Spain: VAT tax rises to reduce the deficit

The increased value added tax (VAT) took effect on Thursday in Spain, as part of government efforts to limit the public deficit, while the Spanish economy for weeks is under scrutiny of the institutions and markets financial, to doubt its soundness.

VAT increased by two points, from 16% to 18%, prices of many products such as appliances, leisure products and alcoholic beverages.

From 7% to 8% in food, soft drinks, hotels and catering.

Products called "first necessity" (rice, eggs, bread, fruits and vegetables) are not affected by the increase.

This increase in the VAT comes into force to coincide with the first day of summer settlements, through which traders expect to delay the first negative effects on sales.

The VAT hike was announced in September by the Socialist government of José Luis Rodríguez Zapatero and approved by parliament in December.

The measure, along with others taken by the government, will help solve the "grave and tremendous" deficit problem that has now Spain and credibility with the markets, said Thursday on the radio RNE Secretary of State for Finance, Charles Ocaña.

The government approved in May a harsh austerity plan 15,000 million for 2010-2011 and with it hopes to reduce the public deficit, which reached 11.2% of GDP in 2009 to 3% in 2013.

The VAT increase will have a "limited" in the pockets of the Spanish, according to Ocaña.

According to Spanish media, representing an average annual increase of 300 to 350 euros in the family expenditure.

Car construction companies fear a negative impact and anticipated an average reduction of 30% of sales in the second half, due to a combined effect between this increase and the end of subsidies from the government, which helped to increase sales in the first half .

Spain should make adjustments "as soon as possible"

Spain should implement adjustment measures "as soon as possible" to deal with the crisis, said Wednesday the central bank governor of Spain, Miguel Angel Fernandez Ordonez.

"There are still major outstanding adjustments have to complete as soon as possible, to avoid involving a drag on the recovery," Fernandez Ordonez said in a speech he could obtain a copy of which AFP.

"I refer in particular to the need to complete the absorption of excess capacity in residential construction, further consolidating assets in the private sector and improve the competitive position of the Spanish economy," he said.

"And this has to do to while dealing with the problems that have arisen with the development of the economic crisis: the decline in employment and deterioration of public finances," continued the governor of the Bank of Spain.

Spain is in economic crisis, with an unemployment rate exceeding 20% of the workforce, and have since 2008 the effects of the bursting of the housing bubble.

International concerns accumulate some days before the country's poor financial health and its ability to reactivate the economy, despite having established a plan of austerity and structural reforms in the labor market, announced on Wednesday, and industry banking.

"It is essential that the fiscal consolidation program is accompanied by structural measures aimed at strengthening the growth potential of the economy, which depends very much on the sustainability of public finances," said Fernando Ordóñez.

"Signs of recovery are still very weak and are based largely on factors of a temporary nature that will tend to run out in the coming months," he noted.

"It is expected that the recovery is gradual and can take some time to reach a growth rate sufficient to generate employment," he added.

In its 2009 annual report presented on Wednesday, the Bank of Spain also claims a "fundamental reform of professional recruitment mechanisms."

The socialist government tried Wednesday to reform the labor market, considered essential to boost employment.

"The correction of the inefficiencies that have emerged in the labor market is of paramount importance, since its reform depends largely on the ability to increase competitiveness and generate employment," he said Fernandez Ordonez.

European Commission says Spain has not requested help from euro zone

Spain has not requested financial assistance from the eurozone and the European Commission is preparing measures to that effect, said the EU executive spokesman, Amadeu Altafaj.
Asked about media speculation that the committee prepares for Spain access to the relief fund of 440,000 million euros (530,000 million), Altafaj told a briefing: "We are not preparing anything is speculation."

"The Spanish Economy Ministry has denied this. There is no order nor is there any plan to submit an application," he added.

Spain: Franchise 'low cost'

The economic crisis is changing the business model of franchising, which has also pointed to the low cost. Difficulties in accessing finance from banks have reduced investments in opening of this activity, which has led to the emergence of new models of affordable franchisee. Thus, according mundoFranquicia Consulting, begin to proliferate the 'corners', 'shelves' or sharing of facilities, with dwindling investments.

You can talk about franchises 'low cost', in need of franchising power to cut costs and offer affordable products to stakeholders, recognizing the general director of the consultancy, Mariano Alonso.
"Many flags are optimizing their resources and significantly reducing or even eliminating their rights of entry to encourage new entrants and boost its expansion," said Alonso in the report 'The franchise in figures 2009'.

Alonso stressed that even some plants start to franchise-owned stores as a way of disinvestment, while others choose to outsource services to save costs.

Another phenomenon detected because of the crisis is the growing interest of the unemployed population by this type of business, a trend that began to worsen from the second quarter last year. "Even some people unemployment concentrated in one payment to deal with an initial investment," Alonso stressed.
Industry figures

Franchising in Spain, composed of 823 banners, reached a turnover of 19.635 million euros in 2009 and employed 22,660 people last year, according to the report mundoFranquicia Consulting.

These figures account for 9% of national retail turnover and 12% of recruitment of retailers, while the total investment stood at 4696.2 million, with an average investment of 76,112 euros per opening.

"There are no comparable data in the previous year, but the turnover has been maintained or have suffered a slight decrease in relation to the environment, while the number of channels grew by 2.4% and stabilized the opening of new establishments (+1 , 2%) ", has detailed Alonso, who in 2010 forecast to increase turnover, employment and the number of openings this form of business collaboration.
Specifically, the sector of hotel and restaurant turnover was more than in 2009, 6246.7 million, followed by food (20 channels), with sales in excess of 2,170 million euros, and travel agencies (31 banners) with a turnover of 1,356 million euros.

The hotel and restaurant also stands as the sector that generated more jobs, with an occupancy of 69,533 people, followed by travel agents (17,239 employees), food (13,172) and clothing and fashion (12,133).

Regarding the structure of supply, there are around 62,000 business units in the Spanish market, of which 82%, about 50,500, corresponding to duty-free farms and over 11,000 units of its own. Of the total, over 56% of business units belonging to the service sector.

In addition, over 84% are national brands, while foreign supply operating in Spain, 69% are European education and 21% American.
Regarding the external balance, they find mundoFranquicia managers maintained the entry of Spanish firms in foreign markets, primarily Latin America and Eastern Europe because of its higher growth potential than the domestic market, while the other side of the currency has stopped the entry of European channels in Spain by the difficulty of access to finance, but remains the initiative of South America, using the Spanish market as a gateway to European markets.

Spain: Unions reject Lloyds restructuring plan that foresees 190 layoffs

The unions rejected "again and unanimously" the restructuring plan of the financial institution Lloyds Banking Group, which resulted from the merger completed earlier this year in Halifax Bank of Scotland (HBOS) and Lloyds TSB, which includes the dismissal of 190 workers.
According UGT said in a statement today, the unions held another meeting yesterday with the address of the entity in which the company presented its bid that seeks to reach agreement with the employee representatives.
He added that previously, the agency gave "a small part of the basic documentation that was requested by the unions" and I pose in their pre-retirement program and downs through layoffs.
UGT explained that on the basis of surplus staff of 190 employees that the company raises, of which 46 must be reduced early retirement of people born in or before 1952, is added confirmation that these 46 people will leave the retail banking in its entirety.

He added that of the 144 remaining workers, the company says it could extend a hand early retirement, provided that the unions accept the early retirement call "industrial", which means that the charge on early retirement and unemployment benefits to supplement income bank fixed, dismissing the rest.Thus, explained that conditions are that the bank planned early retirement with 80 per cent of Pensionable Salary (SP) net, that is, minus income tax and social security contributions.
In addition to paying the Special Agreement to the Social Security retirement age.

However, he indicated that the direction of the entity is not identical issues "very important" as the early retirement age, retirement or the end, though is around 63 or 64 years.
As for layoffs, UGT says the company expects to take place through a Force Adjustment of Employment (ERE) by extending the 20 days per year of establishing this formula up to 40 days per year, of which only the top 20 would be tax exempt and the remaining 20 should be taxed.

Finally UGT said of such proposals, the unions reject the offers, but said they would file a unitary alternative to the company's offer in the near future.
He added that employee representatives nor accept any closure "unilateral" branches.
"We do not accept or dismissal and we are concerned not only the 190 employees that the bank intends to cut now, but also the viability of the new bank resulting from the merger to the address we accuse them of lack of commitment, in the absence of a specific project for the future

The financial balance with the EU Spain increased almost fivefold in 2010

The financial relations between Spain and the European Union recorded a surplus in 2010 for Spain to 2730.86 million, 2153.11 million more than the 577.74 million expected for this year , so that the balance increased almost fivefold.

Under the bill the State Budget presented today in Congress, this increase is justified by the increase in transfers to get from the Union in 2211.44 million, while Spain's contribution to the EU accounts rises at only 58.32 million euros.

As regards the Structural Funds, the main instrument of EU cohesion policy, Spain will receive 5170.06 million euros, 44.46% more than planned for 2009.

Of these, 4027.33 million from the European Regional Development Fund (ERDF), while the remaining $ 1142.73 will come from the European Social Fund (ESF), with increases of 62.3% and 4%, respectively.

Within regional policies, Spain will receive in respect of the Cohesion Fund 1845.09 million euros, 37.61% more.

Furthermore, Spain will also receive other 7407.04 million for various agricultural and fisheries funds.

Thus, the Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD), which since October 2006, replacing the former European Agricultural Guidance and Guarantee Fund (EAGGF) for Spain 6075.04 and 1.332 million respectively.

The European Fisheries Fund (EFF), which also replaced two years ago the Financial Instrument for Fisheries Guidance (FIFG), will provide an allocation of 140 million, 40 more than this year.

As for the Spanish contribution to EU coffers, rising 0.47% to 12,421.34 million euros, most, 12,200 million, is dedicated to the general EU budget.

European Development Fund (EDF), which channels aid to development cooperation, Spain allocated 218.42 million, 3.52% more.

Within the Spanish contribution to the EU budget, the largest item, 9,000 million euros, corresponding to the Gross National Income (GNI), which increases to 16.13% for this exercise.

Another 1,600 million will be contributed by way of traditional own resources (based mainly on customs duties), which decrease 20% compared to 2009, while the contribution of the VAT resource also sum of 1,600 million euros, 33.33 % less.

For the third time, under Article 228.2 of the Treaty on European Union (TEU), is incorporated into the budget a contribution to finance the expected penalty payments that Spain must pay for not implementing certain decisions of the Court, a sum which sum 0, 01 million euros.

The Spanish contribution to EU coffers are full with 2.31 million to finance the provision of interpretation services at the various meetings of the Council of Ministers of the EU.

Zapatero will see Obama in the White House in October

The Prime Minister, José Luis Rodríguez Zapatero, will meet on Oct. 13 at the White House with U.S. President, Barack Obama, said on Friday the newspaper El Mundo.

Be the first time a U.S. president held a meeting with Zapatero in the White House since he took office in 2004 as they had no bilateral meeting with Obama's predecessor, George W. Bush.

No one was available on Presidency of the Government to confirm.