The More Things Change...

Having been away for a week, it doesn’t look as if I’ve missed much.  The Euro-zone is still on the brink, of what I’m not sure.  The UK economy is still tanking, with Osborne still intent on blaming all sundry… except his own insane debt reduction plans.  Worse still, Osborne last week decided to sell Northern Rock (or at least the half of it that is profitable) to Virgin Money.  If the timing was somewhat amiss, then the price revealed the full extent of Osborne’s misjudgement.

Even if, as the Treasury suggests, there was a deadline for the sale of Northern Rock, then there was still over 2 years left until this deadline, 2 years to get a better deal than the £747 million (plus a possible £280 million).  This is an issue worth returning too.

Building projects have also suffered in this recession, this project is in Golf De Sur.

One of Osborne’s targets has been the Eurozone countries, who he believes has been dragging Britain down.  Yet this blog has been making the case that economic difficulties here have had an adverse affect on Euro-zone countries.  Greece, Portugal & Spain are all countries popular with British holidaymakers.  They are all also countries who would be adversely affected by the trend for “Stay-cation” holidays.  Assuming that each plane holds about 250 people, and that each person spends €300, then each plane brings €75,000 to that particular countries economy.

At street level, the similarities to Britain are striking.  Prices have crept up, goods are becoming more and more expensive.  As an example, when we went to Tenerife over two years ago we had a fight with a restaurant (Pata De Ouro in San Blas) for charging €4 for a glass of Coke (on our previous visit in September 2008, this was €2.70).  At the time this was by far the most expensive price for soft drinks we had come across.  Last week, the average for a glass was between €3-3.70, and prices for soft drinks were not advertised.

In Britain, there seems to be a split between businesses who pass on price rises to customers, and businesses who freeze prices (or go for deals) to keep people coming through the door.  In Tenerife, most businesses seem to have gone down the former route. There are a few exceptions, but these are few and far between – with most going down the route of catering to the masses (in terms of who their core market is – British holidaymakers).  For people looking to sample Canarian food, the advice then is to bring plenty of cash or be prepared to hunt for a good restaurant.  Oh and be wary of aggressive vendors.

The street markets have become more aggressive too, with more chat from the vendors (“Lookey…  Lookey…  Lookey” added to the likes of “Cheep as chips” and “Asda price”).  One look at an item will see a vendor speak to you and not leave you alone to decide whether to buy.  Having said that, the most outrageous reaction to a non sale came from Tip Top Regalos in Los Cristianos – their reaction to us not buying the items they offered (as opposed to the items we were interested in) was spiteful and over the top, beware!

The economic position of both countries might be similar, and rooted in similar causes.  When looking at Osborne’s readiness to blame EU countries for our downfall, its worth reminding ourselves that there are people in Spain, Portugal and Greece suffering the same alarming erosion in their standard of living that we are going through – at the behest of the EU, the IMF and other economic think tanks it has to be said. 

Before we become all smug and pious about the debt position of various countries, we should certainly remind ourselves of the policy which led to 125% mortgages, to banks lending without due diligence and to financial companies creating products with little understanding of how they work.  We should remind ourselves of Light touch regulation and how we in Britain let it happen.