Investments and wages to fall

The sharp increases in fuel prices and the weak Euro on international currency markets is putting the brakes on the Spanish economy and will slow down regional and national economies next year. According to the chairperson of the INE Balearic Statistics Institute, Carmen Alcaide, fuel and the Euro are the two key economic factors which the government will have to take in to full account in 2001 with regards to the rate of inflation. However, according to a study of the domestic economy carried out by INE, the deceleration of the Spanish economy will not produce a cycle of change, but there will be a fall in wages, consumption and investments. While a slowing in the Spanish economy will not have a marked effect on the mainland, in the Balearics, where the economy has been growing at a rate which has alarmed economists and the local government over the past two years, the end of the economic boom will have serious consequences, some of which are already being felt, in particular on the high streets. Consumers also feel held to ransom because although the Balearics has the most expensive fuel in Spain, with winter upon us, the demand for fuel, especially for heating, is going to increase. Yesterday local economists and statisticians gathered in Mahon for a mini-summit and from the start of next year more wide ranging examinations and studies of the Balearics economy as a whole and on each individual island are to be carried out in order to keep a close check on the development of the economy. A study is also going to be carried out in to the effects of the controversial tourist tax which the Balearic government is hoping to introduce ahead of next summer season to generate extra funds for the protection and management of the environment.