The Spanish economy saw its smallest contraction since the start of the recession in the third quarter, with the GDP falling by 0.3% according to the INE, National Statistics Institute. It takes the annual shrinkage to 4%. The number is a tenth of a point better than forecast by the Bank of Spain made just two weeks ago, but does mean that it is now five consecutive months of falls. Minister for Employment, Celestino Corbacho, has repeated earlier statements saying that it will take more time for the generation of new employment.

The Government’s law to finance the autonomous regions has been saved, just by one single vote, in Congress. The law which controls the finances for 15 regions, therefore moves ahead despite the lack of agreement between the two main parties. The Government obtained the exact overall majority of 176 needed by law, with 157 votes against and five abstentions.

Brussels has meanwhile warned Spain that the regional governments and local ayuntamientos have to reduce spending as budgetary discipline is needed. Despite granting Spain an extra year to bring the deficit into line, Brussels has said that the effort needed here is greater, as Spain does not have the margin seen in other countries. Spain should also make reforms in the health and pensions sectors according to the EU.

The BBVA bank has announced that it is to sell off 1,200 homes across Spain with savings of up to 40%. Sales fairs have been arranged for the 14th and 15th of this month in Valencia and Sevilla, and the bank will be offering interest rates of 0.4% above the Euribor on the properties. The bank has some 4,000 properties on its books, many from re-possessions. Their will be future sales in Madrid, Barcelona, Valladolid and Málaga.

Hard hit by falling passenger numbers and continuing strike action by cabin crew, who have just announced another eight days of stoppages, Iberia management is fighting back with a 35% reduction in price on the so called ‘puente aéreo’ between Madrid and Barcelona, to make flying more competitive with the AVE high speed train. Cheapest plane tickets will be 129 € each way. The company currently offers 60 daily flights between the two cities, and says the lower prices respond to the balance of supply and demand.
Meanwhile there are press reports that we can expect a decision from Iberia today on the planned merger with British Airways. The Iberia board is holding an extraordinary meeting on the matter.

Repsol YPF has announced a 50% reduction in profits for the year to September at 1.257 billion. A statement from the company said that fall came as a result of the reduction in the price of crude and a severe fall in demand, but that it already saw signs of a recovery in the economy. The company’s financial debt was 10.575 billion.

Telefónica has announced stable profits over the first nine months of the year at 5.61 billion, up 0.3% on last year at the same time. The company says it was helped by increased activity in the third quarter and notes that 39.8% of its income came from Latin America.

Source H.B. Spain business brief