“Balearics has taken measures to improve the quality of tourism”

You know the Balearics well. How do you view the current economic situation here?
Due to various factors, it has had to undergo a period of adjustment and transition. Traditionally, Majorca has capitalised on her strategic position. As for prices, it's no longer the low cost place it once was. The Balearics now have competition from other holiday destinations which appeal to northern European tourism. Everything considered, Majorca enjoys a unique situation and it will only be a short while before it successfully adjusts to promoting its advantages. It will recover the prosperity to which it has become accustomed.

Excessive numbers of tourists. Does this pose a threat to the future of the Balearics?
Fortunately, there is still plenty of natural beauty left in Majorca. Perhaps the problem hasn't so much been with excessive numbers of tourists, but the contrary. What's happened is that, in a market where price rules, Majorca ceased to be as competitive as it was ten years ago. Fall in the market is not just related to numbers of visitors, but also to the amount that tourists spend individually. The initial impact of measures that are being taken at the moment will mean that there will be a decline in the sector, but in the medium and long term, the quality of tourism will continue to improve.

There are those who support the idea of urgently opening up the islands to other markets, other economic activities that don't depend so much on tourism. What form would such activities take?

I view the answer to this question as having a great deal to do with retirement properties for northern Europeans, and all the support facilities that accompany this market; medical services and so forth. I believe there will be a growing demand in this area because Europe doesn't offer too many places with an attractive climate and safe infrastructure.

What do you think about the repeal of the Tourist Tax?
The impression I get as an outsider is that it was very badly set up. It had more to do with image than with fund sourcing. When you set off on the wrong foot like that, it's no good forcing an issue in one direction. I see “the about-turn” as a positive step.

We'll move on to world economy. What is your judgment of the current situation and what short and medium term developments do you envisage?
The signs look quite good. There's evidence of recovery and improved consumption levels. Figures indicate that although the dizzy heights of the mid 1990s won't be relived, there will be strengthening and recuperation. In Great Britain, they have a more favourable position. Germany, which has managed to ride out its difficulties, is also recovering. The movement of foreign exchange, in some form, could upset the balance a little. Everything looks, however, that we are moving in acceptable economic circles.

What, in your view, is the best hope for small investors?
The term “small investors” is not very specific. Generally, in Spain, financial figures in their widely used form are adquate for stock market investors. Nowadays, I believe that medium-sized investors are quite cautious, which is perfectly normal following 3 to 4 years of poor trading. As the economy improves and the world becomes a better place, the prospect of measured risk will become more attractive.

On 9 October, you are going to lead a conference on low risk investment.
GLG Partners, as finance managers, offer widely differing investment products. One such option is a fund that has been established for several years with a medium-level risk attached to it. I will explain at the conference how this functions and the reasons why it behaves as it does, and what one can expect from it in the future.

Do you find the devaluation of the Pound Sterling against the Euro worrying, especially in the Balearics due to its dependence on the United Kingdom as a client market?

It will inevitably affect the amount that the British will spend on holiday. But those people will have to leave their country if they want a holiday on the Continent. It's not a question of the exchange being particularly disadvantageous to the Balearics because the the Euro is the currency in most countries across Europe.

The high cost of housing in Spain has become a major economic issue, especially for young people. How do you see this situation?
Investment in housing and in the stock market are two very different matters. Prices have risen a great deal because bank rates have fallen. The problem will arrive when the rates go up significantly, since many mortgages are financed in the short term. Well, if rates go up it will be because the economy is improving. My advice is to plan carefully.

In economic terms, what positive and negative aspects are implied by globalisation?
Globalisation, in the long term, is good for all of us. But in the short term, you have to be careful of how wealth is shared out.
One speculates, and it would seem not without cause, that the motives of wars waged by the United States of America and its allies, Spain amongst them, are driven chiefly by economic forces.

Economic causes, yes, but legally acceptable ones. In the same way that there are rich and poor in the world, there are also democracies and dictatorships. We are part of the democratic world, and we believe in its underlying principles. At an economic level, while democracy generates wealth in the country in question, I believe that the code of freedom of choice is what it's about.