January 1st, 2013
Following the Spanish Government's last Council of Ministers meeting of 2012, Prime Minister Mariano Rajoy took stock of his first year in Government, saying "we must persevere in the reforms we have undertaken", and asked for "comprehension and solidarity" from citizens in order to overcome the economic situation, and stressed that "we will exit this crisis sooner rather than later". Rajoy explained that to offset the imbalance that existed in the public accounts it was necessary, right from the start, to adopt extraordinary measures that were "painful but fair" in order to reduce the deficit.
However, Rajoy underlined that as a result of approving the Budgetary Stability and Financial Sustainability Act "we have laid the foundations for avoiding the occurrence of a similar situation in the future".
Together with the emergency measures adopted, Rajoy stated that "the most ambitious and intense agenda of reforms of the last few years has been undertaken in Spain". Of these, the Prime Minister made particular mention of the restructuring of the financial sector and the labour reform.
Rajoy stressed that the objective of this raft of reforms implemented by the Government is, "to lay the foundations for the stable and sustainable growth of our economy in the future". In this respect, he said that if these reforms had not been undertaken, "Spain and the Spanish people would now be in a considerably worse situation". He also said "we still have a very tough year ahead of us, particularly the first half", since the Spanish economy will remain in recession for some time to come, "although we expect to see an improvement in the second half of 2013″.
Rajoy praised Spanish society for the way in which it is facing up to these times of crisis, and particularly acknowledged the sacrifices made by civil servants and pensioners. He called for "comprehension and solidarity" from the people: comprehension to apply measures "that no-one likes but which are essential" and solidarity to "understand that we all need to bear part of the common sacrifice to overcome our problems".
Rajoy went on to say, "we must avoid everything that distracts us from our two major objectives, of exiting the crisis and creating jobs". "All our energies must be focused on that which unites us, which makes us stronger, which allows us to resolve our difficulties together", he said.
In response to questions from the press, the Prime Minister reiterated that the government does not intend to ask the European Central Bank to intervene to purchase bonds on the secondary market, but considers it to be a very useful instrument available to those countries that need it. "At present we have no intention of requesting this but we don't discount doing so in the future".
As regards reducing the deficit, Rajoy asserted that "no country has ever been asked to do so much during a situation of recession and with the financing problems that Spain has", and pointed out that the European Commission will not request additional measures for 2012 and 2013.
Rajoy announced that it is not his intention to raise VAT in 2014 but that this depends on how events unfold. He said he also intends to return Income Tax to its previous rate and hold a debate with the Toledo Pact, at the beginning of the year, on the sustainability of the pension system. "We will hold an open debate on the pension system. We have no intention of further raising the retirement age", he stressed.
After commenting on a number of other issues, Rajoy went on to announce some of the measures and reforms to be adopted by the Government in 2013, among which he cited those relating to the public administration services and those designed to drive credit towards small- and medium-sized enterprises (SMEs).
Ernst & Young were not as optimistic .(March 2012 article.)
Ernst & Young Fears 'Social Instability' May Hinder Rajoy's Reforms
The international consulting firm Ernst & Young has forecast a recession for Spain until 2014 after evaluating all the measures taken by the Government of Mariano Rajoy up until now. According to an official statement in the latest Ernst & Young Eurozone Forecast indicator (EEF), which corresponds to spring, "the economic reforms undertaken by the Spanish Government will stabilise the short-term economic growth of the country but, at the same time, provide the basis to ensure its recovery when the economy starts to grow."
"The report forecasts a contraction in the Spanish gross domestic product (GDP) of 1.2% in 2012 and 0.6% in the following year, and only from 2015 the economy will start to grow at rates of about 2%". It is, however, more optimistic than the Government forecast for this year, which predicts a recession of 1.7%, but is more pessimistic about the level of unemployment, which is estimated to reach 25% by the middle of the year.
"The aforementioned reforms will be beneficial in the coming years – in the short term, the Spanish economy is facing a profound fiscal adjustment which, among other things, will reduce domestic demand," says Ernst & Young, who believe that additional adjustment measures requested by the EU "could be counterproductive to our economy in the short term."
The consulting firm forecasts that the price of housing in Spain "will continue falling for at least the next three years" and also that the Government's financial reform "is likely to push banks to reduce their lending."
According to El Mundo, the report highlighted that "the high level of youth unemployment represents a threat to the country's ability to maintain a workforce with high skill levels" and they foresee a rise in the unemployment rate to around 25% for the second half of 2012″. In their opinion, this poses "a risk of social instability for the implementation of the Government's reform program."
José Miguel Andrés, Chairman of Ernst & Young in Spain, said in the statement that "despite the fact that Spain will continue this year in recession, they are laying the foundations for our economy to recover. If the Government successfully implements their ambitious agenda of structural reforms, Spain could be ensured potential for economic growth and sustained job creation once the economy begins to show signs of strength. Therefore, assuming that the Government achieves its objectives, the GDP growth should be accelerated from 2015 and 2016 to levels above 2%, according to our evaluations."
As for the Eurozone Forecast, the company anticipates a GDP contraction in the eurozone of 0.5% for 2012, and subsequently 1% growth in 2013 and 2% from 2015.
From the above report
"The consulting firm forecasts that the price of housing in Spain "will continue falling for at least the next three years"
That's 2013 - 2014 and 2015 - each 11% or about 1/3 off current prices
The Banks might be, but are property prices here linked with the Mainland?
These Islands have far more to offer than mainland Spain for example the 365 Weather.
We should be all aware by now you are unable to make a quick fist full of Euro's in the short term anymore.
There are bargins to be had here and are still good for medium to long term investment, which I thought property used to be about.
This is also a great place to retire and live, notice work was not mentioned,
Does anyone disagree!
Quote from: ANDMAG on January 03, 2013, 09:23:38 AM
The Banks might be, but are property prices here linked with the Mainland?
These Islands have far more to offer than mainland Spain for example the 365 Weather.
We should be all aware by now you are unable to make a quick fist full of Euro's in the short term anymore.
There are bargins to be had here and are still good for medium to long term investment, which I thought property used to be about.
This is also a great place to retire and live, notice work was not mentioned,
Does anyone disagree!
Property is an investment as historically it has not fallen , only in the short term .
BUT
Residential Property should be a place to live . Holiday homes and other Buy to let properties being owned by those that thought they could make a profit has caused alot of the financial problems . They were bought with borrowed money . Historically those with holiday homes were those that were rich and did not need to borrow . As soon as people started to borrow money to buy luxuries was the start of the eventual problem .
Holiday Homes are for wealthy people only , i know others would disagree but thats the point of forums ??
We have a UK based mobile home , cost £10k 18 years ago . £3k a year in site fees insurance etc. There is another part of the same site where they charge £7k pa and the mobile homes are £60-80k plus . That to us is madness , you can only use it fior 9/10 months aswell .