crisis

In March, 2,750 flats and houses were sold in Catalonia, 13.9% less than a year ago in the same month. 32.5% were newly built homes and 67.5% were second hand ones. The previous worst month of the economic crisis had been December 2011, when 2,778 housing units were sold. However, the results from March represent the lowest level of housing sales since January 2007. The reasons behind this drop are the economic recession and the crisis of the real estate sector. In the whole of Spain, housing sales dropped by 12.6% compared to a year ago, with 22,086 flats and houses sold. However, at a Spanish level, the worst month in the last few years is still April 2012, when 21,551 housing units were sold.

Catalonia’s GDP decreased by 0.3% between January and March 2013, while the Spanish economy dropped by 0.7% in the same period. The Catalan figure represents a more gentle drop compared to the last quarter of 2012, when the Catalan economy plummeted by 0.7%. However, looking at the annual figures, results from March 2013 represent a 1.9% drop compared to March 2012. Exports and tourism are the main economic engines. However, the improvement is also due to the fact that domestic consumption continued to post negative figures but they were still better than in the previous months. The data are early estimations calculated by the Catalan Statistics Institute (Ideascat) and the Catalan Economy Ministry, released on Friday.

The offer, presented by Banc Sabadell, has won the tender for the acquisition of Banco Gallego, which was nationalised and owned by the Spanish Fund for Orderly Bank Restructuring (FROB). Banco Gallego was partially owned by Novagalicia Banco, the private bank resulting from Nova Caixa Galicia. The FROB has announced its decision although it also explained that the final details are still “being negotiated”. In the last year and a half, Banc Sabadell has bought the former Caja de Ahorros del Mediterráneo, the business activity of Caixa Penedès (part of Banco Mare Nostrum) and now Banco Gallego.

Artur Mas, the President of the Catalan Government and leader of the Centre-Right Catalan Nationalist Coalition (CiU), is sceptical about the Spanish Executive’s desire to find a negotiated solution regarding Catalonia’s self-determination claims. Asked about the possibility of giving up the self-determination agenda in exchange for more economic resources for the Catalan Executive, Mas stated that “the Spanish Government will not exchange a better fiscal scheme for the self-determination vote”. However, he insisted that public finances are in “an emergency situation”. Therefore, he offered again for the Catalan Independence Party (ERC) and the Catalan Socialist Party (PSC) to sit in the Cabinet because “the situation requires adding strength” in order “to guarantee the survival of Catalonia’s self-government”.

The increase is the highest one registered in Catalonia over the last year. 3,751 home mortgage contracts were signed in January. At the end of 2012, the fiscal benefits for purchasing houses were diminishing and were non-existent by January. Despite this fact, there was a peak in the number of mortgage loans taken out. For the whole of Spain, the number of mortgage loan contracts signed in January reached 25,447, a 44.7% increase in relation to December last year. This is the highest increase since January 2007. Furthermore, the average price of the mortgages signed in January in Catalonia reached €110,418. In year-over-year terms, the number of mortgages signed in Catalonia in January 2013 was 18.58% lower than those signed in January 2012.

The Institut Català de Finances (ICF), the Catalan Government’s financial institution which offers credit, announced that it gave €1.7 billion in loans to 8,500 companies over the last two years in an Action Plan. The plan’s main objective is to foster economic activity and prevent companies from going bankrupt due to liquidity issues. 98% of those who received loans were SMEs and independent workers. The ICF’s Action Plan had the objective of injecting liquidity into the real economy, into the Catalan business network, while the private banks are going through their restructuring process and access to credit is particularly difficult for many companies.

According to the Spanish Statistics Institute (INE), the Catalan GDP fell by 1% last year. However, according to the Catalan Statistics Institute (Idescat), it dropped by 1.3%. Regarding Spain’s economy, the INE declared that it fell by 1.4% while the Idescat indicates it plummeted by 1.9%. The reason for these differences is that data from both institutes are based on estimates and are still provisional. In any case, Catalonia is one of the Autonomous Communities with the mildest recession in Spain and continues to be that with the highest GDP, €198.63 billion. In addition, Catalonia is among those with the highest GDP per capita, set at €27,248 while the Spanish average was €22,772.

The Catalan Finance Minister, Andreu Mas-Colell has announced that the Catalan Government had a public debt of €50,948 million on the 31st of December, 2012. Catalonia’s debt has increased by €16 billion in only 2 years due to the financial crisis. Furthermore, in 2013, the Catalan Government will have to pay €2.2 billion in interest on the debts – equivalent to 8% of its budget and 1% of Catalonia’s annual GDP. Catalonia has been a net contributor to the European Union for decades and has been paying around 8.5% of its annual GDP – equivalent to €17 billion – every year for services and infrastructure in the rest of Spain. Despite this fact, the Catalan Government does not receive enough money from the Spanish Executive, which raises most of the taxes and distributes revenue among Autonomous Communities.

The Popular Legislative Initiative promoted by the Platform is pending debate in the Spanish Parliament. The Mortgage Platform was founded in Barcelona in 2009. Over recent years, it has worked intensively to prevent and ultimately stop people from being evicted from their own homes. Subprime mortgages, very common during the first decade of this century, were one of the main consequences of the property bubble in Spain and have resulted in more than 400,000 foreclosures in the whole of Spain since 2007. This situation is aggravated due to the economic crisis, which increases social inequality and has placed evictions among the first concerns on the political agenda.

Economic recession hit Catalonia even harder in 2012 than in 2011, when it dropped by 0.7%. The contraction was especially severe in the last quarter of the year. In December, Catalonia’s GDP plummeted by 0.6% compared to 3 months previously. The fourth quarter’s poor figures made the Catalan economy contract by 1.3% over 2012. In 2011, it also decreased but at a slower pace, dropping by 0.7%. For the whole of Spain, the economy plummeted by 1.8% in 2012 and by 0.7% over the last quarter of the year, compared to the figures from September 2012. The main reason behind the last quarter’s drop is the decrease in consumption by families, compared to the purchases made in the third quarter, before the VAT increase.

After two days of protests making Barcelona El Prat Airport being without cabs for several hours, taxi union representatives and the Metropolitan Taxi Institute – in charge of managing the sector – have agreed to eliminate the shift system and find another way to reduce the number of taxis on the streets. Taxi drivers have stopped all their protests and they will be using the previous system establishing two days of rest per week. The shift system had been implemented to better pair the availability of taxis to the real demand, which has decreased because of the recession. The system had been approved by Barcelona taxi drivers in a binding referendum. However, one week after its implementation, some of them protested stating that it had reduced their turnover.

Taxi drivers have protested against the new car shifts implemented as of last week. The new shift system affects all Barcelona taxis and it has been designed to reduce the number of cars on the streets in order to increase drivers’ profits by reducing the available taxis at a given time. However, some taxi drivers think the new shifts cause their turnover to drop. For this reason they have decided to protest by not serving Barcelona El Prat Airport or Barcelona Sants Station with cabs on Monday afternoon. The Metropolitan Taxi Institute, in charge of managing the sector, has already announced “talks” with taxi union representatives to “evaluate” the new system.

The Catalan economy contracted by 0.3% between July and September, although its results improved slightly compared to the previous quarter, when it shrunk by 0.5%. The tourism sector continues to grow and internal consumption continues to drop. Compared to a year ago, by the end of September, Catalan GDP has fallen by 1.4%.

The Spanish Government states that the money will “start to arrive” next Tuesday. Over the past few weeks, the Catalan Finance Minister has warned about the urgency of receiving the requested €560 million from the Liquidity Fund for the Autonomous Communities (FLA) in order to face all September’s payments. However, the Spanish Government has sent €400 million to pay debt maturities but has not sent the remaining €560 million to pay private health, education and social centres that receive regular funds from the Catalan Executive. All direct salaries have been paid, but not other payments. In August, the Catalan Government requested €5.02 billion from the FLA for the entire year 2012 in order to face debt maturities and ordinary payments, since access to international markets is closed to the Autonomous Communities.

However, CatalunyaBanc would need a maximum of €10.83 billion in the most stressed scenario. According to the independent audit by Oliver Wyman, with KPGM, Deloitte, PwC and Ernst & Young, the Spanish banking system would need a maximum of €53.75 billion in the worst case scenario. 4 banking groups would concentrate 86% of these additional funds. In total, 7 banking groups would need additional funds, while 7 groups would be strong enough, with their own resources, to resist a hypothetical scenario with a 6.5% recession between 2012 and 2014, 27% unemployment, a 85% drop in land prices and a 55% decrease in housing prices.