Housing: solving young people's dilemma

Only 15.8% of the young population is emancipated, the worst figure in decades. Youth unemployment and housing prices are the two main reasons for this. Now, the government is trying to find a solution through a new housing law. But will it be enough? We talk to the experts.

In Spain, almost half of young people aged between 16 and 29 who live in independent housing do so in shared rented accommodation. If they want to live on their own, the price to be paid represents 91.6% of their salary and, if they want to take out a mortgage, they need to set aside at least 55.1% of their salary. Although buying a home may seem more affordable on the surface, the reality is that the mortgage market is closed to young people. They neither have sufficient savings to cover the initial outlay, nor do they have job stability. This is what the Spanish Youth Council states in its annual study for 2020.

Housing continues to be the big headache for young people who want to become independent. That is why, in an attempt to tackle this scenario, the government of Pedro Sánchez has announced a new Housing Law, which should limit rental prices and favour young people’s access to decent housing. In 11Onze we have analysed the proposed regulation with the Tenants’ Union and the president of the Consell Nacional de Joventut de Catalunya (CNJC), Guillermo Chirino. 

When the law falls short

In an emergency situation like the current one, in which the rate of youth emancipation has reached historic lows, Chirino considers that ‘political action cannot wait’. However, he warns that, if the law takes 12 or 18 months to be passed, as is usual, this gives landlords room to raise rental prices and, therefore, the effectiveness of the measure falls short. The president of the CNJC also warns that the government has already pointed out that the law’s aid would be limited to those young people who work. ‘This alone rules out more than 50% of young people,’ laments Chirino. Moreover, the politicians declared that the aid would reach some 50,000 young people, that is, only 1% of young people in the State.

‘Obviously, this law will not solve anything or facilitate the emancipation of young people’, criticise sources from the Union of Villages, who add that they are not in favour of financing the payment of housing for young people with aid. ‘It allows the landlord to think that, if young people can pay more, then it is not necessary to lower the price, but they can even raise it’, they argue.

The inspiration of the Catalan model

As far as rent regulation is concerned, the proposal is inspired by the Catalan law, the only legislative proposal in force in Spain. This is explained by the Tenants’ Union, who, together with the Tenants’ Union, have worked intensively on the Catalan law and have fought to bring it to the national level. However, the Tenants’ Union warns that the differences between the Spanish government’s proposal and the Catalan one are substantial and put at risk the effectiveness of the measure in the whole of Spain.

To begin with, the Catalan law establishes a rental price index, which assures tenants that, if they sign or renew a contract, the price remains the same as in the previous contract. Moreover, if the price is above this reference index, it must be lowered. The index is calculated on the basis of the average of rental prices for dwellings with similar characteristics and within a specific area. In contrast, in the Spanish government’s proposal, only legal landlords, i.e. companies with more than ten properties, would be obliged to reduce the rental price.

‘In cities like Barcelona, the concentration of ownership is very high, but only 30% of rental housing is legally owned. Most are owned by individuals who, despite owning more than ten homes, would not be obliged to reduce the rent’, warns thethe Tenants’ Union. In the rest of the Catalan municipalities, where the concentration of property ownership is lower, this measure is, in their opinion, ‘totally decaffeinated’.

On the other hand, it seems that the application of the reduction will be discretionary, leaving it up to each autonomous region and even each municipality to decide. On the contrary, Chirino argues that, if it is a public measure, ‘it should be binding for all, as otherwise it can generate inequality and territorial inequity’.

A dignified life for young people

Beyond the regulations on the price of rent, the new law should make a series of aids available to young people. But the difficulties of emancipation do not seem to have a definitive solution. To begin with, although housing should not account for more than 30% of a person’s salary to ensure a decent life, the reality is that prices are skyrocketing and salaries are too low.

Thus, if the average salary of young people in employment in Spain is 969 euros, the amount that should be spent on housing should not exceed 290 euros per month. However, the average rental price is 880 euros per month and, in certain areas of the state, such as Barcelona and its metropolitan area, the figure exceeds 1,000 euros. So, how can we help young people to emancipate themselves?

The Tenants’ Union s believes that, in order to facilitate emancipation, it is necessary to get to the root of the problem: ‘We must ensure that all rental housing lowers its price and facilitates access to vulnerable groups. In Catalonia, many housing collectives are calling for a public rental housing stock at affordable prices. It is not a question of building more, but of recovering housing and ensuring that large owners allocate part of it to social renting’, they argue.

The CNJC has also set up tenant self-defence workshops to detect the difficulties faced by young people and try to find answers. ‘In Catalonia, we already have a law regulating rental prices that has been incredibly effective. It has reduced rental prices in those areas where it has been applied and has also improved confidence in renting’, they argue. Now, they believe, what is needed is to improve this Catalan regulation and extend it to the whole territory. ‘We still have a long way to go,’ they say.

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The economic gears are grinding ever tighter. Rising energy prices are pushing up production costs, while runaway inflation is holding back consumption and rising interest rates are making credit more expensive for businesses and families.

August was the month with the most expensive electricity in history in Catalonia, as the average price on the wholesale market was 307.80 euros/MWh, according to data from the Iberian Electricity Market Operator (OMIE). And this happens despite the application of the “Iberian exception” since June in Spain and Portugal, which has decoupled gas from the wholesale electricity market to reduce its price. In short, electricity has become 190% more expensive than one year ago and the price has risen by 585% compared to two years ago.

The prices of all fuels have soared because of the war in Ukraine and countries such as Germany and the Netherlands have already had to resort to coal to partly compensate for the problems with gas and oil supplies.

Rising energy prices are causing companies’ production costs to rise exponentially across Europe. The Industrial Price Index (IPRI), which measures the evolution of the prices of products manufactured in Spain and sold on the domestic market in the first stage of their commercialisation, indicates that in July 2022 they were 40% more expensive than the previous year. Of this increase, more than half is directly due to the rise of energy prices. In Germany, data for August reflect a 45% increase in industrial prices compared to the same month in 2021.

In this situation, companies are faced with the dilemma of either passing on the cost increase to the end consumer, thus running the risk of losing sales, or reducing their margins, thus also losing out. In short, there is no good decision, the optimal decision is the least bad one.

Double-digit inflation

A second problem gripping the economy is runaway inflation. In Catalonia, the year-on-year variation stood at 10.2 % in August, reaching a double-digit increase for the second consecutive month.

In addition to energy, food prices have also soared, mainly due to fuel and fertiliser costs, which could increase by up to 70 % this year. Globally, agricultural commodity prices are expected to rise by 18% by 2022. And the increases are particularly affecting staples such as tomatoes, meat, oil and milk.

Sustained food shortages and high prices could lead to malnutrition problems for millions of people and popular revolts. Indeed, riots have already occurred in Sri Lanka and Peru, and countries such as Turkey and Egypt could follow in their footsteps.

However, not all the responsibility for the rise in inflation lies with food and energy, which are the products with the most volatile values: core inflation, which does not take these product categories into account, is already close to 6 % in Catalonia.

Of course, in addition to devaluing our savings, the increase in inflation means a loss of purchasing power for citizens, which hampers consumption and further strangles the market for companies. Thus, a second burden falls on the economy.

Rising interest rates

Faced with escalating inflation, most central banks have been forced to raise interest rates to cool the economy, pushed by the aggressive monetary policy of the United States, which has just raised them by 0.75 % for the third time this year. And that has traditionally led to more difficulties in Europe and financial crises in emerging markets and developing economies.

So far, the European Central Bank has raised interest rates by 1.25 % in just over two months and is expected to raise them further at its next meetings. This rise in interest rates is further stifling the economy, as it makes both the credit needed by companies to invest and innovate and consumer credit, which is essential to stimulate certain markets, more expensive. 

In short, with the rise in interest rates, a third burden is falling on the gears of the economy. It is therefore not surprising that in August some 20,000 SMEs disappeared in Spain and that up to 90,000 are in technical bankruptcy, as indicated by the latest barometer of the General Council of Associations of Administrative Managers of Spain. And the forecasts for the coming months are not optimistic, as some 700,000 have liquidity problems.

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High inflation has forced the European Central Bank to raise interest rates higher than expected. And more rate hikes are expected in the coming months. The question is how much they will increase and to what extent they will affect the Eurozone’s economic performance.

The new interest rates approved last week by the European Central Bank come into force today. Although the increase was expected to be 0.25%, the institution chaired by Christine Lagarde surprised the markets with a rise of 0.50%. This is the first increase in 11 years and the largest since 2000.

The ECB Governing Council’s decision affects the three key interest rates, bringing the rate on the main refinancing operations to 0.50 %, the marginal lending facility to 0.75 % and the deposit facility to 0.00 %.

With this decision, the ECB joins the majority of central banks in the world, which in recent months have already taken the step of increasing their interest rates to combat rising prices. The dismal inflation data, which in June reached 8.6% in the eurozone, have pushed the ECB to make a larger increase than expected. Also the sharp rise in interest rates in countries such as the US, which has raised rates three times since May, and the weakness of the euro have influenced the decision.

How will interest rates evolve?

Everything indicates that interest rates will continue to rise in the coming months, although the percentage will be decided “meeting by meeting”, according to the European banking regulator. The aim is to return to rates of “2% inflation in the medium term”.

Analysts speculate that the interest rate range could be between 1% and 3% next year. As a reference, the governor of the Bank of France, François Villeroy de Galhau, recently estimated that it could be between 1% and 2%.

In any case, the ECB seems determined to prioritise the containment of inflation, even if the rise in interest rates ends up generating a recession in some eurozone countries. In fact, there are already those who consider that provoking a recession is the only realistic formula for bringing inflation back to reasonable levels.

It should be borne in mind that higher interest rates will make borrowing more expensive for both individuals (including mortgages) and companies. It should therefore reduce private consumption and corporate investments, which will cool the economy.

For the time being, all indications are that the next rate hike will take place in September, when the ECB Governing Council meets again. Beyond that date, Lagarde only indicated that, “if we see inflation stabilising at 2% over the medium term, a progressive further normalisation of interest rates towards a neutral rate will be appropriate”. 

Risk premiums under scrutiny

The first to suffer from higher interest rates are the risk premia on the debt of the most vulnerable eurozone countries: Greece, Italy, Spain and Portugal. Faced with the possibility of an economic recession triggered by the rise in interest rates, investors are increasingly reluctant to buy the debt of the countries with the weakest economies.

For this reason, the ECB has accompanied the announcement of the rate hike with that of the creation of the TTIP [Instrument for the Protection of the Transmission of Monetary Policy], a mechanism to prevent the risk premiums of peripheral countries from soaring and the financial fragmentation of the euro zone from occurring. We cannot forget the unstable situation in Italy, for example, with the resignation a few days ago of Mario Draghi as prime minister and the call for elections.

The ECB states that this TPI “will be an addition to the Governing Council’s toolkit, and can be activated to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area. It adds that the magnitude of TPI purchases will depend “on the severity of the risks facing policy transmission”. In any case, the ECB intends this tool to be a last resort, as the first line of defence will be the “flexible” reinvestment of the sovereign bonds it now holds in its portfolio. 

Moreover, this intervention will not be without conditions, as the “rescued” countries will have to comply with the commitments and reforms set by the Recovery Fund and the various EU recommendations.

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Throughout the history of mankind, empires have collapsed, many economic systems have failed and dozens of currencies have collapsed. However, gold has always been a safe haven to protect assets and wealth. At 11Onze we have a look at the history of the value of gold.

This history of wealth and gold begins around 3000 BC. The ancient Egyptians were the first to create jewellery from this precious metal. However, it was not until the 6th century BC that gold began to be used as a currency. This was the work of merchants, who were looking for a model that would allow them to standardise their transactions.

This model using gold became hegemonic in the known world, whether in Europe, Africa, Asia, or America. Gold became a true symbol of wealth and heritage. And, little by little, ways of refining this system were sought. The first time the value of a coin that is still in circulation was standardised to represent the government of a country was in Great Britain around 1066. Thus, the pound sterling was given its name.

And it was precisely on the pound sterling that the gold standard was first established. But it was not until many centuries later, according to historians. In 1717, the first gold standard was established by none other than Isaac Newton. It is the scientist who, in an essay on the monetary system, establishes a ratio of gold to silver that defines a relationship between gold coins and the silver penny that should be the standard unit of account in the Law of Queen Anne of Great Britain.

However, a true gold standard requires that there be a source of legal tender notes and coins, and that this source be supported by convertibility into gold. And this did not happen in England until David Hume developed the gold standard system in 1752. From then on, this gold standard spread to the rest of the world and became the characteristic monetary system of the 19th century.

Thus, the gold standard established that a country’s currency was fully convertible into grams of gold, i.e. it standardised the proportion of gold in each of the coins in circulation. In fact, central banks were obliged to exchange currency into gold if a citizen asked them to do so. And, in addition, there was free movement of capital, i.e. individuals could export and import capital in gold, often represented in paper money rather than cash.

Although the dollar was already a Spanish currency in circulation in the Americas, it was not until 20 years after its founding in 1792 that the United States also adopted the gold standard to mint the US dollar and, in doing so, gained prominence in the monetary world. However, after World War I and the crash of 1929 and the Great Depression, many countries decided to abandon the gold standard in order to devalue their currencies and recover an economy that was going from bad to worse.

The end of the gold standard

The 1944 Bretton Woods conference led the way: it was agreed that all currencies would be pegged to the dollar, with the condition that the dollar be kept at a fixed exchange rate with the price of gold. However, the model lasted a scant 30 years, until 1971, when President Richard Nixon ended the gold standard in order to reflate the American economy during the Vietnam War, just as other governments had done before him in the wake of the crash of 1929.

From that moment on, the dollar and the rest of the world’s currencies, including cryptocurrencies such as bitcoin, are what is known as fiat currencies, i.e. they depend entirely on the trust we place in them, as Jordi Sánchez, product manager at 11Onze, explained in La Plaça. Therefore, they are not backed by precious metals and this makes them more unstable.

In fact, the end of the gold standard is, for many experts, the beginning of the perversion of the entire monetary system, which prints banknotes when it suits it, and which means that, at present, the value of the dollar is oversized and causes turbulence in the economy that could trigger a global debt crisis. This is why gold is once again the safe haven that provides investors with protection.

Protecting yourself and avoiding gold bubbles

Gold has never ceased to be important in the global economy. For example, the balance sheets of European central banks such as the European Central Bank (ECB), the US Federal Reserve and the Bank of England, and international organisations such as the International Monetary Fund (IMF) must hold approximately one fifth of the world’s gold reserves. This prevents gold bubbles and controls the price of gold.

Moreover, in convulsive contexts such as the one we are living in, governments protect their country’s reserves by buying gold, as China and India are currently doing, as the former secretary general of Cecot, David Garrofé, explained in one of the latest episodes of the podcast ‘Ens Interessa’. Precisely so that ordinary citizens also have the opportunity to protect their assets from the rampant inflation, 11Onze has launched Preciosos 11Onze.

The material that blooms from the earth

It should be borne in mind that gold is a finite precious material, so it is difficult to lose its value, and is found in nature in its pure state, in elongated pieces or in small particles. At the end of 2006, it was estimated that 158,000 tonnes of gold had been mined throughout history, representing only a cube 20 metres on a side.

Gold as an element, apart from its unique metallic yellow colour, stands out from other metals as the most malleable and ductile known. Scientists value its density and high melting point. It also has a high electronic affinity, which makes it a good conductor of heat and electricity. It is also unaffected by air and most chemicals. In economics, gold is also reliable.

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A study shows that the benefits of biodiversity are equivalent to twice the global GDP.

No country has achieved the diversity targets set by the Convention on Biological Diversity, with a deadline in 2020. We now face a funding gap of more than $700 billion by 2030, warns the UN Secretary General. 

That is why 2021 has to be the year for reconciliation between humanity and nature. So far we have been destroying our planet, we have been abusing it as if we had a spare one, our current resource consumption requires almost two planets, but we only have one. If we compare the history of the earth to a calendar year, we have used one third of those natural resources in the last 0.2 seconds.  

Actions such as air, land, and water pollution have provoked a counter-attack by nature that is evident in record temperatures, the collapse of diversity, the spread of deserts and in the numerous and increasingly dangerous extreme events such as fires, floods, and hurricanes.

A planet for biodiversity 

Biodiversity or biological diversity is, according to the International Convention on Biological Diversity, the term that refers to the wide variety of living things on Earth and what happens to the natural patterns that shape them. They are the result of billions of years of evolution according to natural processes and also the increasing influence of human activities. Biodiversity also includes the variety of ecosystems and genetic differences within each species that allows the combination of multiple life forms. The mutual interactions with the rest of the environment make the sustainment of life on earth possible.

Biodiversity is an essential basis for our economic well-being. While industrial production is currently one of the main causes of pressure on biodiversity, such as land use, overexploitation or pollution, businesses in all sectors can also be key drivers of biodiversity conservation. All stakeholders now need to work together to integrate the value of biodiversity into our decision-making and develop solutions that harmonise nature and economic growth.

Biodiversity in business

Many companies are not willing to let company growth come at the expense of people and the planet. For this reason, they are changing the way business is done. Internal plans have been carried out to help create a world in which we can all live well within the natural limits of the planet. By using resources to address issues such as health and hygiene, gender equality, climate change and plastic packaging waste, long and short-term benefits to society are being generated. 

In 2010 many companies started to be sustainably conscious, the impact that all these changes have made is quite significant: costs and risks have been reduced, and of course, the most important value, to build trust in the consumer. 

Danone, for example, is acting against climate change, biodiversity loss and water scarcity. It is reducing its carbon footprint with the aim of achieving zero emissions by 2050. Beyond its production sites, it is working towards these goals in areas where it shares responsibility, especially in agriculture, promoting regenerative agriculture to protect soil, water and biodiversity, promoting animal welfare and empowering a new generation of farmers.

It also has its own policies and tools aimed at promoting biodiversity:

• An example of this is its forestry policy, where it makes a statement of intent to eliminate deforestation from its supply chain and contribute to reforestation.
• Or the fund dedicated to promoting its local ecosystems, the Danone Ecosystem Fund, which supports the company’s projects with a social purpose. This is the case of Renueva, a Danone Aguas waste management and revaluation system which, together with other partners, works to recycle out-of-home consumer packaging, and has a plant in Barcelona Montcada i Reixac.

 17 goals to transform the world

The United Nations has created 17 goals to transform our world. The Sustainable Development Goals are the blueprint for a sustainable future for all. They are interrelated and incorporate the global challenges we face every day, such as poverty, inequality, climate, environmental degradation, prosperity, peace, and justice. 

In order to leave no one behind, it is important that we achieve each of these goals by 2030:

1. End poverty
2. Zero hunger 
3. Health and well-being 
4. Quality education
5. Gender equality
6. Clean water and sanitation
7. Affordable and clean energy
8. Decent work and economic growth 
9. Industry, innovation, and infrastructure
10. Reducing inequalities
11. Sustainable cities and communities
12. Responsible production and consumption
13. Climate action
14. Undersea life
15. Life of terrestrial ecosystems
16. Peace, justice and strong institutions
17. Partnerships to achieve their goals

And this is our daily goal and that of business too. There will probably be many companies that will put this into practice anonymously. Other companies will post on their website the development plans and all the changes they have made; some examples are: Cepsa, Decathlon, Ferrovial, San Miguel Mahou, Iberdrola, Unilever, Danone, among others. 

Biodiversity is part of progress

We have to demystify the idea that biodiversity is synonymous with increasing costs, but quite the opposite. They go hand in hand together with the economy. Thanks to these gestures and changes, not only will we be able to reduce costs, but we will also have a healthier, more sustainable and better life for future generations. 

A documentary not to be missed is “David Attenborough: A Life on our Planet”, in which the renowned naturalist reflects on both the defining moments of his life and the devastating changes he has witnessed. The documentary is available on the Netflix platform and addresses some challenges of life on our planet. He explains how much ground the natural world has lost globally in less than a century, he witnesses the change in nature in his more than 50 years of work, and notes that the world is a unique and spectacular wonder. Moreover, Attenborough sends a message of hope to future generations, revealing the solutions to save our planet from disaster.

We can start with the famous 7 R’s: Recycle, Reuse, Reduce, Redesign, Repair, Renew and Recover. Among all of us, we can achieve it. Do you want to be part of this change? 

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The 28 Catalans among the 100 largest fortunes in Spain increased their wealth by 4.2%, to 27,200 million euros, keeping Catalonia as the second territory in Spain with more entries in the Forbes rich list.

The annual ranking of the 100 richest Spaniards, prepared by the Spanish edition of Forbes magazine and published on Tuesday, shows that the number of Catalans appearing on the list has decreased compared to last year’s edition, but those included have increased their fortune.

According to the Forbes ranking, Catalonia has 28 millionaires among the 100 richest in Spain who have seen their fortune increase by 4.2%, accumulating a wealth of up to 27,200 million euros. The Principality remains the second region in Spain in terms of the number of top fortunes, behind Madrid.

Isak Andic, founder of Mango, and Sol Daurella, president of Coca Cola Europacific Partners, maintain their position as the two richest people in Catalonia with assets of 4.5 billion euros (+€1.8 billion) and 3 billion (+€1 billion) respectively. They are followed in third place by José María Serra Farré, majority shareholder of Grupo Catalana Occidente, with 1.7 billion euros (+200 million euros).

The fourth-richest Catalan in 2024 is businessman Simó Barceló, owner of the Barceló hotel chain, with a fortune of 1,600 million euros. Also noteworthy, is the entry into the 90th position in the global ranking of Joan Font Fabregó, founder and president of the Bonpreu supermarket chain, which accumulates 400 million euros, as well as the departure of the Grífols family, a regular for years on the Forbes list.

The founder of Inditex continues to be the richest man in Spain

As for Spain as a whole, the sum of the 100 Spanish fortunes amounts to 250,400 million euros, an increase of 27.7% compared to last year. Amancio Ortega, founder of Inditex, is once again the richest businessman in Spain with a net worth of 120,200 million euros (+38,000 million euros) and has been at the top of the Spanish list for a decade.

In second place is his daughter, Sandra Ortega, whose wealth has grown to 10.4 billion euros (+3.3 billion euros). Next is the chairman of Ferrovial, Rafael del Pino, who completes the podium with a fortune valued at 7.1 billion euros (+1.2 billion euros).

They are followed by the chairman of Mercadona, Juan Roig, who rises to fourth place with a wealth of 5.8 billion euros (+1.9 billion euros). Roig owns approximately 51% of this unlisted company, and his wife, Hortensia Herrero, owns 28%, making a combined total of almost 80% (discounting treasury shares).

The most significant rise in the Forbes list has been made by Vicente Boluda, president of the Valencian Businessmen’s Association, who has jumped from 35th to 95th place since last year’s edition with a net worth of 1.2 billion euros. Finally, new entries to the list include Jesús Núñez of Gesbolsa Inversiones, who is in 23rd place with a fortune of 1.5 billion euros.

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The housing crisis in Spain has not only created a situation of inequality and precariousness that hits the middle and lower classes particularly hard, but may also castrate the country’s economic recovery, becoming a drag on GDP growth.

The cost of housing, both owned and rented, remains sky-high. According to data from the Bank of Spain, during 2023, Spanish households spent on average 39.2% of their income to meet the cost of housing, 15% more than in 2022, and need 7 and a half years of gross salary to purchase a home, the greatest effort recorded since the end of 2011.

The Association of Registrars notes that the price of housing has increased by 2.9% in the second quarter of the year compared to the first, accelerating its rate of increase, which had increased by 0.8% between January and March. The average price has now exceeded 2,000 euros per square metre, standing at 2,057 euros, compared to 1,998 euros in the previous quarter.

In terms of the ability of young people aged between 16 and 29 to emancipate themselves, Spain is still at the bottom of the list of advanced economies. Only 16.3% of young Spaniards are emancipated, far from the European Union average of 31.9%, and they have to spend 92.1% of their salary on housing, as shown in the latest report on the Balance Sheet of the Youth Emancipation Observatory, which regularly monitors young people’s options for accessing the labour market and the housing market.

The weak point of the economic recovery

The housing crisis not only affects the individual, but also has socio-economic repercussions at the collective level. Rising prices cut the disposable income of families, contributing to the expulsion of the middle and lower classes from urban centres to the peripheries, while at the same time reducing aggregate consumption in the economy and limiting growth.

The Economic and Social Council (CES) warned about this a few weeks ago in its Report on the economic and employment situation in Spain: ‘The extreme shortage of social and affordable rental housing in Spain, in addition to being a major social problem that limits the emancipation of young people, the creation of households and the increase in the birth rate, can become a bottleneck that strangles growth’.

President Sánchez’s government recognises the issue and wants to make it a prominent issue of his legislature, ‘in a context of such dynamic and balanced economic growth we have to prevent housing from becoming a bottleneck’, he said in early August. Meanwhile, his counterpart in Catalonia, Salvador Isla, has pledged to make progress in this area in exchange for being invested.

Some economists are concerned that this shortage in housing supply, exacerbated by labour shortages and an expected increase in demand over the next few years, will make the problem even worse, becoming a drag on economic growth.

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The crisis between Israel and Iran has once again placed the Strait of Hormuz at the centre of current affairs. However, to understand why markets react with such concern to any threat in this region, it is necessary to look far beyond the headlines and discover the history of one of the most strategic points on the planet.

Whenever a crisis erupts in the Middle East, one name immediately appears in economic headlines: the Strait of Hormuz. Analysts warn of possible disruptions to maritime traffic, oil prices react, and major powers follow developments with almost obsessive attention.

For many people, this concern may seem exaggerated. After all, it is simply a maritime passage located between Iran and Oman. Yet this perception changes when one understands one of the great lessons of geopolitics: geography continues to determine a large part of the global economy.

The Strait of Hormuz is a narrow shipping lane that connects the Persian Gulf with the Indian Ocean. From a geographical perspective it is relatively small, but its location has made it, for centuries, a fundamental piece of international trade.Long before oil existed, these waters were already crossed by merchants transporting spices, silk, precious metals and other goods between East and West. Persians, Arabs, Portuguese and British competed for its control because they understood a very simple reality: whoever controls the major trade routes accumulates wealth and influence.

The Portuguese were the first Europeans to realise its strategic importance when they occupied the island of Hormuz in the 16th century. Later, the British Empire would turn the Persian Gulf into one of its main spheres of influence in order to protect communications with India. For centuries, the value of this maritime corridor was associated with trade. But everything would change with the arrival of oil.

The discovery of the great oil fields of Saudi Arabia, Kuwait, Qatar, Iraq and the United Arab Emirates completely transformed the region during the 20th century. This maritime passage, which had once served to transport goods, now became the main gateway for the export of one of the world’s most important raw materials. Since then, the Strait of Hormuz has become one of the most important energy arteries on the planet.

Today, nearly one-fifth of the oil consumed worldwide passes through these waters. A significant share of global liquefied natural gas trade also flows through this route. Countries such as China, India, Japan and South Korea depend heavily on the security of this maritime corridor to power their economies.

This explains why any incident generates concern. If the flow of oil were significantly disrupted, the effects would quickly be felt in energy markets. Oil prices would rise, transport costs would increase, and inflation could once again put pressure on economies around the world. However, the importance of Hormuz goes far beyond energy: when oil became monetary power.

The end of the bond with gold

In 1971, US President Richard Nixon ended the convertibility of the dollar into gold, definitively closing the era that had begun with the Bretton Woods Agreements after the Second World War. From that moment on, the United States needed to reinforce international confidence in its currency. The answer would arrive a few years later through agreements established with Saudi Arabia and other oil-producing countries.

The mechanism was simple but extraordinarily effective: oil would be traded primarily in US dollars. This meant that any country wishing to buy energy first needed access to American currency.

Thus was born the system known as the petrodollar. Control of the major energy routes became closely linked to the financial hegemony of the United States.As oil became the engine of the global economy, the security of the Persian Gulf was transformed into a strategic issue for Washington. This reality was formally established in January 1980, when President Jimmy Carter delivered the speech that would give rise to the well-known Carter Doctrine.

At the height of the Cold War, following the Iranian Islamic Revolution and the Soviet invasion of Afghanistan, Carter warned that any attempt by a foreign power to gain control of the Persian Gulf region would be considered a direct threat to the vital interests of the United States and would be repelled by any means necessary, including military force. 

The Carter Doctrine made the protection of the Persian Gulf and the Strait of Hormuz a permanent objective of US foreign policy, highlighting the extent to which control of energy flows was considered essential to preserving the international economic order led by the United States. For decades, this energy and financial architecture helped consolidate the dominant position of the dollar and strengthen American global influence.

The current dedollarization process

The current crisis between Israel and Iran comes at a particularly delicate moment. The world is experiencing profound geopolitical transformations. China is gaining economic weight, Russia is attempting to reduce its dependence on the Western financial system, and the BRICS countries are exploring alternatives to increase the use of their own currencies in international trade.

Iran is actively participating in this trend. In fact, its accession to the BRICS symbolises the desire to build an economic order that is less dependent on the dollar. For this reason, when investors observe tensions in the Strait of Hormuz, they do not merely see a potential disruption to energy supplies. They also see one of the arenas where competition between different visions of the global order is unfolding.

This does not mean that the dollar is about to lose its dominant role. It remains, by far, the world’s leading international currency. However, it does indicate that de-dollarisation has become one of the major geopolitical trends of the 21st century.

The Strait of Hormuz reminds us of a reality that is often overlooked: behind the major movements of the global economy lie geographical, energy and political factors that continue to shape our daily lives. When we talk about oil, inflation or interest rates, we are also talking about geopolitics. This is why it is so important to understand what happens in strategic locations such as Hormuz. Because the world is becoming increasingly global, yet the consequences of its crises continue to reach our wallets.

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Catalonia’s wine sector has a turnover of more than 3.2 billion euros and employs almost 10,500 people. This value chain has doubled since 2016, turning it into a global benchmark in wine quality, cultivation, production, and distribution.

Catalonia has a rich winemaking tradition that is reflected in its twelve designations of origin (DO): Alella, Catalunya, Cava, Conca de Barberà, Costers del Segre, Empordá, Montsant, Penedès, Pla de Bages, Priorat, Tarragona and Terra Alta. These territories are recognised both nationally and internationally for the production of quality wines and form part of a wine-growing ecosystem that continues to grow in all its specialities.

This is what can be gleaned from the latest study on the wine value chain in Catalonia, elaborated by the Catalan Government’s Department of Business and Employment through ACCIÓ, the Agency for Business Competitiveness, which analyses the state of health of the Catalan wine and Cava sector.

According to this report, the turnover of this sector has doubled since 2016, when it was last analysed, with 62% more companies turning over €3,267 million a year (an increase of 104%), equivalent to 1.2% of GDP, and employing 10,460 people.

This is a fully consolidated business fabric, where the majority of companies, 81.2%, are more than 10 years old. The document also points out that 95.7% of Catalan companies in this sector are SMEs with a turnover of less than €50m. Alt Penedès, Priorat, Barcelonès, Vallès Occidental and Baix Llobregat are the regions with the highest concentration of businesses related to the wine value chain, with the Barcelona area accounting for 55.6% of the total.

Catalonia, an export benchmark

The report notes that almost half (49.5%) of the companies in the wine sector are exporters and more than a third (35.4%) are regular exporters, making Catalonia the region with the most regular exporters of wine products. Last year alone, exports of wines and caves from the Principality totalled 615 million euros, five times the volume of imports of these products.

Over the last 10 years, Catalan companies have accounted for 21.1% of total Spanish wine and cava exports, consolidating its position as the leading region both in terms of the number of companies doing international business and the volume of business generated. It is also the leading region in terms of regular exporters of wine products, accounting for 30.6% of Spain’s total.

The document also stresses that the Catalan wine sector is a global benchmark in terms of wine quality, cultivation, production, and distribution. In this sense, it highlights the importance of the Vi de Finca Qualificada (VFQ) distinction, which is the highest recognition that a Catalan wine can receive from the Government of Catalonia and a very useful in improving the ranking of these producers in key markets around the world.

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The term business cycle refers to the fluctuations in economic activity that occur over a given period and correspond to four stages: recovery, boom, contraction, and depression. We explain the different phases and their characteristics.

Although market economies historically follow an upward trend, they do not tend to do so sustainably, but rather there are ups and downs. These variations are cyclical, i.e. they follow phases of expansion, contraction, expansion, contraction and so on. Therefore, fluctuations in economic activity that are repeated over time are inherent to capitalist economies and are known as the economic cycle.

The economic cycle can be divided into four phases that describe the swings in economic activity and determine the evolution of GDP. These four stages often vary in intensity and duration in each cycle, but always follow the same pattern.

1. Expansion. This is the upward phase of the cycle after the economy has bottomed out. It is characterised by optimism in the market and consumers who increase investment and spending. This leads to an increase in production, trade, and employment. In other words, all economic variables have an upward movement.
2. Peak. The economy reaches its peak of growth. This is reflected in low unemployment and high output. However, economic activity begins to show signs of exhaustion or the economy overheats as a result of labour shortages or shortages of raw materials, which can drive up costs. This is the transition point between expansion and recession.
3. Contraction. This is the downward phase of the cycle. This phase is characterised by a generalised reduction in economic activity: GDP shrinks, output falls and unemployment rises. Businesses cut back on investment and consumers reduce spending because of uncertainty about the economic future.
4. Through. The economy reaches the bottom of the cycle. This is the phase of greatest resource scarcity, in which economic activity is at a low ebb and the quality of life of the population worsens, with high unemployment. During this stage, prices fall or remain stable.

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