Editors desk, June 2009

So, Ryanair is good enough for the Queen of Spain!

Reports last month that the Spanish Queen flew back and forth to London, (and for €15) have sent the media into a tizz! Why?

At 70 years she gave a lesson in austerity amid an economic crisis when she flew on a budget airline, something that politicians, Spanish and English, could and should learn from, well done your RH. Ryanair in the meantime commented, ‘Ryanair is Spain's second largest airline and all Ryanair passengers are treated like kings and queens at Europe's lowest prices.'

Speaking of austerity, the BBVA, one of Spain's largest banks has forecast that housing prices in Spain will fall nearly 30 percent between now and 2011 before they start to recover from the collapse of a property boom. Saying prices would fall by 10 percent this year and 12 percent in 2010.

The plunge in housing sales also led to a 3.2 percent drop in house prices in 2008, according to government statistics. But some sector specialists put the fall in prices last year at up to 8.8 percent.

Meanwhile, Spain's immigrant population has reached 5.6 million.

The number of foreigners rose by almost 330,000 last year, but the latest figures show a noticeable decline in immigrants as Spain sinks deeper into recession. The largest numbers of new arrivals coming from Romania, Morocco and Britain. 40.5 percent of them from other European Union countries, the national statistics institute said.

Foreigners accounted for 12 percent of Spain's total population of 46,661,950, up from 11.3 percent in the previous year, it said in a statement. Romanians make up Spain's largest foreign community with 796,576 members, followed by Moroccans with 710,401 members and Ecuadorians with 413,715. The British make up Spain's fourth largest foreign community with 374,600 members, most of them found on the country's sunny Mediterranean coast.

Finally, Spanish prime minister, José Luis Rodríguez Zapatero, has the legerdemain of a magician. In last month's state-of-the-nation debate, he plucked many rabbits from the hat: a laptop for every schoolchild, €2,000 for new-car buyers, tax cuts for small businesses who held on to employees. Mr Zapatero did not explain how to pay for all this in a deep recession, but his was a bewitching performance. In a poll asking who won the debate, he beat the opposition People's Party (PP) leader, Mariano Rajoy. With unemployment fast heading towards 20%, this represents a Houdini-like escape from the frustration of many Spaniards and foreigners.

The problem is that Mr Zapatero is in no position to make big promises. He heads a minority Socialist government. It cannot pass laws without smaller parties. And he does not control the revenues of regional governments that must help to pay for his headline-grabbing schemes. Indeed, when parliament voted on them, they had been watered down into vague plans for the future. It was further proof of Mr Zapatero's political weakness.

Some of Mr Zapatero's measures were gimmicky, but others were promising. A proposal to abolish tax breaks on mortgages for the better off is politically brave. It marries fiscal austerity with the removal of a subsidy that has long pushed up house prices. And putting the change off until 2011 might encourage buyers to mop up some of the million unsold homes on the market.

A new, unknown centre party, Rosa Díez's Union for Progress and Democracy (UPyD), threatens to upset the old two party system.

Ms Díez, a former Socialist, refuses to define herself along the left-right axis, claiming it has become meaningless. But she is firmly positioned on the other axis that runs through Spanish politics, the balance of power between central government and the regions. Ms Díez, a Basque, is militantly centralist. She believes regional governments have too much power and wants to claw back central control over, for example, education. ‘A lot of Spaniards now feel that the state itself needs defending,' she says.

Her pitch works both on discontented leftists who see Spain's regions as a driver of inequality and on former PP voters worried that their party has shifted too far right.

Ms Díez's aim is for the UPyD to come third in the European election, displacing the communist-led United Left. For his part Mr Zapatero talks of a deal with unions and employers to transform Spain's bricks-and-mortar economy into a knowledge-based one. He will need more than a magician's hat to pull that off.

Welcome to June, welcome to Streetwise on-line!

Bill Dinsmor, Editor