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Spain's Vicious Circle

By Mr Grumpy - Mon 7th Jan 2013

Over the course of the last 3 weeks somebody in Government, high up in their Ivory Tower and with their heads lodged firmly up their well-fed arses, has yet again taken the decision to continue with the infamous "Spanish Vicious Circle".

On the 22nd of December it was reported how the cost of Electricity in Spain would increase by 3% from the 1st of January 2013. This came following increases of 4% in April and 7% in July. In October prices fell by 2.4%, however this went pretty much unnoticed due to the rate of IVA for Electricity being hiked from 18% to 21% in the September.

To make matters worse October's increase was backdated to March - forcing consumers to pay extra on bills they had long since settled.

However, news of these increases followed an announcement by National Grid Operator, REE, that in July 2012 demand fell by 2.4% compared with the same month in 2011 to 21,646 gigawatt hours. This compared with consumption of 20,655 gigawatt hours in June. For the first 7 months of the year, demand was down 1.7% from the same period in 2011.

And then there are the toll roads.

On the 11th of November the Ministry of Public Works announced that traffic on the country's toll roads during the first 6 months of 2012 was 9% down on the same period in 2011. It was also reported to be 27% down on 2006 levels.

The Government's response to this ? - To increase tolls by an average of 2.4% as from the 1st of January 2013.

The cost of living increases, the rate of inflation increases, unemployment levels increase - all resulting in a lack of money and a fall in consumer demand for various services.

Why can't the Government realise that they are simply trying to get more and funds from fewer and fewer consumers ? And that the more they squeeze, the more demand is likely to fall.

And if an idiot like me can grasp that concept, why can’t those in Government ?

Comment on this Blog

How annoyingly obvious, and yet that never even occured to me ! ... the old "Connections with those in Power"... I especially liked this weekend's news that Rodrigo Rato, perhaps the most hated man in Spain, has landed a nice job with Movistar whist Millions are jobless and hungry at his expense.
Mr Grumpy - Mon, 7th Jan 2013
Be calm. Inspire... Expire... Think... Iberdrola... Felipe González... Gas Natural... José Mª Aznar... Movistar... Eduardo Zaplana & Rodrigo Rato. Inspire... Expire... Now, you can vomit
Rodrigo González - Mon, 7th Jan 2013

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