IMF revises Spanish growth forecasts slightly upward

The International Monetary Fund onWednesday slightly improved its growth forecasts for Spain for this year and the next, but insisted the recovery of the Spanish economy would continue to lag behind those of the rest of the major industrialized countries. In the fall edition of itsWorld Economic Outlook, the IMF predicted the Spanish economy would contract by 0.3 percent, compared with an earlier estimate of a fall of 0.4 percent. For next year, it increased its forecast for GDP growth to 0.7percent from 0.6 percent. The revised figures are still well above the government’s estimate of GDP growth of 1.3 percent in 2011. The agency sharply raised its estimate for growth in the euro zone for this year to 1.7 percent from 1.0 percent and for next year to 1.5 percent from 1.3 percent. The IMF sees world output rising 4.8 percent this year and 4.2 percent in 2011.
“The world economic recovery is proceeding,” the IMF’s chief economist, Olivier Blanchard, told a news conference in Washington. “But it is an unbalanced recovery.”
The IMF said that growth in Spain, Greece, Ireland and Portugal is expected to be much lower than the rest of the euro zone because of the constraints imposed by the need to get their financial houses back in order, and by a lack of competitiveness.
Portugal and Spain have embarked on painful austerity drives to bring their public deficits back within the 3-percent ceiling imposed by the European Union. In the case of Spain, the shortfall last year was 11.1 percent of GDP and 9.3 percent in Ireland.
The IMF predicted that the Portuguese economy would grow 1.1 percent this year before
stagnating the following year. The fallout from housing bubbles that have burst in both Spain and Ireland is also expected to put a drag on the recovery in those two countries. The IMF noted that construction’s share of total value added in Spain stood at 12 percent at the height of the housing boom, compared with an average for the euro area of only 7 percent. “The housing bust thus brought a severe contraction in construction and employment,” said the IMF, which in the case of Spain “is not showing any signs of abating from very high levels.” At over 20 percent, the jobless
rate in Spain is the highest in the European Union, where the average is under 10 percent. “Reallocation of labor away from construction is likely to take considerable
time, which will keep unemployment rates stubbornly high,” the IMF report said.
The IMF expects Spain’s jobless rate to rise from 18 percent last year to 19.9 percent this year, easing slightly to 19.3 percent in 2011.

3rd QUARTER TAXES

October 20th is the last day to present the IVA & advanced income tax payment for the 3rd quarter (July, August and September).

Bear in mind the deadline if you are going to pay it by bank account is the October 15th.

Income tax increase for high earns in Spain approved

The Spanish government has decided to increase the income tax for the highest earning workers.

For earnings above 120.000 euros annually, the new tax percentage will be 44 %, up one percentage point. For incomes higher that 175.000, the new tax is going to be 45 %, raised by two percentage points.

The government also approved a raise in the minimum pensions by 1 % in 2011. Other pensions remains freezed in order to save money, as economy ministry Elena Salgado explained these past days.

Electricity price in Spain will rise 4.8 % from 1. October

The price of electricity in Spain is to rise by 4.8 % starting October 1st, according to an agreement signed yesterday by the Ministry of Industry, Tourism and Commerce.

Increased fuel prices and seasonal adjustments for the upcoming winter are the reasons for the increased price.

The electricity price will have climbed by more than 30 % in Spain the last five years after this newest increase. The consumers organization “Facua” stated that there was absolutely “no justification” for the price increase decided yesterday, but did not indicate it would take any kind of action against it.

Tourist arrivals start to pick up again as economic crisis passes

The Spanish tourist industry this year had its best August for arrivals since 2006, but the country has yet to reach post-crisis levels amid stronger competition from cheaper destinations such as Turkey.
The Industry, Tourism and Trade Ministry said the number of overseas visitors rose 4 percent last month froma year earlier to just under 7 million. But disregarding last year when arrivals fell 8 percent, the figure for this August was the lowest since 2004.
Industry Minister Miguel Sebastián attributed the improvement to a pick-up in the key UK market where the economic downturn combined with the weakness of the pound had kept British visitors away in droves. The Italian and French markets also improved as the crisis eased

RESIDENCE REQUIREMENTS

From 28 March 2007, Royal Decree 240/07 requires that all EU citizens planning to reside in Spain for more than 3 months should register in person at the Oficina de Extranjeros in their province of residence or at designated Police stations. However, you will no longer be issued with a residence card. Instead you will be issued a Residence Certificate stating your name, address, nationality, NIE number (Número de Identificación Extranjeros) and date of registration.

If you are an EU citizen with a valid residency card, you do not need to do anything until your card expires. On expiry you must register at the Oficina de Extranjeros or designated police stations.

HAVE YOU WORKED IN SPAIN?

Whilst Spain continues to be a popular choice of residence amongst European pensioners, more and more British people are making the move earlier in life. The number of people who have worked and made social security contributions in both countries is therefore increasing. Living and working in Spain may be a dream come true for many. However, when it comes to the financial side of things, such as claiming pensions and benefits, the added factor of having lived and/or worked in another EEA country can seem like a headache most of us could do without!

But it doesn’t have to be. In terms of where you apply for your pension or benefit, the rules are relatively simple. You should make one application through the social security office of the country where you last worked and made contributions. So, if this is Spain, you should apply through the Instituto Nacional de la Seguridad Social (INSS). If your last place of work was the UK however, apply through the International Pension Centre.

After working in more than one EEA country, it is possible for your contributions from each one to be taken into account when calculating your pension or benefit. You must therefore give as much information as possible about your working life when you apply.

For example, when calculating your pension, the total number of qualifying years you have in the UK and Spain will contribute to your entitlement. If you have worked a combined total of 15 years, the minimum number of qualifying years for a pension in Spain, which is higher than the UK minimum, you may well be entitled to a pension from both countries.

It is also worth noting that state pension age in Spain is 65 for both men and women. However, a woman who has worked in both countries and who has a sufficient number of qualifying years, can apply for her UK State Pension at 60 and her Spanish entitlement at 65. If this does apply to you, you can continue to work in Spain until you are 65 whilst receiving your UK pension, but remember that you would need to make your application through Spain

You may also be thinking about paying voluntary contributions to top up your pension entitlement in either country. If you are currently working in Spain, but wish to voluntarily contribute to the UK, you can pay for any of the last 6 years where you have not contributed enough previously. In addition, anyone who reaches state pension age between April 2008 and April 2015 is entitled to pay voluntary contributions for any 6 years back to 1975, providing they already have 20 full qualifying years. If you are interested in paying UK voluntary contributions, contact HMRC.

COMPANY START-UPS RISE FOR SEVENTH MONTH IN A ROW

The number of new firms set up in Spain in July rose annually for the seventh month in a row in July, rising 9,2 percent after a hike of 7,0 percent in June, the National Statitics Institute said Tuesday.

HOME SALES CONTINUE THEIR RECOVERY IN THIRD QUARTER

Spanish home sales rose for the third quarter in a row in the period April-June and at a much stronger pace than the previous three months, as the housing market showed further signs of steadying after a prolonged slump.

The Housing Ministry said sales in the second quarter were up an annual 24,7 percent at 149.527 units after an increase of only2,3 percent in the first quarter of the year. On a quartely basis, home purchases climbed 39,6 percent. In the 12 months to June, sales rose 4,8 percent to 495.684. "Sales continued the recovery initiated in the forth quarter of 2009" the Housing Ministry said in a statement.

GOVERNMENT'S LABOR REFORM PASSED DESPITE UNIONS' WARNING

The Spanish government's controversial labor reform bill passed its final hurdle in the lower house yesterday, and is set to be signed into law. Congress threw out most of the amendments included in the bill by the Senate, and the new legislation retains largely the form aproved by Congress after a first reading in July.

The Socialist administration of Prime Minister Jose Luis Rodriguez Zapatero claims the make over of the jobs market is needed to address high unemployment, wich at over 20 percent is currently double the average in the European Union. The unions, however, argue it panders to demands of employers by cutting the cost of firing workers, and will fail to achieve its supposed end of creating more employment.

The bill relaxes the economic and financial conditions under wich companies can lay workers off with severance pay of only 20 days per year in service and promotes an alternative contract with compensation of 33 days as opposed to most current permanent contracts, wich carry an etitlement of 45 days' pay. It also reduces from 100 to 30 days the grace period given to unemployed workers who refuse training or a new job proposal by the state employment agency.