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MONEY

How Spain’s cost of living increase is worse than in France and Germany

Eurostat data reveals that Spain is the major EU economy where people are having to deal with the biggest rise in prices, from electricity and fuel, to food and travel costs. 

spain inflation cost of living
The Spanish government has implemented measures aimed at stopping the spiralling costs of electricity, fuel and rent, but the evidence suggests that they haven't been fully effective. (Photo by Gabriel BOUYS / AFP)

Although the price of goods and services has risen exponentially across the European Union over the past year, the EU’s Harmonised Index of Consumer Prices (HICP) showcases how Spain is where the cost difference is greatest, especially when looking at the EU’s largest economies: Germany, France, Italy and Spain. 

The HICP represents the change over time in the prices of consumer goods and services purchased by euro area households.

It’s “harmonised” because all the countries in the EU follow the same methodology, ensuring that the data for one country can be compared with the data for another.

Spain is moving past most of its European neighbours in terms of this harmonised inflation rate. It’s 1.8 percent higher than that of the eurozone and 0.9 percent above the EU average.

Spain’s HICP stood at 10.7 percent in July compared to 6.8 percent in France, 8.4 percent in Italy or 8.5 percent in Germany.

Source: Eurostat

There are 13 other EU nations where the HICP is higher than Spain’s (including Lithuania, Latvia and Estonia where the rate is now above 20 percent), but these are deemed smaller EU economies. 

Based on data from Spain’s National Statistics Institute, the biggest price increases in July 2022 compared to figures from July 2021 were electricity (49 percent more expensive), hotels (33.8 percent more costly), fuel and gas (23.9 percent higher), international flights (+21.6 percent) and grocery shopping (+13.5 percent).

The Spanish government has implemented measures aimed at stopping the spiralling costs of electricity, fuel and rent, but the evidence suggests that they have been less effective than similar methods used in the EU’s other major economies, despite the fact that Spain is less dependent on Russian gas. 

According to Spanish think tank Funcas, the country’s inflation rate will remain in double digits throughout August and will start to drop throughout autumn until reaching 8 percent by December. 

INE reported in mid-July that the country’s 10.2 inflation rate was the highest level the country had experienced since 1985

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MONEY

Britain fines Spain’s Santander over money laundering failures

Britain on Friday hit the UK arm of Spanish banking giant Santander with a fine of almost £108 million (€125 million) after uncovering "serious and persistent gaps" in anti-money laundering controls.

Britain fines Spain's Santander over money laundering failures

The Financial Conduct Authority (FCA) said in a statement that it had concluded that Santander UK plc “failed to properly oversee and manage its anti-money laundering (AML) systems” between December 2012 and October 2017.

The failures affected more than 560,000 business customers.

Santander did not dispute the findings and therefore qualified for a 30-percent discount, otherwise the fine would have totalled nearly £154 million.

“Santander’s poor management of their AML systems and their inadequate attempts to address the problems created a prolonged and severe risk of money laundering and financial crime,” added Mark Steward, FCA executive director of enforcement and market oversight.

“As part of our commitment to prevent and reduce financial crime, we continue to take action against firms which fail to operate proper anti-money laundering controls.”

In response, Santander UK accepted the conclusions and apologised, adding it had cooperated fully.

“Santander takes its responsibilities regarding financial crime extremely seriously,” said CEO Mike Regnier in a separate statement.

“We are very sorry for the historical AML related controls issues in our business banking division.”

He stressed that Santander UK had taken action to address the issues once they were identified, but added that its systems should have been stronger.

“We have since made significant changes to address this by overhauling our financial crime technology, systems and processes.”

The division now has more than 4,400 staff who focus on financial crime prevention, which is a key focus for Spanish parent Santander. 

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