Spanish house prices will fall further, former PMs join building society fight

| 03-07-2009| Economics & Trade • Politics & Law

UBS Investment Research has just published an extremely harsh report on the Spanish economy, titled: “Spain’s economic situation: the disaster will go on” (pdf).

Former PMs Join Building Society Fight

The main conclusions, which do not bode well for Spain given the weight of the construction sector and real-estate market in its economy are that:

1. house prices still have another 20% to fall (compare that to another recent analysts’ estimate that house prices could fall another 40%), and that;
2. unemployment will reach a massive 25% in 2010.

It’s well worth downloading and reading through the whole report if you’re interested in the Spanish economy.

In other bad news, net profits of non-financial companies in Spain were down 21.5% in the first quarter of 2009 and El País reports very briefly that domestic tourism will outdo foreign tourism in Spain this year.

Former PMs wade into regional building society fight

Two former Spanish Prime Ministers have today waded into the debate on Spain’s regional governments and the battle for control over Spain’s huge regional building societies or cajas.

Clearly everybody wants a bit of the new 100 billion euro OBRF pie and regional politicians will be vying for an ever bigger bit over the coming months.

OBRF is the newly-approved Ordered Banking Restructuring Fund (FROB in Spanish). I wonder about the use of the adjective ‘ordered‘.

Several regional governments have a chip on their shoulder over whose turf it is, and former socialist PM Felipe Gonzalez doesn’t like it.

He has said that: “if they don’t want oversight by the Bank of Spain, then they shouldn’t worry, we’ll just cancel the financial aid.”

Former conservative PM José María Aznar has attacked the government for: “rewarding bank and building society directors who have proved their incompetence with money from the pockets of Spanish families, small businessmen and the self-employed.”

Given Zapatero‘s penchant for devolving power to the regions, his relatively weak majority in the Spanish parliament, which counts on regional support, and his intense dislike of Aznar, I’m sure he won’t be happy with either comment.

¡Hasta mañana!