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Sunday, April 23, 2006

Stretching the Euro

Spain used to be the country where one could live well for a fraction of the costs in Northern Europe. The foreign owners in Spain were stretching their pension payments.
This is no longer so, specially after the introduction of the Euro, that many owners of restaurants, bars and shops simplified by calculating the Euro at 100 of the old Pesetas, instead of the official exchange rate of 166.

In the meantime many new and bigger supermarkets have pushed out the small shops, launching great publicity campaigns to attract clients, and inventing all the time new “special offers” to confuse the buyers.

The Spanish consumer organisation OCU has placed the prices of the different supermarket chains under their magnifying glass, and arrived at interesting conclusions of great interest also to the foreigners living in Spain.

Model of valuation

OCU has grouped the prices of the supermarket chains in two groups: What you pay for brand products, and the prices of products on offer. We have to add that some of the chains are not represented all over the country. Some can be found only in the north, others are stronger in the south, some go for the bigger cities, others for the smaller villages.

The investigators gave the chain with the lowest prices in each of the two group the valuation 100, and then ranked the others in relation to that chain. They found that Cuenca is the place in Spain with the lowest prices. Pamplona is 11% more expensive.
Teruel, an inland province, has the cheapest fish, no one can beat Soria when it comes to fruits and vegetables. That the supermarkets in Avila, a province famous for its cattle, has the best prices on meat, is more logical.

The most expensive supermarkets can be found in the towns of Pamplona (Navarra), Las Palmas (Canary Islands), Bilbao (Vizcaya) and San Sebastian (Guipuzcoa).

The ranking

For brand products, Supermarkets Dani is ranked as the cheapest, with 100 points, followed by Alimerka (106), Herbu (107) and Alcampo (108). Mercadona and Carrefour have both a respectable rating of 110, Intermarche 111, Eroski 112 and Caprabo 119. Almost at the bottom of the ranking can be found El Corte Ingles med 127 points.

When it comes to prices on special offers, the difference between the cheapest and the most expensive goods is even clearer. The best prices were found in Plus Supermarkets, given 100 points, followed by Carrrefour (106), Lidl (107), Aldi (110). Alcampo (114), Dia and Eroski (116), Intermarche (118) and Mercadona (120). Again, the Corte Ingles is almost at the bottom of the ranking, with 173 points.

Sunday, April 16, 2006


At Spain’s peak as a world power (from 16th to 18th century) the gold and silver taken from America and brought into the economy over Seville laid the foundations for the defeat, dissolution and financial collapse of the country.

After the second world war Spain started to come out of its poverty due to two sources of foreign income: the emigrants going to Northern Europe to work and sending home hard currency, and the trickle of foreign tourists going south to spend their income.

While the Spanish emigrants returned home or stayed with their families in the north, a great number of immigrants from the third world is coming into Spain and sending savings back to their families.

Tourism gathered momentum over the years and become the most important economical sector in the country, creating jobs, economical growth and an enormous surplus on the foreign currency balance.

From Spain joined the Common Market in 1986, a new river of gold poured into the country. Over the years Spain has received half of all money paid out from Brussels to
bring less developed member countries up to the EU average. That stream is drying out soon, and Spain is expected to contribute to the development of the new member countries in the east.

Foreign tourism has stagnated at the 50 million visitors mark. A great part of what is statistically labelled as “tourists” is in reality the foreign property buyers and owners. The hotel tourism is diminishing, the tourists staying fewer days and spending less money. The foreign currency balance is deteriorating by months, as the Spanish import more and export less. And the purchase of property along the coasts of Spain is taking a dip, while the foreign buyers look for more economically priced properties along other shores.

Has Spain learned its lessons from the period of “the gold from America”? Has it used the funds pouring in to lay the foundation for a modern production? Has it changed its tourist model to adapt to the new situation? Has it done anything to maintain the retired property owners wanting to spend their pensions in the south?

Maybe we shall have an answer to our questions very soon.