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Spain Stagnates Despite Blue Skies Appearing Over E Z

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Spanish Growth Stagnates as Austerity Measures Bite, Bank of Spain Reports
By Emma Ross-Thomas - Nov 5, 2010 9:18 AM GMT Tweet LinkedIn Share
Spain’s economy stalled in the third quarter, the Bank of Spain estimated, as the deepest austerity measures in three decades undermined the recovery.
Spain’s gross domestic product was unchanged in the third quarter from the previous three months and expanded 0.2 percent from a year earlier, the Bank of Spain estimated in its monthly bulletin today in Madrid. The economy had expanded 0.2 percent from April to June, as consumers brought forward purchases ahead of a sales-tax increase in July.
Spain’s Socialist government faces widespread opposition as it seeks to implement the deepest budget cuts since at least 1980 and trim the euro area’s third-largest budget gap by half in two years. Today’s data highlight the divergence between booming business in Germany, Europe’s largest economy, and a continued slump in smaller euro-region economies such as Spain.
“It is to be expected that the stagnation in the third quarter is transitory,” the Bank of Spain said. Once the one- off effects linked to the value-added tax increase have passed,
the economy
tractor production will “return to the path of smooth recovery,” it said.

A few clouds appearing in the recent spate of EU blue skies reports?

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Spain, Ireland and Greece are doomed under the current system. Default is inevitable.

Unemployment rising 0.2% per month 20.8% total, the latest PMI data indicates a 0.3-0.5% contraction in q3 I think. Labour market, GDP and Housing statistics are being manipulated by the government so the real economic picture is hidden.

My best guess is the real budget deficit is 15%+ and debt to gdp 90%~. The figures released are a joke and make no sense when you compare the massive rise in unemployment (11%+) to the very small fall in GDP compared to other EU economies.

The official stats on house prices indicate a 15% fall off the top, the real figure is probably 30-40%. The complete lack of increase in mortgage lending for 2 years should ring alarm bells.



This is looking pretty indicative of where growth is going in 'ClubMed' at the moment. The bond market is cracking the whip and making the peripheral economies do exactly what they shouldn't be doing right now, which is cutting spending," said Eric Wand, analyst at consultancy 4Cast.

The output data follows a Markit survey of purchasing managers for the manufacturing and services sector that showed activity in both areas had taken a turn for the worse at the end of the third quarter.

Economists believe the economy contracted by 0.1 percent in the third quarter, according to the most recent Reuters survey.

"We have to acknowledge the usually accurate forecast from the Bank of Spain and assume that stronger exports offset weak domestic demand. I am very curious to see the details as weak construction and services data paint a much worse picture of the economy," said Unicredit economist Tullia Bucco. (Additional reporting by Nigel Davies, Manolo Ruiz; Editing by John Stonestreet)

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  • 441 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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