Tuesday, October 30, 2012
Spain retail sales decimated by VAT hike
Spanish retail sales fell at their fastest pace on record in September as already battered consumer confidence took another hit from a hike in value added tax, driving many shoppers to trade down to cheaper products. Sales fell 10.9 percent year on year, Monday's National Statistics Institute data showed, reflecting an economy struggling through its second recession in three years and plagued by chronically high unemployment.
The drop was the biggest in calendar-adjusted terms since current records began in January 2004, and marked the 27th monthly decline in a row. Spain has been in recession since the first quarter of the year and is not likely to grow again until late in 2013, according to official estimates that many economists consider optimistic.
The country had the highest unemployment rate in the European Union in August - 25.1 percent - according to EU data. That figure is expected to rise further as a large public deficit forces the government to implement deeper spending cuts and further tax hikes to persuade markets it can control its finances. It increased sales tax on September 1. Read more >>