Take 5 and come back tomorrow (7/3/25) Markets Taxes ACS Pensions Budgets
None of what follows is investment advice.
Market environment: If you think you know what’s going on, you probably don’t have all the information – (Asia-Pacific markets declined as do European equities with US futures fluctuating) – Asia-Pacific markets and European equities fell due to continued geopolitical uncertainty and confusion over the US tariff situation. US futures fluctuate.
Response to the crisis: If you can’t beat them, join them – (Regional governments stop adjusting the personal income tax for inflation (Expansion p22) – The central government has not adjusted for inflation (during a high inflation period) its portion of the Personal Income Tax for years, which has resulted in a significant rise in tax collection with minimum controversy. Some of the regions had made the correction on principle and unsuccessfully tried to extract PR points from the stance but seem to have reached the conclusion that if you can’t beat them you should join them.
ACS: If at first you don’t succeed try again, then give up, there’s no point in being a damn fool about it ?– (Abertis gives up on fighting the Government for the €4.3bn related to the AP-7 motorway (El Economista p8) – The dispute originates in an agreement between Abertis and the Spanish government whereby the former carried out investments in the AP-7 toll road, in return for a “guaranteed traffic”, with the difference between the real and guaranteed traffic having grown into a €4.3bn claim. However, Spain’s Supreme Court rejected most of the claims in January 2024 and what Abertis is doing now is giving up on pursuing its claim to still higher courts (Spain’s Constitutional Tribunal and the European Justice Tribunal). So, this is a negative but unlikely to have much of an impact on ACS (which owns a 30% direct stake and a further 20% vis Hochtief).
Pensions: On life support – (Over one third of regions have less than two affiliates to Social Security per pensioner (El Economista p26) – Spain already has a weak proportion between contributors to Social Security and pensioners (2.27 contributors per pensioner), which has not improved recently despite the growth in Social Security affiliations, and has a negative outlook given the Country’s demographics. ?But this is even worse at certain regions, whose pensioners are being even more subsidised than the average. The main positive, if it can be regarded that way, is that it could make it more difficult for some of those regions, such as the Basque country (1.92 workers per pensioner), to make a push for independence.
Budgets: Hold this for me – (The public sector payment period exceeds that of corporates for the first time since 2014 (Expansion p29) – Late payment by the public sector is a way to fund the budget deficit via “supplier financing” (whether by delaying the budget recognition of the work carried out or by simply taking longer to pay), with the impact being more significant the higher the level of interest rates (as the suppliers have to finance the amounts in the meantime).
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