Sterling proved to be slightly less fireproof than it had been the previous week, losing the half- cent between €1.11 and €1.1050. The low came at €1.0950 on Wednesday and sterling was staring at that same level as things got under way in London this morning. In a dull week for hard data the British economy did not have a whole lot to say for itself and what it did manage to scrabble together was not particularly edifying. Two house price indices, one from the Royal Institute of Chartered Surveyors and the other from estate agents’ website Rightmove, damned the property market with faint praise. The RCIS house price balance, which compares the number of members reporting higher prices with those reporting lower ones, fell from 32% to 17%; still positive but more reservedly so. Rightmove’s index of asking prices went up by 0.1%; positive buy only by a technicality. UK industrial production figures were a bigger disappointment and took sterling to the lows of the week. Production (manufacturing, mining and energy lumped together) fell by -0.4% in January. Manufacturing alone was down by -0.9%. January’s trade deficit was £8 billion, the biggest since August 2008. Between August ‘08 and January ‘10 Sterling’s trade-weighted value became 23% weaker yet imports were up and exports were down. The significantly more competitive currency is still not having any positive effect on the balance of trade. Sterling also had to contend with unhelpful comments from several quarters. Credit ratings agency Fitch was ‘uncomfortable with the fiscal adjustment path set out by UK authorities’ and looked for ‘more credible and stronger fiscal consolidation plans during 2010. Credit Suisse anticipated that UK banks, collectively, would have to reduce their balance sheets by more than £500 billion over the next three or four years in order to meet new regulations. The prime minister reassured investors that Britain’s AAA credit rating was solid but not all of them were convinced, especially the researchers at UniCredit Bank who predicted that the government would have problems selling all the bonds they need to shift to finance the budget deficit. Euroland was just as starved as Britain when it came to useful statistical guidance. Investor confidence improved from -8.2 to -7.5 but the figure was still negative. It was only really euro zone industrial production that counted for anything. The +1.7% increase in January was way better than Britain’s anaemic performance, even if it did only represent a +1.7% improvement over the same month last year. More salutary than that were Germany’s trade figures. In the same month that the UK made an £8 billion loss, Germany turned a profit of almost the same amount. It did so despite what the authorities in Berlin and Paris describe as an overvalued euro. Underlying everything to do with the euro was still the co-ordinated (or not) bailout programme for Greece. Another week went by without any sign of final sign-off for the €25 billion (or thereabouts) mix of loans and guarantees that the Greek prime minister spent half the week travelling the world to engineer. As things presently stand there are several schools of thought. One believes that Greece will be able to work its own salvation, if only because it must. Another has it that Germany and France will eventually get off their high horse and put their hands in their pockets. Yet another argument is that, with or without Germany’s co-operation, Brussels cannot afford to see the economy of a euro member crumble for lack of cash. The market’s point of view, for the moment at least, is Micawberesque; ’something will turn up’. Investors are not sweating too much as long as nothing explodes. Sterling surprised many with another refusal to lie down last week despite a string of potentially damaging developments and data. However, as long as the opinion polls continue to indicate a hung parliament investors will continue to fear that even after a general election Britain’s government will be unable or unwilling to tackle the budget gap. Buyers of the euro should hedge 50% of what they will need. If the money is required in the near future they should consider covering the whole amount. Get the best foreign exchange rates with no bank fees or commission charges using your Moneycorp Privilege Card

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Sterling Rides Most of the Blows

In a bumper news week, there’s good and bad news for Spain. Let’s get the bad news out of the way first - and end on a high. Remember my soapbox rant last week about how public sector striking will only add to Spain’s woes? Well, the public won, and the government caved in over pension reforms . This is particularly bad news for Spain - who already have precious-few financial tools left to deal with their twin problems of mounting debt and growing unemployment. I have no doubt that whatever they next suggest as a solution will be opposed - and most likely defeated. Unsurprisingly, buying into Spanish government debt via bonds is now seen as a risky business . Advising investors, a Merrill Lynch spokesman said: It’s going to take a very long time - half a generation - for Spain to fix the structural issues they have. Rather than a spectacular short-term event, a more likely outcome is a death-by-a-thousand-cuts-type scenario. My prediction is that Mr Zapatero’s aversion to taking on the unions will cost him at election time. The incoming government will make drastic changes - and suffer temporary unpopularity by doing so - and Spain will eventually enjoy a more sustainable foundation for financial growth. Until then, it’s “death-by-a-thousand-cuts” for Mr Zapatero and the nation he’s supposed to be leading. And now for the good news - and there is a fair bit of it. Last week I boldly proclaimed that we had already passed the bottom of the Spanish property market . It seems that I’m not the only one who thinks so. In Spanish Property Recovery Begins , Mark Stucklin adds some data to that assertion but warns that the recovery is not happening uniformly throughout Spain, nor across all types of property. Mark’s summary is backed up by the latest TINSA house valuation trend too. No-one is predicting a spectacular U-turn in the fortunes of Spanish property - and you wouldn’t believe them if they did. Even so, any kind of a recovery is welcome news right now. There are also hints that Spain’s building societies are playing their part in the fragile recovery. An update on lending in Spain provides the cheery news that: Spanish Banks are slowly relaxing their lending criteria with one or two offering more attractive deals and higher LTV’s. And finally, in the fairly unlikely event that you’re a higher rate tax payer and employed by a Spanish company, you can now benefit from the same tax breaks as David Beckham. Martin Dell, Kyero.com

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Spanish Property: And Now for the Good News

Positive economic signs from the UK economy allow a near-miraculous recovery for sterling after a sharp fall. Investors are more relaxed about the Greek budget problems. Sterling fell sharply last Monday, losing nearly two cents before lunch. The remainder of the week was devoted to the slow and tedious process of recovery. Although it seemed an impossible ambition last Monday afternoon sterling opened in London this morning at €1.11, unchanged on the week. At the beginning of the week the non-domiciled tax status of Baron Ashcroft dominated the media. Allegedly, the noble lord had bought his way into a peerage by making large donations to the Conservative party. For some reason this old tradition had become suddenly improper. It would be an exaggeration to blame sterling’s sharp fall on Lord Ashcroft alone but the story will certainly have unnerved investors who were already nervous about the Tories failing to win a majority at the forthcoming general election. From there it was uphill all the way but at least sterling managed to make it up the hill with the assistance of some positive news. On Tuesday the government held a successful auction of 30-year gilts which attracted bids for nearly twice that much. The last five auctions of 30-year stock have achieved an average of 1.63 times cover so, whatever misgivings they may have about sterling’s short-term future, there is a degree of confidence among investors the current problems will be short-lived. Having ignored Monday’s manufacturing purchasing managers’ index (their minds were on other things) investors took a great deal of interest in Wednesday’s services sector PMI. At 58.4 the services PMI was more than three points better than predicted, scoring a three-year high. It blew America’s 53.0 and Euroland’s 51.8 into the weeds. Coming hard on the heels of a ten-point jump in consumer confidence it was another reminder to the market that not everything to do with Britain’s economy is in a state of collapse. There was more reassurance from the Bank of England when the Monetary Policy Committee voted to keep interest rates unchanged for a 13th month and to leave quantitative easing on hold. A rash of data provided no coherent picture of the euro zone economy. The manufacturing and services PMIs were both a little softer on the month but not far adrift from what the analysts had forecast. Consumer and producer price inflation were roughly in line with the market’s expectations but had no immediate implications for euro interest rates. A -0.3% monthly fall for retail sales was better than the expected -0.5% decline but still not exactly positive. The revision to fourth quarter GDP showed the Euroland economy growing by +0.1%. The European Central Bank tightened monetary policy on Thursday with an end to the cheap three-month loans it had been offering to commercial banks. They will still be able to borrow one-week money at 1% but the three-month rate will depend in future on market rates. The ECB had nothing to offer the Athens government and said it would oppose any attempt to approach the IMF for assistance. Nevertheless, Greece did manage to find buyers for a €5 billion bond issue. By the end of the weekend it had become clear that, although Germany would not put its hand in its pocket for a Greek bailout, the EU had an emergency plan if push came to shove. At least for the moment investors are comfortable, if not deliriously happy, about the situation but their next question will be whether France and Germany will be able to carry the euro zone economy ahead on their own if the economies of Greece, Spain, Portugal, Ireland and Italy are to be weighed down by austerity measures of one sort or another. Whilst sterling’s recovery last week might be seen as a sign that there is life in the old dog yet, it is still hard to see the British currency as anything other than a dog. Opinion polls continue to indicate a hung parliament and investors fear that even after the general election Britain’s government will be paralysed by indecision, unable or unwilling to tackle the budget gap. Buyers of the euro should hedge 50% of what they will need. If the money is required in the near future they should consider covering the whole amount. Get the best foreign exchange rates with no bank fees or commission charges using your Moneycorp Privilege Card

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Lucky Escape for Sterling

There was a small uptick in Spanish housing sales during the fourth quarter of last year, according to data released today by the Ministry of Housing. Small, maybe, but enough for the Government to get excited about. “The transactions in the fourth quarter represent a rise of 4.1% with respect to the same period last year, this being the first year-on-year rise since the fourth quarter of 2006,” goes the first sentence, in bold, of the Ministry’s press release. In fact, if you just look at the ordinary housing market, the uptick was even better. Excluding social housing there were 116,664 house sales in Q4, a rise of 5.5%. Regrettably, that’s where the good news ends. Take the year as a whole, there 413,112 transactions last year, a fall of 19% compared to the previous year, and a whopping 46% down on 2007. Even the Q4 was down 33% compared to 2 years ago. Some regions did better than others. Looking at a selection of regions popular with holiday home buyers, the inland province of Teruel suffered the most in 2009, down 36%, followed by Las Palmas in The Canaries, down 32%. At the other end of the scale, Spain’s two big cities did the best, down just 1.7% in Madrid and 3.9% in Barcelona. The small national uptick in Q4 that got the Ministry excited was almost entirely driven by big increases in Catalonia and Madrid (Barcelona +35%, Madrid +41%). Why the big surge in home sales in those two cities in the last quarter of 2009? I don’t know. But I wouldn’t be surprised if it had more to do with banks shifting Spanish property around their balance sheets than families buying homes to live in. Story from Mark Stucklin

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Spanish Property Market Grew Q4 2009

There were two chinks of light permeating the same old economic gloom in this week’s Spanish property news. First, even though Spain is still officially in recession, consumption in Spanish households increased for the first time in two years. This is still a far cry from a booming economy - but at least it’s a move in the right direction. Second, Despite the news that mortgage lending is down 34% , news of competitive 100% mortgages could be just what the market needs to catalyse Spanish property buying again. One other piece of news which I’ll stick my neck out and interpret as ‘good’ is that the Spanish protests organised against raising the retirement age by two years have been poorly supported . I have no particular feelings either way about the wisdom of this pension reform - but I do feel strongly that striking is the very worst thing for Spain’s fragile economy. Yes, the politicians messed up. Yes, they should be held accountable. Yes, they should find workable solutions to revitalise Spain’s economy and reverse the spiralling unemployment rate. But striking won’t make those things happen - it will only delay them. For their part, Spain’s politicians are playing ‘fast and loose’ with the media. When speaking to international journalists and investors, they emphasise the austerity of the country’s economic plans - in an attempt to sooth investor nerves and cement Spain’s line of affordable international credit. Meanwhile in Spain, these same politicians are emphasising how it’s ‘business as normal’ and that there will be no significant cuts in public spending and no erosion of benefits. The upshot of this - since we live in an age of Google translate and the Internet - is that neither foreign investors, nor the Spanish people have any faith in anything the government says. They’re clearly ‘bending the truth’ at least 50% of the time, if not 100%. Over on the Kyero blog, we’ve discovered a way of getting Google to send you property alerts - even when the web site you’re using doesn’t offer that functionality. We apologise for annoying you with our signup forms, and we ask whether translating property descriptions really makes sense? If you have an opinion about these topics, please leave a comment and join in the conversation. Martin Dell, Kyero.com

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Spain: Two or Three Reasons to be Cheerful

Thin turnouts for union protests against an unpopular pension reform may ease pressure on the Spanish government as it seeks to calm markets with austerity measures while avoiding social conflict. A total of only a few tens of thousands of protesters showed up for marches in Madrid, Barcelona and Valencia on a chilly Tuesday evening, according to most estimates. The size of the protests, the first by the unions against Socialist Prime Minister Jose Luis Rodriguez Zapatero, was being monitored by international investors for signs the government might struggle to contain social anger against the rise in the pension age to 67 from 65 and a 50 billion euro austerity plan. These measures are seen as vital if Spain is to convince markets that it can tame a budget deficit that reached 11.4 percent of gross domestic product in 2009. Doubts over Spain’s long-term credit-worthiness caused the spread of 10-year Spanish bonds over German bunds to spike to more than 100 basis points earlier this month during a scare over Greek finances. They have since eased and traded little changed at 76 basis points on Wednesday. One newspaper poll showed almost half of Spaniards would support a general strike against increasing the retirement age. But Tuesday’s turnout will reinforce suspicions that Spanish unions, which represent only 16 percent of workers, would struggle to bring the country to a halt. Juan Carlos Rodriguez, of Madrid consultancy Analistas Socio-Politicos, said: “The unions were powerful in the past, but they’ve lost it. They have much more influence in times of economic boom.” Protesters in Madrid were overwhelmingly middle-aged or older and representatives of Spain’s large immigrant population were almost completely absent. The unions also seemed to fail to attract support from people without full-time employment. “There is a very clear segmentation between the employed and the jobless,” said Jose Luis Martinez, of Citigroup. “Unemployment is at 19 percent, nearly 20 percent,” he said, adding that it was essential Spain reform the rigid labour markets which now both protect most union members and bar millions of others from finding employment. The lack of impact of the union protest was apparent in Wednesday’s session of parliament, during which it was notably missing as a major subject of debate. Nonetheless Labour Minister Celestino Corbacho repeated the government’s desire to reach negotiated deals on reforming the pension system and labour laws. “Protests are one thing. But they are not incompatible with a possible accord,” Corbacho told parliament. Apart from increasing the pensionable age, which the government says is necessary as Spain’s population gets older, the government has indicated it is willing to negotiate the length of time for which people must make contributions to the system. Story from Reuters

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Spanish Pension Reform Protest Lacks Support

Jump in UK inflation is a ‘temporary deviation’. Greek prime minister likens his economy to the Titanic. Having set off from €1.15 the pound fluctuated between €1.14 and €1.1550 until the middle of the week. On Thursday it took a dive, which was extended on Friday. It opened in London this morning off its lows - but only just - at €1.1350. The week got off to a slow start with bank holidays in Switzerland, Canada and the United States. The lunar new year put China and much of the Far East on a go-slow for several days. Things started to become interesting for sterling on Tuesday with January’s consumer price index data. As most analysts had predicted - and the Bank of England had warned - CPI inflation jumped from 2.9% to 3.5%, appreciably above the Bank’s 1 target range. In the Governor’s compulsory open letter to the chancellor he called it a ‘temporary deviation’ and repeated his belief that ‘weakness in spending… will bear down on inflationary pressures over time.’ If that was the good news, the bad news on Thursday was that the Treasury had had to borrow £4.2 billion in January. The Treasury never has to borrow money in January; that’s when a big chunk of the annual tax revenue comes in. The Times summed up the situation as ‘On borrowed time: shock deficit threatens UK recovery.’ January’s retail sales figures, released on Friday morning, were no help to sterling either. The -1.8% monthly decline was a surprise to forecasters, as was the downward revision which showed sales falling in December as well. An interesting debate in the press showed how opinion is divided about what course of action the government should take to bring its budget deficit back into line. The Sunday Times printed a letter from 20 respected economists highlighting the dangers of Downing Street doing nothing. Friday’s Financial Times carried a response from 60 other, equally well-respected, economists saying that nothing is a very good thing to do until the economy gets back on its feet. Although disagreement among economists is nothing new, the exchange of views highlighted Downing Street’s dilemma. Finding itself in a state of anxiety fatigue after weeks of angst about the difficulties of the debt situation in Athens, the market came to the conclusion that Greece was not about to be lost with all hands. It did so despite new revelations that the previous government had arranged swap trades with about 15 investment banks to hide (it is alleged) the size of its deficit. Investors also managed to ignore some unfortunate sound-bites from Greek prime minister Papandreou. On one occasion he said that ‘we are trying to change the course of the Titanic; it cannot be done in a day’; an unfortunate simile. At the weekend he said he was not looking for a bailout because ‘our borrowing needs are covered until mid-March’, not exactly far away on the calendar. He elaborated by explaining that ‘we need the help so that we can borrow at the same rate as other countries, not at high rates which in fact undermine our possibility for making the changes and cutting down our deficit.’ In other words Greece is not asking for actual cash but it is looking for guarantees that will allow it to borrow in the market. Basically, Greece wants the use of France and Germany’s credit cards. After three months spent between €1.09 and €1.13 the pound is clinging to a slightly higher range, between €1.13 and €1.16, despite last week’s unhelpful news. Although its profile is now a little lower, the Greek albatross remains a burden, balancing investors’ slightly different worries about Britain’s political and financial situation. Buyers of the euro should take advantage of any spikes to hedge 50% of their exposure. Get the best foreign exchange rates with no bank fees or commission charges using your Moneycorp Privilege Card

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January Spending Gap Hurts Strerling

Recent periods of heavy selling in the Spanish stock market, in the wake of fears that worries over Greece will spread to other European nations, is reportedly being investigated by the country’s intelligence service. The unit of the National Intelligence Center that deals with economic intelligence has spent the last few weeks discussing the matter with Spanish companies and the stock exchange as well as other experts, according to a report in El Pais’s English edition on Monday. An official could not be reached for comment. The newspaper said the investigation is looking at whether there was any collusion in attacks by investors and the hostility shown by some sectors of the U.K. and Spanish press. Over two weeks ago, Spain’s IBEX-35 saw its biggest one-day loss since 2008, in the wake of worries over Greece and fears Spain might have similar economic worries. See related story on Spain The government has been battling a tidal wave of bad news and sentiment from inside and out. Prime Minister Jose Luis Rodriguez Zapatero has hinted on a number of recent occasions that criticism by the U.S. and British media is part of an effort to undermine the euro. El Pais said in private he has been taken aback by just how aggressive some parts of the foreign press have been with Spain. Paul Krugman, the Nobel prize winning economist columnist with the New York Times, is practically persona non grata for his comments on Feb. 4 after a blog posting that said Spain was the euro zone’s biggest trouble spot. Salgado responded by saying that analysts and media from outside the euro zone did not understand how the bloc worked. Krugman was at it again on Monday, writing in his column for the New York Times, that Spain’s core economic problem is that prices and costs have gotten out of line with those in the rest of Europe and there isn’t much that the government can do to make it better, as its economy is locked into the euro. “This is McCarthy-style witch hunting,” said analysts at UBS in a note to investors on Monday, in response to the report in El Pais. “Spain was a victim of joining an inappropriate monetary union and a Ponzi scheme housing market.” Story from Market Watch

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Spanish Intelligence Investigating Market Slurs

More than half of Spain’s landlords are dodging taxes as the rental market expands, depriving the financially strapped government of more revenue each year. Owners are asking for payment in cash from tenants to avoid tax on 2.5 billion euros ($3.5 billion) of earnings annually, the Gestha union of tax inspectors estimates. An increase in rental properties nationwide hasn’t generated any more tax revenue. The Spanish government, seeking to pull the country out of its deepest recession in 60 years, needs all the money it can get right now. The slump was triggered by a crash in the Spanish property market and has left Spain with the highest budget deficit since at least 1980. Taxes go unpaid on income equal to about a quarter of gross domestic product, Gestha estimates. “The deep economic crisis in which the country is submerged is once again making the hidden economy flourish,” said Juan Jose Figares, chief analyst at Link Securities in Madrid. “The government will be compelled to clamp down on rent fraud.” A drop in house prices starting in the second quarter of 2008 has forced many people who bought homes as investments to seek tenants for their properties rather than selling at a loss. At the same time, more Spaniards are trying to lease homes after they were priced out of the market in the years before the crash, making it easier for landlords to strike deals that don’t involve the taxman. The number of properties for rent increased 18 percent to 2.2 million units in 2008, according to data from Spain’s Housing Ministry. Rental income declared by landlords rose by just 0.1 percent over the same period, a report on the Web site of Spain’s tax office shows. The rental market has a lot of room to grow. At 13 percent, the proportion of renters to homeowners in Spain is still low compared with other European countries, where 40 percent to 60 percent of housing is rented, according to Madrid-based property consultant Aguirre Newman. Around 65 percent of Spaniards aged 25 to 29 live with their parents, compared with about 22 percent in France and the U.K., economic research institute Fedea estimates. “During the housing boom, the state was earning so much from home sales that it wasn’t worth chasing the odd landlord,” said Fernando Encinar, co-founder of Idealista.com, Spain’s largest real estate Web site. “Now, with the economic crisis, the government really does need the money and will make efforts to prosecute tax dodgers.” Encinar, whose company lists 360,000 properties for rent and purchase, said Gestha’s estimate that 54 percent of landlords are ducking taxes “falls short of the true figure, which is set to grow further.” The penalty for avoiding tax on rent is a fine equivalent to 150 percent of the unpaid amount, according to the Spanish tax office. The tax also must be repaid. There is no punishment for the tenant. The penalty is almost never applied because tax dodgers are not being investigated, Gestha General Secretary Jose Maria Mollinedo said. “As both the landlord and the tenant make an agreement not to declare tax or their residency, there is absolutely no way to prove that tax fraud is taking place and therefore no non- declaring landlords are brought to book,” Mollinedo said. A tax break adopted in 2008 accounts for part of the difference between rising rentals and the lack of tax revenue growth. It gives landlords a 100 percent tax break if they rent to tenants who are under 35, according to a spokesman for Spain’s tax office who declined to be identified by name, citing government policy. He didn’t provide information on how many landlords claimed the tax break. The incentive makes little difference because most leaseholders are over 35 and landlords worry that the break will be repealed in a couple of years, after they’re all registered with the state, Mollinedo said. Spain can ill afford to lose revenue it should be collecting. The country, which had a record budget surplus equal to 2 percent of GDP in 2006, will probably have an overall public-sector deficit of 9.8 percent this year, according to Finance Ministry data submitted to the European Commission today. Sellers pay 18 percent capital gains tax in Spain on any profit made from home sales. There were 106,273 transactions in the third quarter of 2009, according to the most recently published data from the housing ministry. That was 14 percent lower than a year earlier and 58 percent less than the market’s peak in the second quarter of 2006. Values decreased as much as 11 percent last year, Idealista.com said. Rent fraud is just the tip of the iceberg, with Spaniards avoiding tax on income of 240 billion euros, equivalent to 23 percent of the economy, according to Gestha. If Spain could reduce that figure 13 percent, the country generate another 25 billion euros of tax revenue annually, it said. Tenants, happy to find a place at all, aren’t likely to turn into whistleblowers. While rents fell 8.4 percent in Madrid and 12 percent in Barcelona during the first half of 2009, increases over the previous five years continue to squeeze budgets. Rent levels climbed 28 percent in the capital and 56 percent in Barcelona in the five-year period. Ruben Gonzalez, a 33-year-old Madrid resident, said he received 120 calls in four hours after placing an advertisement in Idealista.com for a 2-bedroom apartment on behalf of his current landlord. Then he turned his cell phone off. Gonzalez showed the first 30 callers around the 60-square- meter (645-square-foot) city center apartment, which has a broken refrigerator and faulty boiler, rising damp and peeling paint. “‘Everyone was fighting over the place because it’s better than a lot of what is out there and the owner is legal and insists on a contract.” Gonzalez said. “One couple even offered to pay more than the asking price and another offered a cash bribe to put them at the top of the list.” Story from Business Week

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Spain’s Tax-Dodging Landlords

Spain’s Cabinet will discuss spending cuts of as much as 50 billion euros ($70 billion) by 2013 as it aims to slash the budget deficit by two-thirds to meet a European Union target. The government will discuss the so-called austerity plan that aims to cut current spending in the central and regional administrations, said an official at the prime minister’s office in Madrid today who declined to be named in line with policy. Spain, mired in recession with the highest jobless rate in the euro region, has come under scrutiny amid concerns that smaller European countries like Greece may struggle to finance their growing debt. Even as Spain’s public-debt burden is about half the size of Greece’s, the risk premium on Spanish bonds has surged to the highest in nine months. Spain’s public-sector deficit probably amounted to 11.2 percent of gross domestic product last year, according to forecasts from the European Commission, which has set a 2013 deadline to cut the shortfall to the 3 percent EU limit. The country’s debt burden is set to double from before the crisis to 74 percent in 2011. Spain’s economy has been contracting since the second quarter of 2008, pushing the unemployment rate to 19.4 percent as the collapse of a construction boom destroyed more than a million jobs. In response, the government created one of the biggest stimulus programs in Europe, putting builders back to work, and extended jobless pay for the long-term unemployed. To shore up state finances and convince investors about its deficit-cutting plans, the government raised taxes on income from savings in 2010 and will increase value-added tax in July. Bank of Spain Governor Miguel Angel Fernandez Ordonez said more needs to be done as reining in the deficit is the most “urgent” priority, along with overhauling labor rules. “It will be necessary to implement, in each component of spending, deep structural reforms,” he said in a speech in Vigo, Spain. Story from Bloomberg

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Spain Targets €50Bn Spending Cuts