a threat of a "hot" first of May, i.e. bang on the start of the tourism season. This is the great worry, though the impact on tourism of Thursday's media bonanza was minimal; flights weren't that badly affected, there was transport available and most tourists seemed to be unaware of what was going on or, as last time, were standing around taking photos with their mobiles and uploading them to Facebook. Assuming they saw any evidence of the strike, that is.
The strike has achieved nothing. Any further strike would only do so were it to be for a prolonged period, which will not happen. Apart from anything else, workers might be prepared to give up one day's pay but not any more.
As is usual on such occasions, there was the odd nutty element that made a nuisance of itself. "Radicals" - as the media-bonanzaing media like to call them - were involved in a run-in with the police in Barcelona, but there will always be some nutty boys who muscle in on these events. There wasn't much by way of violence anywhere; you wonder if there really is the stomach for a fight amongst the workforce of Mallorca and Spain, that which is in work of course.
One senses that there is more an air of resignation. Whether Mallorcans and Spaniards as a whole really grasp the enormity of Spain's problems is questionable, but most will probably just carry on in their own sweet way, blaming anyone but themselves for whatever these problems might actually be. A country and a population that has been on the receiving end of so much generosity and managed to blow it all is ill-prepared psychologically to understand that it might itself need to accept a share of the blame.
The population will probably take in its casual stride to the next bar for a coffee the news that the government has announced measures to cut 27 billion euros of spending. The amount is so enormous, rather like all the largesse that had once been directed towards Spain, that it doesn't mean a great deal. It may do for public sector workers who are caught up in cuts that average 17%, but otherwise ...?
But look at these cuts and they should really make everyone fearful. While commentators believe the government's measures do not go far enough in meeting its deficit-reduction requirement, others might well ask where is any growth to come from that might help in raising the tax revenues the government seems to believe that it will receive. Cuts to the tourism and budget of over 30%, for example, don't make for great news for an industry that is constantly referred to as the motor of the economy.
No one is convinced, no one that is who casts a critical eye over Spain's economy. Brussels isn't convinced, the Italian prime minister isn't convinced (though he has apologised for his critical remarks), "Le Monde" in France has described Spain as Europe's great problem. No one is convinced and partly because Rajoy is so unconvincing. As a prime minister he lacks any sense of leadership or vision. He is an automaton politician, one without the personality to inspire confidence. He might just get away without there being huge expressions of public discontent, but only because the public is so apathetic. Or maybe he won't.
Any comments to andrew@thealcudiaguide.com please.
Index for March 2012
Andalucía regional election - 27 March 2012
Balcony diving - 5 March 2012
Beach bars - 12 March 2012
Catalan defence - 11 March 2012
Círculo Fortuny: luxury promotion - 29 March 2012
Cricket in Spain - 13 March 2012
Environment, coasts, building and tourism - 4 March 2012
European tourism trends - 15 March 2012
Gay tourism - 7 March 2012
General strike - 31 March 2012
German cyclist death - 28 March 2012
Jaume Matas guilty - 22 March 2012
Joan March anniversary of death - 9 March 2012
Llucmajor scraps tourism promotion - 3 March 2012
Magalluf: change of name? - 25 March 2012
Magalluf: concerts this summer - 2 March 2012
Nature parks: self-financing - 17 March 2012
New Order in Mallorca - 16 March 2012
Oil exploration in Canaries - 26 March 2012
Palm Sunday - 30 March 2012
Public space: invasion of - 10 March 2012
Puerto Alcúdia best beach destination - 8 March 2012
Real Madrid Resort Island - 24 March 2012
Recession and tourism - 1 March 2012
Social media and tourism promotion - 6 March 2012
Spring starts in Mallorca - 20 March 2012
Tapas - 18 March 2012, 23 March 2012
Tourism organisation in Mallorca - 21 March 2012
Travel writing - 19 March 2012
Youth unemployment in Spain - 14 March 2012
Friday, March 30, 2012
MALLORCA TODAY - Massive deficit cut planned by Spanish Government
The general strike and the Andalucía election out of the way and the Spanish Government has announced its anticipated next round of austerity measures. It hopes to be able to cut by 2.5% the public deficit through a cut in spending of 27 billion euros. The axe is falling on government departments, energy and tourism losing 32% of its budget, development (which includes transport and roads) 34.6%, and the largest in overseas affairs and co-operation, 54.4%. There are to be no changes to IVA (value added tax) but company taxes will rise.
Wednesday, February 08, 2012
MALLORCA TODAY - Balearics deficit is 2.7%
Balearic Government finance minister Josep Aguiló announced yesterday that 2011 had closed with a deficit of 2.7% of PIB (equivalent to GDP), more than the 1.3% it had established as a target with central government but less than the 4.2% it might have been on account of the deficit it inherited on taking office in June.
Wednesday, November 23, 2011
Mariano And The Mess
Who on earth would want to be a Spanish prime minister? Well, Mariano Rajoy for one, though why is anyone's guess. It says much for political ambition that you would willingly enter the lions' den unprotected and smelling of dinner. Deficit, highest unemployment rate in Europe, virtually no growth. Presumably, in the words of the election song of a certain former prime minister, things can only get better. Actually, they can't; they can only get worse, and they already have.
Surprise has been expressed that the markets have reacted with a massive thumbs-down. That's not how it's meant to work. Good, right-wing, slash-and-burn politico takes over, and the markets are supposed to cheer at the fall of the squandering, bumbling incompetents from the left. They might have done were it not for the fact that Rajoy has to wait a few weeks before getting his backside onto the prime ministerial seat. There are procedures, you know, post-electoral ones, and the markets are being blamed for not understanding that it takes weeks for the Spanish to sort these procedures out. Perhaps Spanish politicians should try understanding how markets work, though they have shown little evidence that they do.
The hiatus following the election is just one reason why the markets have reacted so negatively. Another is that they really don't have much confidence in Rajoy and the Partido Popular as they know full well that there is precious little that Rajoy can actually do. Yep, it's a great time to be taking over as prime minister, knowing that you are totally emasculated and are dead meat even before you start.
If he were allowed into the prime ministerial office now, he would be flashing into the night sky over the Gotham City of Spain the distress image of the Euro and getting Angela and Nicolas racing from the ECB Batcave. "There are only 24 hours to save Spain, Robin." Which isn't too far from the truth, as each day brings with it ever more woe. Or perhaps he would be sending out an SOS and hoping that Thunderbird 5 picks it up. "Brains, any ideas as to how we can rescue Spain?" "Er, er, well, er, Mr. Tracy, we'll have to dig very deep. Cut very deep." "Right, Brains. Virgil, take Thunderbird 2's austerity mole pod." "F.A.B., father."
Oh that it was as simple as sending out a distress signal and International Rescue comes and makes everything all right. What am I saying? This is pretty much how it is. The IMF or the European Central Bank buying up Spanish debt as quickly as it can be issued in order to give Rajoy some breathing space to stutter his words of reforms before they cart him off to the Papandreou Home For Distressed European Leaders.
There's the deficit and then there's employment creation. It's not going to happen, because JP Morgan says so. Yes you can always rely on what banks say - they got everyone into the mess and now they can gloat at everyone's misfortune; JP Morgan reckons unemployment in Spain will rise to 27% next year. Rajoy, if and when he can get his scissors out, is going to have to cut so deep that unemployment will continue its upward march and growth its downward slump. Here comes another recession. Not that the first one ever really went away.
In an ideal world, and you may have noticed that the world currently isn't ideal, Rajoy would set in motion much-needed plans to restructure Spain's economy and not just its finances. Investment in new industries to break the dependence, certainly in some regions of Spain, on construction and tourism has been demanded for years. But where would the investment come from now? Even if the banks weren't suffering liquidity problems or weren't applying a squeeze and even if the government had spare pots of cash lying around, the results would take years to bear fruit. And Rajoy hasn't got years. He's barely got days.
Some proposals like tax cuts for smaller businesses could help with stimulating the economy, but what really might would be lowering the burden on social security payments. A reduction in IVA for the tourism industry, however, would be senseless. Tax receipts have gone up this year, thanks in part to the rise in IVA, and they are likely to be up again next year.
Rajoy has inherited a God awful mess. He should demand our sympathy, but then he wanted to be prime minister. So he should get on and sort it. But he can't, not yet, because procedures don't allow it. Incredible.
Any comments to andrew@thealcudiaguide.com please.
Surprise has been expressed that the markets have reacted with a massive thumbs-down. That's not how it's meant to work. Good, right-wing, slash-and-burn politico takes over, and the markets are supposed to cheer at the fall of the squandering, bumbling incompetents from the left. They might have done were it not for the fact that Rajoy has to wait a few weeks before getting his backside onto the prime ministerial seat. There are procedures, you know, post-electoral ones, and the markets are being blamed for not understanding that it takes weeks for the Spanish to sort these procedures out. Perhaps Spanish politicians should try understanding how markets work, though they have shown little evidence that they do.
The hiatus following the election is just one reason why the markets have reacted so negatively. Another is that they really don't have much confidence in Rajoy and the Partido Popular as they know full well that there is precious little that Rajoy can actually do. Yep, it's a great time to be taking over as prime minister, knowing that you are totally emasculated and are dead meat even before you start.
If he were allowed into the prime ministerial office now, he would be flashing into the night sky over the Gotham City of Spain the distress image of the Euro and getting Angela and Nicolas racing from the ECB Batcave. "There are only 24 hours to save Spain, Robin." Which isn't too far from the truth, as each day brings with it ever more woe. Or perhaps he would be sending out an SOS and hoping that Thunderbird 5 picks it up. "Brains, any ideas as to how we can rescue Spain?" "Er, er, well, er, Mr. Tracy, we'll have to dig very deep. Cut very deep." "Right, Brains. Virgil, take Thunderbird 2's austerity mole pod." "F.A.B., father."
Oh that it was as simple as sending out a distress signal and International Rescue comes and makes everything all right. What am I saying? This is pretty much how it is. The IMF or the European Central Bank buying up Spanish debt as quickly as it can be issued in order to give Rajoy some breathing space to stutter his words of reforms before they cart him off to the Papandreou Home For Distressed European Leaders.
There's the deficit and then there's employment creation. It's not going to happen, because JP Morgan says so. Yes you can always rely on what banks say - they got everyone into the mess and now they can gloat at everyone's misfortune; JP Morgan reckons unemployment in Spain will rise to 27% next year. Rajoy, if and when he can get his scissors out, is going to have to cut so deep that unemployment will continue its upward march and growth its downward slump. Here comes another recession. Not that the first one ever really went away.
In an ideal world, and you may have noticed that the world currently isn't ideal, Rajoy would set in motion much-needed plans to restructure Spain's economy and not just its finances. Investment in new industries to break the dependence, certainly in some regions of Spain, on construction and tourism has been demanded for years. But where would the investment come from now? Even if the banks weren't suffering liquidity problems or weren't applying a squeeze and even if the government had spare pots of cash lying around, the results would take years to bear fruit. And Rajoy hasn't got years. He's barely got days.
Some proposals like tax cuts for smaller businesses could help with stimulating the economy, but what really might would be lowering the burden on social security payments. A reduction in IVA for the tourism industry, however, would be senseless. Tax receipts have gone up this year, thanks in part to the rise in IVA, and they are likely to be up again next year.
Rajoy has inherited a God awful mess. He should demand our sympathy, but then he wanted to be prime minister. So he should get on and sort it. But he can't, not yet, because procedures don't allow it. Incredible.
Any comments to andrew@thealcudiaguide.com please.
Tuesday, April 19, 2011
MALLORCA TODAY - Pollensa deficit of over 600,000 euros
Pollensa town hall has finally closed the books for the year 2009 and declared a deficit of 636,000 euros. A question that has been raised is what might the deficit be for 2010. Another question, one that stems from what is alleged to be a lack of transparency, is whether the deficit is in fact greater.
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