Is Spain a Self Fulfilling Prophecy


The definition of a self fulfilling prophecy is

“A prediction that directly or indirectly causes itself to become true”.

Yet again Spain is hitting the headlines.

“Red Cross starts its first campaign in history to feed the starving in Spain”

“S&P downgrade Spain to just above Junk and put on negative watch”

“Moody’s anticipated to downgrade Spain to Junk Bond status”.

“Unrest on the Streets”

With these kind of headlines is it any wonder the rest of World believe we are on our knees.

The reality at grass root level is very different but the danger for all of us living and working in Spain is that the negative press and Media attention eventually pushes us down the Greek route of no return. Whilst we have our issues, high unemployment, unacceptably high level of poverty for a 21st Century civilized country, a Banking sector that is reeling from poor lending decisions and lack of liquidity, and a requirement to balance our books, the situation is not as grave as it is portrayed.

Even in Andalucía, one of the poorest regions businesses are surviving, cafes and restaurants and shops remain buzzing not just with Tourists but with Spanish working people too. Last weekend I went to Malaga. The new Port area was full, the cafes and restaurants were full, the shopping areas were full and, always a good sign, the Car Parks were full. During the whole day in the City Centre I saw one Beggar, this was one young Man. I defy anyone to go to any major Town in UK or anywhere in Europe and not see more beggars than this.

In the countryside where I live the people never really saw the benefit of the boom years and lived as they did before despite the new found wealth. Not perhaps our idea of a comfortable life but with some sort of roof over their heads, food in their bellies, money for Tapas and drinks and in the great scheme of things relatively stress free lives.

Many businesses in Spain are individually or Family owned, the freeholds are owned and before the boom the owners were used to finding a way of surviving through difficult times. Yes we are to a degree a nation of tax avoiders but again given the level of self employed we are no worse than the other countries were self employed try to mitigate tax as much as they can. One of the big problems is self employed in Spain, unlike those in the UK, get no tax breaks. You pay profit tax and then if you take any kind of dividend you pay personal tax again. This means for even small businesses and average earners they can pay 30% corporate tax and then another 30% personal tax. This is a 60% tax bracket so no wonder cash businesses do not declare it all.

We spend less per capita on social services and families lean on and support each other to a degree not seen in other European countries. Whilst many working in the public sectors, or for large business may not deliver the best service and seem to the rest of the World to be laid back and lazy this really relates very few of the population. In general service has improved, the days of long Siestas have gone and in fact most work longer hours than many other countries as we open everything up to a minimum of 9pm and often beyond.

We have all the will and the way to survive difficult times as long as outside influences do not pull us down. If all the Tourists and those bringing investment to Spain are frightened away, if the Bond price becomes unsustainable, If the Government are constantly forced into Fire Fighting the latest crisis and not able to spend anytime concentrating on the issues we do have relating to bureaucracy, lack of support for business and entrepreneurs then we are doomed.

We have a fantastic climate, we still maintain our traditions, our communications have improved tenfold, we have many educated and hard working people  and the population in general is realistic and bears hardship  well because of an ability to enjoy the more simple life and make the most of the things we have here that come for free. What we cannot fight is faceless institutions that make judgments and create markets both positive and negative with a flick of a pen. I know not who they serve and cannot believe that after the debacle of 2008 the ratings agency have any credibility in the World but still they seem to be able to move markets and force countries into self fulfilling prophecies which no doubt someone out there will gain from.

For those people who are considering Spain for a Holiday or buying in Spain come and look for yourself do not believe everything you read in the Press.

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