CAN SPAIN GET TO GRIPS WITH ITS BLOATED BANKING SECTOR?

The pound has hit 1.25 against the euro this past week, its highest rate since Oct 2008, as Spain struggles to get to grips with its banking sector and Greece contemplates a euro exit. So what next for the continent in crisis, and the exchange rate?

Here is my latest update of the British pound to euro exchange rate, covering the 8th to 15th May 2012. This is intended as a brief guide to what’s affected the exchange rate this past week as well as what might happen next, to help you decide if now’s the best time for you to change currencies.

This Past Week

It looks as though the Eurozone debt crisis is escalating! The UK pound hit its highest point against the euro since 2008 this week (at 1.2540) as speculation Greece might exit the euro inside weeks gripped the market, while Spain failed to put its banking sector to rights.

The good news is that Europe has avoided falling into official recession, but while the political outlook looks so uncertain that is unlikely to aid the euro.

Spain’s Banking Headache

In Spain, the problem is that the banking sector is struggling to get to grips with the billions in bad loans it’s suffered since the housing crash in 2008.

This past week alone, Bankia (the 4th biggest bank in Spain according to assets, and itself the product of a merger of seven illiquid cajas) was nationalised, while 4 other cajas are also looking at joining forces.

This process should prevent Spain’s banks going bankrupt (which would obviously be disastrous for the public finances) but it fails to deal with the underlying problem of bad debt. The markets see this, which is why the euro has weakened in spite of Spain’s action.

In the medium term, this is likely to remain a problem too.

Is A Grexit (Greek Exit) Coming?

In Greece meanwhile, the sudden dominance of anti-euro parties on the political front means we’re facing the increasingly real possibility that Greece will exit the euro.

This accounts in large part for the decline in the euro, as the markets attempt to anticipate such an outcome by selling assets in euros and putting them in locations believed to be safer, such as the UK pound and US dollar.

The problem of course is that a euro exit is completely unprecedented, and has the potential to spark a domino effect across Europe in which all of Europe’s banks become unstuck, while other countries in the grip of austerity such as Ireland also avail themselves of the chance to leave.

So long as this remains possible, the euro looks set to remain weak.

The Next Week

In the short term, the fact that Europe has avoided official recession this week should provide some support of the euro.

However this of course will not help solve the problems in Spain and Greece. So long as Athens remains in political limbo, and the markets view Spain’s banking reforms with scepticism, the euro looks set to remain under strong pressure against the pound.

It would take a disaster in the UK to push the pound back down for long at this point.

Get in Touch

I will return with my next exchange rate update next week.

If you would like a no-obligation quote for transferring your money to Spain, don’t hesitate to fill in your details here and see all the services that we can offer at Pure FX  - where we are always delighted to provide an in-depth response to your queries, free of charge.

Peter Lavelle – Pure FX

FLAMENCO DANCER AND ANDALUSIAN HORSE - DANCING TOGETHER

Spain is, of course, famous for its horses and its riding.  In fact, one of the emblems of Spain is a proud male rider astride a huge, white Andalusian horse, its short, powerful neck arched and its forelegs thrown ‘artificially’ high as it moves forward.  The rider is usually seen wearing a black waistcoat, a broad brimmed hat, black jodhpurs, long boots and spurs and is seated on a Western style saddle with large metal stirrups.  Occasionally, he will be pictured with a woman behind him, sometimes wearing a vibrant Flamenco dress.  The horse and rider invariably look magisterial – as if they own the world!

Wonderful!

Certainly, the style of horse riding in Spain is very different to that of most of Europe (notably so in the case of the UK).  It is more formalized, with classic dressage being of critical importance.  In fact, unlike a UK horse, a Spanish school horse will not also jump when a UK horse would usually be expected to perform well at dressage (albeit not the same type of dressage as a Spanish school horse), as well as being able to show jump or hunt.

AN EMBLEMATIC SIGHT!

Of course, the terrain of much of Spain militates against hunting and therefore jumping.  The land is often bone dry, stony and dangerously uneven – which may be why the Spanish school of riding developed to exclude show jumping.

Certainly, in Spain Spanish school horses are trained to perform movements that would never be seen in the UK.  The horses can ‘dance’ with a precision and beauty that is awesome.  Indeed, in many displays you will actually see a rider (ginete) riding an Andalusian horse to music, whilst doing a complex pas de deux with a woman dressed in Flamenco and performing a Flamenco dance.  At its best this can be thrilling to watch, especially when the rider and horse make short, fast, sharp-turning sprints around the dancer.  This is followed by delicate traverses around her, with the horse and rider advancing and retreating from the dancer, whilst both respond to the music.  This requires terrific horsemanship and can be electrifying to watch.

A display of horse riding in Spain is always worth seeking out and involves a whole series of displays of horsemanship that can be breathtaking to watch.  If you are fortunate you will see riders providing a comprehensive display of virtually everything that a horse could be trained to do, each action a demonstration of total control whether it is a horse bowing to the crowd, rearing up or moving diagonally, backwards, laterally or dancing to the time of music.  Sometimes you will see a rider controlling another horse in front of him with long reins.  At other times, you will see riders carrying long lances, around which the horses will make incredibly tight circles, before galloping away fast, ‘turning on a sixpence’ and stopping perfectly – in a split second.

A SUPERB DEMONSTRATION OF HORSEMANSHIP

Of course, in the past, absolute control over a horse was essential for any cavalryman and would have been the difference between life and death.  It is from here that the Spanish style of riding has largely descended, with the philosophy being to produce horses (Andalusians) that are completely obedient and safe for a (competent) rider.  This, needless to say, was also important for any rider in a bullfight, who has to be able to rely upon a powerful, athletic horse capable of responding to a whole variety of evasive movements immediately.

If you are in Spain you will often have the opportunity of seeing Spanish school horses, which invariably form some part of a fiesta.  You will certainly not miss them – they are usually large, compact and heavily muscled with incredibly powerful, arched necks and they move with a unique controlled elegance.  Normally Andalusians are grey but there are many colour variations.

Interestingly, stallions are always used for displays with mares often rare in stables that specialize in the Spanish school.

AN AWESOME SIGHT!

Needless to say, the Spanish are very proud of their school of riding, it is an inherent part of the culture of Spain and it is always fun to hear the shouted admiration (olé!) and support of a Spanish crowd when in front of a display of Spanish horsemanship.  Certainly, it is deeply impressive, very ‘macho’ and wonderfully ostentatious!

Of course, you can learn to ride Spanish school horses and there are many stables in Spain that provide lessons – with the images above taken from a display given by the excellent Los Robles stables (run by Victor Robles) just outside of Gandia (call Victor on649 406 050!).

CLASSICAL SPANISH DRESSAGE IS AN EXTRAORDINARY DEMONSTRATION OF TOTAL CONTROL

In reality, most North European riders understandably prefer their riding to be a touch simpler than the demands of the Spanish school of horse riding, so you will be relieved to know that many riding schools in Spain concentrate upon ‘normal’ riding and have horses that are ideal for hacks.  There is also not a complete absence of show jumping in Spain and you can also find places that will provide you with lessons.

Nick Snelling – Culture Spain

FURTHER ARTICLES ABOUT HORSE RIDING IN SPAIN

Activities in Spain

Spanish horses and riding in Spain

Horse riding in Spain

Show jumping in Spain – from the best in the world

BEAUTIFUL VILLA FOR SALE IN GANDIA

So, over the past couple of weeks the true state of the Spanish property market is becoming apparent and confirms what I have been saying for a long time.  In short, average property prices across Spain have fallen by around 40% since the height of the boom in 2007 – not the 20% that the Spanish government has been steadfastly declaring for years.

Recently, Pompeu Fabra University reported that Spanish property prices had actually fallen by 41% and the Spanish author (Mathew Borja) of a book on the Spanish property market has stated that prices have dropped by 43%.

Meanwhile, the total number of housing units for sale in Spain has been assessed by property appraisers Acuna & Associates as some 2 million, with annual demand some 200,000.  So, it is possible that the existing excess housing in Spain could take ten years to clear.

In fact, Mathew Borja thinks that matters may be worse and estimates that there are 1.9 million homes for sale with a further 1.3 million in construction and some 2.6 million empty – with an annual demand of some 175,000 units.

In truth, all these figures are probably little more than educated guesstimates but the overall message is clear.  Indeed, whichever way you look at it, Spain has a major problem and this has finally now been spotted by the international markets.

S&P recently downgraded the credit rating of 11 Spanish banks including Santander and BBVA, which until recently were (improbably) thought to have escaped the worst of the Spanish property crash.

Of course, the main banking disaster at the moment is Bankia, which was formed from the amalgamation of seven savings banks (cajas) and has just been part nationalised by the Spanish government.  Evidently Bankia needs some 7,000 million Euros to rescue it, which is much the same amount as the cost of the health cuts across Spain.  As Spain’s 4th largest listed bank it has some 37.5 billion Euros worth of exposure to the property market (of which 31.8 billion is problematic).

Not surprisingly, Spain’s stock market has fallen some 18% so far this year (and hit an eight and half year low)  and Spain’s sovereign credit rating has been dropped to BBB+/A2, with the cost of borrowing having risen to almost unsustainable levels.  This, it would seem, has already occurred to the wretchedly badly run Autonomous Region of Valencia which, last week, sold six month bonds at a yield of 7% – which is actually greater than that paid by Greece!

To make matters worse, recent statistics issued by the INE (the National Statistics Institute of Spain) showed that unemployment in Spain rose to 24.4% of the working population.  This is a hideous figure, made all the more poignant by the fact that some 50% of all 18 -24 year olds are unable to find work.  Needless to say, this means that the government’s revenues are low and that the population in Spain is dangerously discontented.  Few Spaniards can see any ‘light at the end of the tunnel’ and there may be a political backlash as the government’s austerity measures start to be felt in earnest.

What does all this mean to anyone with an interest in Spanish property?

Well, to state that this is a depressing time for existing property owners is probably a gross understatement, as many people have seen their equity disappear or are now in negative equity.  Meanwhile, trying to sell a property is desperately hard, with owners now having to compete with the prices of the repossession properties of the banks – which are increasingly swamping the marketplace.

Sadly, it would be madness to claim that the property market in Spain has yet stabalised.  Prices are still dropping and are likely to continue doing so for 2012 and possibly longer.  This means that holding onto property in Spain in the hope of recovering lost equity, let alone in the hope of it rising in value, is probably a lost cause.  Indeed, some commentators are stating that Spain may fall into the same situation as Japan in the 1990s when any growth simply halted altogether.

Of course, matters are rosier for buyers of property in Spain.  A 40% + decrease in Spanish property prices means that you can pick up property in Spain for prices last seen around 2003/04, some nine years ago – when Spain was offering terrific value for money.  Equally, unlike the boom years, there is so much property on the market that you can invariably find what you want and ‘cherry-pick’ the very best properties around.

How to Buy Spanish property and Move to Spain – Safely (the ultimate guide!)

It is also fair to say that by negotiating hard you will probably be able to obtain a price for your property that will be low enough to buffer you against any further price drops.  So, although in the short term to mid-term you should have few expectations of making money on your property, you will know that you will have bought a sound and stable investment.  In an exonomic crisis that is not something to dismiss.

In the meantime, of course, you can come to Spain (either on holiday or permanently) and enjoy what the country has on offer.  This remains considerable, despite the dreadful economic problems.  After all, the wonderful climate has not changed nor the convenient distance between Spain and Northern Europe nor the tremendous landscape, historic heritage and fabulous beaches.  Living here is still cheap in comparison with Northern Europe and the intrinsic and joyous nature of the culture of Spain has not changed.

Indeed, one of the more extraordinary aspects to Spain over the past few years has been the reaction of the Spanish to the present crisis.  Despite being appallingly badly led by their incompetent and corrupt politicians (of all parties) they have remained remarkably tranquil, with hardly a sign of the violence and trouble seen in Greece and elsewhere.  The Spanish, to their credit, remain community based, welcoming to foreigners and still have a way of life that most North Europeans justifiably envy.  Long may that continue as the country fights its way through its present troubles…

Nick Snelling – Culture Spain

FURTHER RELEVANT ARTICLES ABOUT THE SPANISH PROPERTY MARKET

Unemployment in Spain surges

Recession in Spain (again) – by numbers

Spanish property – the right time to buy property in Spain?

Spanish economy, a ‘perfect storm’ (with EU bailout likely)

Property for sale in Valencia

How to Buy Spanish property and Move to Spain – Safely (the ultimate guide!)

BEAUTIFUL BEACH COSTA BLANCA

Have you noticed that the price of prescription drugs in Spain has dropped markedly over the past year?  So much so that, in some cases they have dropped in price by 75%!  I had noticed this happening over the past few months but I had thought that I was just imagining things.  However, this was confirmed to me by a chemist yesterday, who gave the illustration of her father whose prescription drugs have dropped in price from 40 euros to 10 euros in the past year for each prescription.  By comparison mine have reduced in two years from around 50 Euros to 14/15 Euros a time.

Needless to say, it is good to see that the price of prescription drugs in Spain has dropped and that is great news for any patient.  However, it begs the question of why the government was paying so much for its drugs beforehand?

Certainly, my chemist friend advises me that until the recent crackdown on excessive Spanish state expenditure the issuing of branded drugs was the norm – even when much cheaper generic drugs were available.  This, of course, was a financial madness, albeit one that worked well for the pharmacists as their profit margins on prescription drug sales was greater on (more expensive) branded drugs than on cheaper generic ones.

Nonetheless, the radical reduction in drugs just shows how profligate the Spanish government was in the past and how necessary (and justified) some cost cutting is.  Indeed, I shudder to think how many other areas of the state have been run with the same carelessness as the prescription drug trade.

On the subject of chemists in Spain did you know that like tobacco shops (estanqueros) you cannot open a pharmacy in Spain wherever you like.  In fact, pharmacies are strictly limited to given areas in Spain, depending upon local demographics.  This is the reason why, unlike the UK, there are not a profusion of pharmacies wherever you go – let along several along one street or in one shopping centre.

In fact, a pharmacy is not allowed to be within some 250 metres of another pharmacy and is only allowed to exist at all if there are a minimum number of people living within a given area.  Accordingly, owning a pharmacy in Spain is considered a lucrative business, as the owner of one has a guaranteed monopoly within his particular district or village.

If you are chemist (or businessman) who wants to start a pharmacy, you therefore have to buy an existing pharmacy or wait until the government decrees that the number of people in an area have increased to such a point that another pharmacy is justified under the regulations.  When this happens the government then set a competition to see who should have the opportunity of setting up the brand new pharmacy!

In fact, this is not quite as crazy as it sounds because the competition for the new pharmacy is based around finding the most competent pharmacist to own the new pharmacy.  There is an exam and a points system to establish who, amongst the competitors, has the highest qualifications and greatest pharmaceutical experience – with the winner obtaining the license to operate the new pharmacy.

Just one of those oddities that might tickle your sense of curiosity about Spain…

Nick Snelling – Culture Spain

FURTHER INFORMATION

State healthcare in Spain

Hooked – the Gateway to Hell in Spain (the war on drugs in Spain)

PROPERTY FOR SALE IN SPAIN - SAFE TO BUY?

Buying Spanish property can be somewhat hazardous.  Indeed, a combination of illegality (both in title and construction), potential liabilities (i.e. where an infrastructure project may occur) and indifferent build quality are far from rare when it comes to Spanish properties.

That is not to say that there are not fully legal, sound properties to be bought in Spain.  To state otherwise would be absurd and most people buying property in Spain find excellent homes devoid of problems.  However, few people would argue that buying Spanish property requires great care and the attentions of a first class, specialist, Spanish conveyancing lawyer (backed up by a professional building surveyor) – if a purchase is to be trouble free.

But how effective are conveyancing lawyers in Spain?

This is not an idle question, given that many foreigners have bought property in Spain, used a Spanish conveyancing lawyer – and still had problems with their Spanish properties.

Well, after nine years in Spain and having dealt with some 18 different Spanish lawyers, I would say that the overall standard of legal practice of many Spanish lawyers is indifferent to poor.   In fact, of the 18 I have come across, I would personally only use two of them – both of whom are notable for their iron integrity (a virtually unknown quality in Spain) and professionalism.

How to Buy Spanish Property and Move to Spain – Safely  (the ultimate book on the subject!)

Of course, I am the first to admit that my personal ‘straw poll’ is so small as to be largely worthless.  However, you may give it more credence when you realize that there are some serious differences between the way Spanish lawyers train and work and those of, say, the UK.

Firstly (and rather worryingly), a Spanish lawyer can start practicing law, on his own account, as soon as he has finished his training and examinations and has been certified to practice.  By contrast a UK solicitor cannot start his own practice until he has completed three years working for an existing firm of solicitors.  This time period starts after he has finished his exams and two year probationary period (Articles).  The three year period working for an established law firm, obviously, provides the brand new UK solicitor with invaluable mentoring under experienced lawyers – something the new Spanish lawyer lacks, if he starts practicing straight away in his own practise…

Secondly, many Spanish lawyers tend not to specialise – where in the UK virtually every lawyer is a specialist in a particular branch of the law: litigation, conveyancing, probate, tax, crime, copyright, corporate, divorce etc.  By contrast, in Spain most lawyers are single practitioners, working on their own and tackling virtually any matter that comes their way.  As Spanish law is as complex and wide ranging as British law this means that many Spanish lawyers tend to lack detailed, in-depth knowledge (and experience) about any particular area of the law.

Thirdly, my impression is that the Colegio de Abogados (equivalent to the Law Society in the UK) lacks ‘spine’ to control the legal profession and enforce high standards of professional conduct.  I can see this as being one of the only reasons why there are some Spanish lawyers still practicing, who should have been disbarred (and possibly imprisoned!) years ago.   By contrast, over the past few years, the UK Law Society has become increasingly rigorous about enforcing high standards of conduct amongst the UK legal profession.

Fourthly, the public liability insurance of some Spanish lawyers can be very low, certainly by comparison to that of UK lawyers who usually have massive cover.  This is no laughing matter as it is essential that a lawyer’s liability insurance is more than sufficient to cover any errors that he may make and these errors can be extremely costly – whether they are contractual or relate to a specific high value property.

Finally, it is no secret that the Spanish legal system is notoriously slow and cumbersome which means that you have to be very brave, patient (and reasonably wealthy!) to take legal action against a Spanish lawyer for negligence.

What does all this amount to?

In short, if you are buying Spanish property you must make sure that the Spanish lawyer you use is excellent and a properly experienced specialist in the relevant area of law that you require.  Furthermore, make sure that he has an adequate public liability insurance policy that well and truly covers you for any errors relating to the work he is going to undertake for you.

How do you find such a lawyer in Spain?

That is always something of a conundrum not least because the different Regions of Spain have different laws and therefore you will, when it comes to buying property in Spain, almost certainly need a lawyer from the particular Region in which you are buying your property in Spain.  Equally, of course, you will need a Spanish lawyer who speaks your language fluently…

For the key tips to finding an effective lawyer in Spain, have a look at this article about lawyers in Spain - which you may find provides you with some vital and concise guidelines.

Nick Snelling – Culture Spain

FURTHER RELEVANT INFORMATION

How to Buy Spanish Property and Move to Spain – Safely  (the ultimate book on the subject!)

Lawyers in Spain – a Spanish lawyer’s advice

Lawyers in Spain – the way not to do things!

BANKS IN SPAIN VARY CONSIDERABLY IN CHARGES AND SERVICE - SO MAKE SURE YOU CHOSE THE RIGHT ONE!

If you are thinking of banking in Spain then, in principle, you are spoilt for choice – or are you?

There are dozens of banks in Spain including a number of savings banks in Spain called Cajas or Caixas.  The latter are often regional and some have very few branches.

Spanish banks vary in terms of their exposure to the effects of the economic crisis in Spain.  Some are secure and others less so – although there is limited Spanish government protection in place should a Spanish bank collapse.

So  – what bank in Spain should you use?

Well, as with all retail banks, in every country in the world, there is unlikely to be a great deal of variation (in reality) between what one bank in Spain and another offers – in terms of account benefits. However, as a foreigner in Spain, three matters are of very considerable importance:

1.       Communication.

It is essential that you can do any and all your banking in Spain in your own language and that all paperwork (bank statements etc.) and Internet access is available in your language.  Equally, you need to have a permanent personal point of contact at your own branch who speaks your language fluently.

2.      Free receipt of money transferred from your bank in your own country to your Spanish bank.

Considerable receiving fees can be charged unless your Spanish bank expressly agrees to forego these fees!

3.      Extensive branches throughout Spain.

Unless you plan to always stay within one small area, you will need a bank in Spain that has branches spread across Spain.  This is helpful should you travel or move around the country.

Over the past years, some Spanish banks have specialised in providing a foreigner user-friendly service.  These banks usually have multi-lingual staff and are both used to dealing with foreigners and well equipped to provide an appropriate service.  This is very important and can greatly ease the stress involved in banking in Spain.

After all, few things are more unnerving than dealing with your money in a foreign country – in a different language!

I know of one high street retail bank, for example, that has focussed closely upon the foreign market in Spain which has a number of branches along the high density foreigner coastline of Spain.  This bank tends to be efficient and invariably have multi-lingual staff in their branches.  They also provide the option for you to do all your banking in your own language.

For more information about Spain, living in Spain and Spanish property have a look at:  ‘How to Buy a Spanish Property and Move to Spain – Safely!

However, if you want to know more about banking in Spain and details of who I would recommend – then please drop me a note and I will  send you further details…

Nick Snelling – Culture Spain

APRIL ON THE COSTA BLANCA - WONDERFUL!

The INE (the Spanish Statistics Institute) has just released data showing that there are now some 5,639,500 people unemployed in Spain – a figure that is nothing short of disastrous.  Indeed, some 4,000 people a day lost their jobs in Spain during the first quarter of 2012.  A mind numbing figure.

Indeed, with an unemployment rate in Spain of 24.4% the country is teetering on the 25% estimated unemployment rate suffered by the US in the Great Depression of the 1930s.

Meanwhile, the Spanish economy shrunk by 0.4% (between January and March 2012) having contracted by 0.3% in October to December 2011.

This means that Spanish economy is on course to shrink  by around 1% this year, at best.  In fact, it is likely to be much worse than that, as the 27 billion Euros worth of cuts announced in the recent Spanish national budget are implemented.  The latter are bound to create further unemployment in Spain and undermine an economy already in desperate straits.

Recession in Spain (again) – by numbers              Spanish economy, a ‘perfect storm’ (with EU bailout likely)       

To make matters worse, the Spanish banks continue to be deeply troubled by massive property related debts.  These are, as I have stated elsewhere, probably greater than currently shown on the banks’ (over-optimistic) balance sheets as they (together with the Spanish government) have studiously avoided factoring in the true value of their property ‘assets’.  These stand at some 50% less than they were in 2007.

In the case of some industrial estates in Spain, a 50% reduction in value by the banks on their balance sheets may be hugely optimistic, with some industrial estates being, to all intents and purposes, worthless – despite huge past investment.  Indeed, recently, I was on a vast new industrial estate with new roads and plots upon which there was just a single factory.  Everywhere else was vacant, with the likelihood of any further businesses coming onto the estate inconceivable for a generation.  This is not an uncommon sight, is replicated across Spain and a terrifying indication of how some (significant) Spanish bank assets that have no market value.

It is of little surprise therefore that Standard & Poors has now cut Spain’s credit rating to a dismal BBB+.

Spanish property – the right time to buy property in Spain?

Of course, the immediate response by some people to high unemployment figures in Spain is to state that the figures mask the truth, which is that whilst many people are registered as unemployed there are vast numbers operating in the ‘black’ economy in Spain (the sumergida).

Certainly, the ‘black’ economy in Spain is large (as it always has been).  However, in reality, it will have shrunk at the same rate as the rest of the Spanish economy and it would be absurd to suggest that people register as being unemployed – then move into the ‘black’ economy and earn what they did before.  If that was the case then fewer businesses would be closing down, there would be less re-possessions and the March retail figure would not have dropped by 3.7%. – having fallen, month on month, for an appalling 21 months.

Nick Snelling – Culture Spain

FURTHER RELEVANT ARTICLES ON THE SPANISH ECONOMY

Recession in Spain (again) – by numbers

Spanish property – the right time to buy property in Spain?

Spanish economy, a ‘perfect storm’ (with EU bailout likely)

STUNNING TOLEDO - ONE OF THE MOST BEAUTIFUL CITIES IN THE WORLD!

One aspect to Spain that is often overlooked is its world class heritage.  In fact, it may surprise you to know that Spain is second only to Italy for its UNESCO World Heritage sites, of which it has 42 to Italy’s 47.  By comparison the UK has 28.

I say that Spain’s World Heritage position may be a ‘surprise’ because, for most people, Spain is perceived as little more than a country with some excellent beaches, a great climate and cheap booze.  Indeed, it is probably fair to say that the vast majority of Spain’s 53 million annual tourists have little or no interest in the culture of Spain and come to the country for their summer holidays to escape the vagaries of North European weather.  Once on the beach, of course, few stray far, apart from, perhaps, a brief day out to some (usually over-rated, over-commercialised and desperately crowded) ‘beauty’ spot.

In reality, Spain has an enormous amount to offer beyond its beaches and it is well worth knowing what is around before you choose the location for your holiday in Spain.  That way, you can plan to combine a beach holiday in Spain with seeing some of the true wonders of the world.  These can hugely enhance any holiday and are likely to stay firmly in your memory long after fond memories of lying pickled on some beach have passed!

So, what World Heritage sites does Spain have and where are they located?

Well, here is the full list, courtesy of the excellent UNESCO World Heritage site, which also provides the reasons why each of the Heritage Sites in Spain have been chosen:

• Alhambra, Generalife and Albayzín, Granada ²¹
• Burgos Cathedral
• Historic Centre of Cordoba ²²
• Monastery and Site of the Escurial, Madrid
• Works of Antoni Gaudí ²³
• Cave of Altamira and Paleolithic Cave Art of Northern Spain
• Monuments of Oviedo and the Kingdom of the Asturias ²⁴
• Old Town of Ávila with its Extra-Muros Churches
• Old Town of Segovia and its Aqueduct
• Santiago de Compostela (Old Town)
• Garajonay National Park
• Historic City of Toledo
• Mudejar Architecture of Aragon ²⁵
• Old Town of Cáceres
• Cathedral, Alcázar and Archivo de Indias in Seville
• Old City of Salamanca
• Poblet Monastery
• Archaeological Ensemble of Mérida
• Route of Santiago de Compostela
• Royal Monastery of Santa María de Guadalupe
• Doñana National Park
• Historic Walled Town of Cuenca
• La Lonja de la Seda de Valencia
• Las Médulas
• Palau de la Música Catalana and Hospital de Sant Pau, Barcelona
• Pyrénées – Mont Perdu *
• San Millán Yuso and Suso Monasteries
• Prehistoric Rock Art Sites in the Côa Valley and Siega Verde * ²⁶
• Rock Art of the Mediterranean Basin on the Iberian Peninsula
• University and Historic Precinct of Alcalá de Henares
• Ibiza, Biodiversity and Culture
• San Cristóbal de La Laguna
• Archaeological Ensemble of Tárraco
• Archaeological Site of Atapuerca
• Catalan Romanesque Churches of the Vall de Boí
• Palmeral of Elche
• Roman Walls of Lugo ²⁷
• Aranjuez Cultural Landscape
• Renaissance Monumental Ensembles of Úbeda and Baeza
• Vizcaya Bridge
• Teide National Park
• Tower of Hercules
• Cultural Landscape of the Serra de Tramuntana

Incidentally, travel in Spain is often surprisingly simple and quick – so do not be put off should a Spanish World Heritage Site not be right beside where you are staying.  The roads throughout Spain are astoundingly good (due to colossal amounts of EU money!) and remarkably free of traffic, which means you can travel long distances with an ease and speed inconceivable in places like the UK.  Meanwhile, the rail network is very cheap (unless you travel by AVE).

Of course, it makes sense to plan trips to Spain that are dedicated just to seeing the best of the culture of Spain or rather the best of international culture – because that is what the UNESCO World Heritage sites are all about. Certainly, few of the World Heritage sites in Spain will not have you gasping at the beauty on offer and you will know that what you are seeing has been acknowledged as universally important and exceptional!

Incidentally, an obvious joy for anyone interested in the best of Spanish culture is that the climate in Spain is generally so benign that you can enjoy terrific weather out of the high tourist season which means that you can really ‘win’ by booking a culture tour in Spain during the winter months.  At this time you can often find the weather delightful, few other tourists around and that local hotels and Paradors are offering very competitive packages.

In short, we all seem to think of Spain only as somewhere for our summer holidays.  However, in reality, Spain is much more than just great beaches – it is a repository for some of the most wonderful sights in the world!

Nick Snelling – Culture Spain

RELEVANT INFORMATION ABOUT THE CULTURE OF SPAIN

The culture of Spain – day to life and influences

The great cities of Spain

THE SPANISH - LOOKING AHEAD TO A DIFFICULT FUTURE?

As the son of Spanish immigrants, born and raised in the UK but having spent most of my working life doing business in Spain and the last seven years living here, I have given a lot of thought to trying to understand what gives the Spanish the character they have – loud, opinionated, proud, autocratic, confrontational and individualistic. Yes – they can also be kind, helpful and hopelessly optimistic but, in my experience, that is the exception not the norm.

Ok, so this is a rather negative view of Spaniards and is perhaps less true the further north in Spain you go, but it happens to be one shared by many outside observers who know them well – both professionally and socially. I think the way the Spanish ‘ran’ their Empire in South America and Europe and the way the Civil War was conducted by both sides, provides ample evidence of some of the characteristics I have identified above.

More recently, the disputes and posturing of the larger Autonomous Regions in Spain are continuing examples of these characteristics – at least at a political level. Also, just watch and listen to a group of Spaniards talking with any conversation invariably descending very quickly into a shouting match – with no one listening and everybody expressing an opinion. In fact, even after all this time, I keep expecting to see a murder committed in front of my eyes.  Thankfully everyone usually ends up as best friends – at least on social occasions!

So, what influences have contributed to the essence of the culture of Spain and being Spanish? My own view is that the main factors which provide the foundation for the character and culture of a race are:

1. Climate and natural resources;
2. Geographical location; and
3. Topography.

These in turn affect economic, social and political development. In all three cases, Spain suffers from extremes: hot and cold weather with very few natural resources – other than sunshine; the country is at the Western extreme of Europe; and, it is the second most mountainous state in Europe.

The size and topography of the country means that until recently, and I mean the last 30 years or less, much of the country was remote and relatively inaccessible. This, combined with poverty, meant that ordinary people did not usually travel. Hence, although finally united under Isabella and Ferdinand in the 15^th, century, Spain remained a country of insular and isolated regions. At the same time, until the late 20^th century, Spain was a largely agrarian society and wealth, mainly in the form of land ownership, was concentrated in the hands of the state, the Church and a small minority of powerful families.

I believe that the method of managing this ‘wealth’ also had a significant impact on the evolution of the Spanish character and the culture of Spain. For example, in the north a system of tenure/leases over small plots predominated which gave the workers – dare I say peasants – some sense of involvement and ownership, as well as economic benefit. In the south, absent landlords owned vast estates which were worked on their behalf, and for their benefit, by the workers – leading to poverty as well as tension between the ‘haves’ and the ‘have nots’. These systems prevailed until relatively recently and Spain only became industrialised in the 1960s although Spain was, in fact, one of the top 10 largest economies in the world in the early-mid 1970s (before the oil crisis) – albeit that this was largely limited to Catalyuna and the Basque country.

Therefore, what we have is a large, geographically diverse country, with poor communications, few natural resources, where the land ownership (and hence wealth) was concentrated and which industrialised very late, compared to most other western European countries. All of this sounds like a recipe for disaster and, I think, goes a long way to explaining the natural character inherent in the Spanish.

So, once united under Isabella and Ferdinand, how did the ruling classes stave off revolution a la francais or Cromwell?

Well I suppose the sheer size of the country and poor communications made it difficult for the peasants to revolt. At the same time, the lack of natural resources forced Spain to look beyond its borders for wealth, mainly by conquering countries richer than themselves.

Spain’s Age of Expansion as it was known, occurred between 1506 and 1700 and maybe this colonialism reinforced some of Spain’s more aggressive and autocratic characteristics? Certainly, one thing it definitely helped to do was to create a complex, and quite autonomous set of regional bureaucracies, which meant that taxes, infrastructure improvement, etc. were defined independently by each region, leading to many internal customs barriers and tolls, and conflicting policies – sounds familiar?

Unfortunately, most of the wealth “acquired” from the New World was squandered in wars and Spain’s economic position became weaker and weaker. As a result, starting in the second half of the 17th century, Spain experienced a gradual and remorseless political and cultural decline not helped by a series of civil wars and the Carlist Wars, which racked the country in the 19^th century. As Spain’s political and economic influence abroad waned, the country became poorer, whilst wealth and land ownership remained concentrated in a very small minority.

Downtrodden, poor, with no political power and with the rest of the world around them going through industrial revolution and economic growth, Spaniards turned to republicanism and anarchism in the first half of the 20^thcentury.

And then came Franco – although I’m not going to delve into that particular ‘can of worms’. All I will say about him is that he delayed Spain’s socio-economic-political evolution (although not always deliberately) but he did not create the Spanish character as we perceive it today. The seeds for that were sown centuries before and he was just the result of a long and slow process towards, strange as it may seem, democracy.

In 1976 Spain became a tentative democracy and a constitutional monarchy and in 1986 joined the then EEC (becoming the single biggest recipient of EU funds), whilst having only just gone through a short, sharp learning curve in political and economic terms. This has had its pros, for example, reinforcement of democracy and a huge improvement in the national transport infrastructure network.  However, it also had its cons, for example, a false sense of economic security (made worse, in my opinion, by joining the euro), which in turn has led to an unwillingness to take difficult decisions to improve the long term competitiveness and flexibility of the economy – a situation which exists to this day.

I think these are the most important factors which have shaped Spanish character and culture to date.

That said, I have, perhaps, omitted one important factor which most people I have spoken to believe contributes to the Andalucian character – the Moors. There is no doubt that 700 years of occupation will have had a huge impact on the culture of Spain and also the genetic pool and this does go some way to explaining ‘typical’ Andalucian behaviour (e.g. being warlike/aggressive) but I’m personally not so convinced that this is a lasting legacy of the Moors. The occupation ended over five hundred years ago and, as we have seen, a lot of ‘water has passed under the bridge’ since then. My own feeling is that it is geography, climate and economic underdevelopment which continue to be the main drivers for the Andalucian character.

Some time ago, I talked with Professor Andrew Kakabadse (Professor of International Development at Cranfield University School of Management) about what influences the development of culture, national characteristics and leadership skills.  Professor Kakabadse was writing a book on the reality of cultural differences (using several countries as examples) and one of his principle conclusions was that the re-distribution of wealth, combined with sustained investment in social and economic ‘assets’, e.g. education, healthcare, infrastructure, etc., are the major cultural factors for any country.

He cited Germany as a good example where, over a relatively short period of time (approximately two generations), such policies have successfully created a unified country whose citizens, on the whole, feel they are part of one large family. As he puts it – it has moved from a shareholder to stakeholder model. On the other side of the coin, Ireland appeared to be moving in this direction with its new found wealth after joining the EU but this is now coming under pressure as the economy crumbles with a ‘legacy’ of socio-economic characteristics coming to the surface – because the re-distribution of wealth has not been sufficiently wide spread and investment has been poorly targeted.

Of course, I’ll leave you to come to your own conclusions about why Spaniards are the way they are and what the future holds for Spain – within this complex and divided nation!

Robert Tenison – Culture Spain

THE EURO - WHY IS IT HOLDING UP?

The backlash against austerity has begun, following the victory of Socialist Francois Hollande in Round One of the French presidential contest this weekend. So what next for Europe, and the euro?

What next for Europe? This question has quite suddenly gripped the markets in the last day or two, following events that have apparently reduced the edifice of European austerity to rubble. For one, Socialist candidate Francois Hollande took a decisive lead in the first round of the French presidential contest on Sunday, and looks set to convincingly thrash Nicholas Sarkozy in the second. For another thing, the Dutch government has unexpectedly collapsed, following a failure inside Prime Minister Mark Rutte’s coalition to agree EU-mandated spending cuts.

So last week, the German-led consensus toward long and senseless spending cuts appeared solid; this week, we’re faced with either light at the end of the tunnel, or chaos, as markets react to this political rebellion against austerity by abandoning Europe. Which will it be?

Quite astonishingly given this Eurozone turmoil, to date the euro has endured only minor losses against the pound and US dollar. The pound continues to inch up at the time of writing, coming just a third of a cent short of 1.23 against the euro. The sole explanation for this continued euro endurance is that neither the UK nor United States is in much better shape. Looking ahead, I can only see the euro continuing to weaken, unless both the UK and US disappoint in their growth figures later this week (due Wednesday and Friday respectively.)

Let’s look in greater detail then at the current upset in Europe.

Francois Hollande’s “War Against Finance”

In France, Socialist candidate Francois Hollande has made waves amongst both voters and markets by declaring a so-called “war against finance.” His idea (which to some extent, I agree with) is that democratic nations and their governments shouldn’t be in thrall to international markets to determine what that nation does and doesn’t do, in terms of policy. Right now, he argues, European governments serve two masters: their voters, and international markets. This for Hollande is unacceptable.

Of course, you might rightly object that if Hollande has such distaste for investors, he can stop holding bond auctions for France. Then it wouldn’t matter what markets thought of his policies. But this is impractical: in reality, Hollande is right that something must be done to redress the sway over which markets hold European governments right now, and which has led Spain and Greece (among others) to pursue policies that guarantee decades of pain for their voting citizens.

The Netherlands: Stuck In A Rutte*

To some extent, it’s the same problem in the Netherlands. To date Prime Minister Mark Rutte (as well as his trusty finance minister Jans Kees De Jager) have been among the keenest advocates of austerity, arguing (like Germany) that Europe could end its troubles if only the profligate South could control its spending.

Yet in the aftermath of the agreement of the fiscal union, it emerged that the Netherlands would themselves by in violation of the proposed 3.0% annual deficit, and have since then been engaged in finding €15bn in cuts. However the proposed cuts now look set to fall (of course) on the poorest and least well-off in The Netherlands, spurring disagreement among Mr. Rutte coalition partners this past week, and his government to collapse.

Looking Ahead

So what next for France and the Netherlands, and Europe as a whole?

Well, we know from Spain that Francoise Hollande or the Dutch government meekly caving in to market demands for cuts wouldn’t solve the problem. The markets have rewarded Spanish austerity by pushing up borrowing costs, leading me to comment in previous articles on this website that the Spanish are damned-if-they-do-damned-if-they-don’t. There’s no reason to think investors would treat France and the Netherlands more kindly, if they continued to tow the austerity line. Indeed, to everyone except perhaps the Germans, austerity has proven thoroughly self-defeating.

Instead, Europe needs growth. It needs to drag itself out of recession, and get to grips with its spiralling unemployment problem. Then, and only then, should it begin to cut its debts in a sustainable manner. This incidentally is the second plank of Francois Hollande’s platform, and one that (to me) seems a reasonable alternative to the EU/IMF-imposed cycle of cuts and more cuts. Of course, whether Mr. Hollande gets the chance to enact his agenda, or whether he’s beaten down by both the Germans and markets when he (as seems likely) becomes President of France, is another thing. That can be what we look forward to next perhaps.

Get in Touch

I will of course return with my next market update next week.

If you would like a no-obligation quote for transferring your money to Spain, don’t hesitate to fill in your details here. One of our dealers at Pure FX would be delighted to provide an in-depth response to your query, free of charge.

*There must be dozens of journalists that have used this pun this week. Oh well!!

Peter Lavelle – foreign exchange specialist at Pure FX