Live News From Spain As It Happens

The Council of Ministers has today approved the draft budget for 2012, which includes cuts totalling 27.3 billion euros by reducing ministerial operating costs by 16.9% and increasing corporation tax for large companies.

Deputy prime minister, Soraya Sáenz de Santamaría, announced that budget did not include any increase in VAT so as not to compromise consumers' purchasing power, and that it would maintain the current pension rates.

Furthermore, civil servants' salaries have been frozen, rather than reduced, there are no reductions in unemployment benefit and nor in other social benefits, like grants.

Read more at ThinkSpain.com

Belt tightening in the board room and the living room, deep public budget cuts and anaemic bank lending may be setting Spain up for years of economic stagnation that could eventually force it to seek a bailout.

Under pressure to chop Spain's deficit to the European Union limit and stick to new fiscal rules, Prime Minister Mariano Rajoy has promised to present a budget on Friday that will be "very, very austere".

With the economy on the verge of its second recession in three years, soaring unemployment and rising borrowing costs, some economists are predicting a lost decade of growth such as the one experienced by Japan in the 1990s from which it has never fully recovered.

Others, including Italian Prime Minister Mario Monti, say Spain could drag the euro zone back into a deep crisis.

"We've signed a suicide pact in Europe by agreeing that we all need to make cuts," said Luis Garicano economist at the London School of Economics and head of Spanish think tank Fedea.

Read more at Reuters.com

A Euro Vegas in down-and-out Spain?

Depending on whom you ask, it could be heaven-sent or a deal with the devil.

Casino mogul Sheldon Adelson's dream to build Europe's first Las Vegas-style resort in Spain would certainly bring much needed relief to an economy lurching into another recession and struggling with sky-high unemployment.

But the millions that would rain down come with strings attached: Adelson wants Spanish laws bent so that gamblers can smoke inside the casinos and new zoning regulations allowing him to send buildings soaring above the skyline. And not everyone is thrilled about the idea of Spain hosting a European Sin City that could attract prostitution and mafia gangs - and add gambling addiction to the woes of already desperate Spaniards.

Still, Madrid and Barcelona are both vying to woo Adelson and the $22 billion he wants to invest to erect "Eurovegas" - an array of six casinos, 12 hotels featuring 36,000 rooms, a convention center, three golf courses, shopping centers, bars and restaurants.

The two sites being eyed in Madrid each cover an area equivalent to 1,000 football fields.

Read more at nwsource.com

Eurozone leaders have spent the last couple of weeks telling the world’s media that ‘there’s nothing to see here. Please move along’. Which, given how dry and difficult to explain this subject has become, we would all love to. The trouble is that everytime it looks as if one fire has been damped down, another flares up.

This time it is Spain which seems to be heading rapidly down a road first travelled by Greece a couple of years ago. To show that I’m not exaggerating, I give you this figure: in the last two years Greece has had to cut its national budget by 4.7%, and we all know what that has done for the economy and for unemployment. Spain is now under orders from the European Commission to cut its budget by even more, 5.5% in the next two years, and before it even starts that process unemployment in Spain is already higher than in Greece.

You don’t have to be Nostradamus to think that there may be trouble ahead. Nor Cassandra, for that matter. A general strike called by Spanish unions for March 29th may be just the first of many battles this year as the newly elected Government of Mariano Rajoy tries to impose savage cuts on an economy that is already deep in recession.

Read more at itv.com

The Mayor of Los Barrios has paid the wages of the council workers using a 1.5 million € loan he obtained from an individual at an interest rate of 28%. The interest has to be returned to the individual on April 1 2012.

Jorge Romero from the Partido Andalucista obtained the loan at the end of last year, against the advice of the Municipal budgetary office.

Read more: http://www.typicallyspanish.com/news/publish/article_34063.shtml#ixzz1pYgeFkB6

Fifty years ago Peleas de Abajo was a center of farming innovation. Now it is famous for claiming to be Spain's most indebted municipality after investments made during the country's boom years went sour.

The small town in the northwestern region of Castilla y Leon is struggling to pay its bills and service a pile of debt that accumulated from an investment in a rest home 15 years ago when cheap loans were plentiful.

The riches to rags story is typical of towns and regions across the country. After years of overspending, their finances are under scrutiny as Spain tries to rein in its budget deficit just as the economy heads towards recession.

Every euro is being scrutinized in an austerity drive to chop Spain's deficit to the European Union limit of 3 percent of gross domestic product next year from 8.5 percent in 2011. Town halls alone generated a deficit of 0.4 percent of GDP last year.

Read more at Reuters.com

There have been signs of spring returning to debt-stricken Europe. Eurozone ministers in Brussels have this week signed off on the Greece bailout package. The International Monetary Fund will confirm its own contribution to the relief deal tomorrow. An agreement on bolstering the eurozone's bailout fund is expected later this month.

The European Central Bank's €1trillion liquidity operation has averted the threat of a Continental banking crisis. Financial markets are calm. Some European officials are even daring to talk privately about a "turning point" in the long-running crisis. But in the corner of this encouraging scene, a dark, ominous cloud is growing. It is in the shape of Spain.

The Greek deal was the main topic of this week's Brussels meeting. But a close second was the problem of Spain's budget deficit. Last year Madrid's borrowing came in at 8.5 per cent of GDP, rather than the 6 per cent that had been expected. Spain had originally been tasked by Brussels with reducing its deficit to 4.4 per cent of GDP in 2012. But earlier this month the government of Mariano Rajoy announced that it would be unable to hit this target. Instead Rajoy announced a goal of 5.8 per cent of GDP, in what was seen as a direct challenge to his European partners.

At this week's Eurogroup meeting finance ministers hammered out a compromise. They said that Spain would not be expected to hit the original 4.4 per cent target this year. But Madrid would be expected to impose an extra 0.5 per cent of GDP in cuts – and the head of the Eurogroup, Jean-Claude Junker, stressed that Spain must not waver from reducing its deficit to 3 per cent of GDP by the end of 2013.

Read more at Telegraph.co.uk

We were robbed! That’s how many Peruvians feel, now that U.S. courts have given Spain the 17 tons of silver and gold coins that a private company salvaged from the wreck of a colonial-era Spanish sailing ship.

The treasure’s origin is not in dispute. The metals were mined and the coins minted in the Andes. The Spanish navy frigate that was carrying them to Spain exploded during an attack by British warships in 1804.

Peru argued it should get the precious metal recovered from the Nuestra Senora de Las Mercedes. But its legal case was sunk in large part by a historical fact: This country was, at the time, a Spanish dependency. It didn’t gain independence until 1821, the last bastion of Spanish rule in South America.

Read more at boston.com

CaixaBank (CABK) SA, Spain’s fourth- biggest lender, is studying combining with Banca Civica SA (BCIV), a former savings bank, as part of an overhaul of the nation’s financial industry. Civica shares surged.

CaixaBank, based in Barcelona, and Banca Civica, based in Madrid, are conducting due diligence with a view to a possible deal, the two lenders said in separate regulatory filings today. They are both also considering other mergers, and no final decision has been reached, they said.

Spain’s government is encouraging lenders into a second round of consolidation as it requires them to recognize deeper losses on real estate accumulated during the property crash. CaixaBank Chairman Isidro Faine expects a “wave of mergers,” he said on Jan. 27 as lenders seek to cut costs and boost scale in an economy where lending is shrinking at a record pace.

Read more at Bloomberg.com

The contract to complete the land sale for the new Paramount Theme Park in Murcia, southern Spain, has been signed given the green light for the much awaited project which could help boost the country’s slow property market.

Proyectos Emblematicos Murcianos (PREMURSA), the promoter behind Murcia’s Paramount Theme Park and LifeStyle Centre, agreed to pay €10.3 million for two thirds of the land earmarked for the project.

Chris Mercer, director of estate agent Mercers which is based ten minutes drive from the Theme Park, believes it will transform the area.

‘In this time of negative reporting, particularly with reference to Spain’s economic tribulations, it is so refreshing to have some ultra positive news to share. After many months of waiting it now looks as though we have been right to have had faith in, and publicised, the ongoing Paramount Park saga,’ he said.

‘This Theme Park is going to transform our corner of Murcia and, as the closest estate agent geographically with 28 years experience in the region, we’re already becoming the first port of call for serious investors looking to take advantage of this once in a lifetime opportunity,’ he explained.

Read more at Propertywire.com

The Irish and Spanish property markets are emerging from the doldrums according to delegates at this year’s MIPIM real estate conference in Cannes.

Experts said that both markets were now proving “interesting” for investors. Pierre Vacquier, chief executive of Axa Real Estate, said “Both Spain and Ireland are interesting investors but Ireland is more attractive as the necessary price drops have taken place.”

Joe Valente, head of research and strategy for the European real estate group at JP Morgan agreed, adding: “We’re looking at doing deals in Ireland and an awful lot of funds are doing the same.”

Read more at opp.org.uk

A BRITISH pensioner is being forced to return to the UK for knee surgery after waiting almost a year in Spain.

Ian Dennis, 74, who lives in Casarabonela, has no cartilage between the lower and upper part of his leg and cannot walk without the aid of crutches.

He was told by specialists in April 2011 he needed a double knee replacement, and was assured he would be seen within six months at the Virgen de la Victoria Hospital in Malaga.

Nine months later however, in January 2012, Belfast-born Dennis was still waiting – and to his horror was told his op would be delayed by another six to nine months.

“It’s so frustrating,” said Dennis, who can only sleep dosed up on painkillers.

“After all that time waiting, they said it is going to be at least another six months.”

Read more at theolivepress.es

Mercedes Garcia, the director of a residency for severely mentally disabled adults, has a crisis in her kitchen.

Two caterers have been supplying and preparing food for the centre's 46 patients for free for almost a year; the other 18 recently decided they'd had it and refused to provide further service without payment up front.

The residency has been running on fumes for months because the local government, squeezed by austerity measures to combat the euro zone debt crisis, has not paid its share of expenses.

"All of the residents here will need 24-hour care from cradle to grave, but our carers can't continue their own lives if we don't pay them," an exhausted-looking Garcia told Reuters in February. Her caregivers earn 800 euros a month, just above minimum wage and not enough to tide them over when their paycheques are delayed.

Read more at Reuters.com

Spain, whose economy – the fourth largest in the eurozone – is staggering under a burden of debt, is preparing for further austerity measures after its finance minister revealed that the 2011 budget deficit was substantially higher than expected.

­The deficit came to 8.51% of GDP – far higher than the European Commission’s own forecast of 6.5%. Brussels will now effectively dictate the 2012 budget ceiling which Spain will announce on Friday. The country will have to come up with more than 40 billion euros in savings to meet that target. However, most economists say the planned cuts are impossible as the economy is already slipping into recession.

Read more at rt.com

A doctor who fraudulently claimed more than £100,000 in benefits while secretly owning a Spanish holiday home and receiving an NHS pension has walked free from court.

Dr Barbara Longley, 60, made repeated claims for benefits over six years from Brighton and Hove City Council but failed to declare her three-bedroom property in Alicante.

The mother-of-two, from Hove, Sussex, also hid an NHS pension and a bank account containing several thousand pounds.

Read more at Daily Mail Online

Spain will get no leeway on its budget targets before May, Spanish Economy Minister Luis De Guindos said on Thursday, but Madrid could opt for defiance when it presents the backbone of its 2012 plan on Friday.

Spain has hovered on the fringes of the euro zone crisis as investors worry that its economy, enfeebled by the bursting of a property bubble, puts it at risk of following Greece, Ireland and neighbouring Portugal in seeking a bailout.

Prime Minister Mariano Rajoy, elected last year on a pledge to slash spending, has been lobbying Brussels for leniency, arguing the country's shrinking economy makes it impossible to cut enough this year to achieve a deficit target agreed with Brussels of 4.4 percent of gross domestic product.

Read more at Reuters.com