Spanish Property Industry Want Stimulus, Can New Govt Deliver
23 November 2011
It's all go in the Spanish property market. The centre-right Popular Party was elected in the general election on Sunday. The party was elected on a commitment to reduce unemployment for the under 30s, and saving the economy, and now the property industry is calling for a swift round of stimulus for the economy and the property market. But can one of Europe's most indebted countries really go on a spending spree on the back of Italy falling into desperation?
"We expect to see a stimulus package of reduced social security payments for employers taking on people in this age bracket," says Colin Guanaria, the founding partner of Bonnin Sanso, the biggest independent agency in Menorca.
Guanaria hopes Popular Party leader Mariano Rajoy will reduce taxes for the building / housing sector including the property sales tax, and further says that what is needed is: "a major stimulus package for the tourist industry in an effort to boost tourist numbers".
Surely this is pie in the sky stuff with Spain's debt levels. Spain is one of the most heavily indebted countries in the world, and with Italy having recently become the fourth country out of the PIIGS five to go down the bailout route (although it hasn't actually happened yet), surely Spain cannot go on a huge spending spree now.
On the other hand, with an unemployment rate of 46% and a hard struggle to see any kind of growth helping to bring it down, it is hard to imagine Spain seeing any kind of recovery without spending.
However, it isn't really down to the government anyway. Since the Eurozone fell into this crisis the EU central bank has been holding the purse strings of all the PIIGS, forcing them to take austerity measures, so it is more likely a case of what Rajoy can get away with, or get wiggle room for, than what anyone believes is needed to save the Spanish property market.f