Monday, 24 July 2017
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AlvorNighttimeThe price of houses in Portugal has started to cause concern in the sleepy corridors of Brussels as the average value of property rose 7.1% last year. This was really a 6% increase as general inflation was 1.1%.

The ever-meddlesome European Commission has concluded that this increase has reached the acceptable limit and now it has to start worrying about ‘imbalances in the economy.’

Brussels looked at Portugal’s prospects earlier this year and, even though its analysts knew that house prices were rising sharply, they were more concerned with high public and private debt levels, unemployment and low competitiveness.

The country is doing rather well with property prices, almost back to 2008 levels, and currently is trumped only by Malta (9.2%), Latvia (8.8% %) and Austria (8.5%).

The suits in Brussels are afraid that Portugal’s ‘overvalued the real estate market’ may be a bubble and if this happens, there will be losses of wealth for families and businesses -  as if they really care, as behind the meddling is a terror that prices will crash again. The banks’ balance sheets are chocked full of property assets, returned from now-indigent customers, and the last thing the EU needs is another banking crisis in Portugal.  

To give the banks a helping hand, Portugal’s government is preparing to change laws to enable banks to deduct billions of euros in impairments from their tax bills over 15 years in a move that will boost banks’ capital ratios.

The Secretary of State for Tax Affairs, Fernando Rocha Andrade, said the changes would replace laws that have been in place since the 1990s and would allow for impairments, as defined under European banking regulations, to be tax deductible.

Rocha Andrade today told Reuters, "We expect this to go into effect this year and that the measure applies to the banks' results this year."

Weighed down by large property portfolios from the country's economic crisis, Portugal's banks harbour €30 billion in non-performing loans, have struggled to return to profitability and have perilously low capital ratios.

The taxpayer is at hand to help though, as soon the banks will be able to write off these loans over 15 years and, with a suitably refreshed balance sheet, will be able to return to their reckless lending policies of the past where anyone with a pulse was offered credit.

Andrade recognises that the Portuguese taxpayer is the involuntary fall-guy, yet again, "In the long-term, the billions of euros in impairments, would always represent a tax cost, the question is whether it would be in one year or another."

Andrade also said Brussels was behind the scheme, in fact there had been demands from the EU that Portugal take this move so that the bankers can sleep better at night, secure in the knowledge that the taxpayer remains the banker of last resort.

Comments  

-1 #2 Charly 2017-05-21 14:50
Sorry, typical reaction from a Brexitter....
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-1 #1 nogin the nog 2017-05-20 23:03
hmm.
What your really saying is our destiny is not our own.
We are only there for the benefit of the powers in Brussels. :-* The little man or the tax payer is only to serve the rich and powerful. Our well , glad we got that straight, I thought I was being paranoid..
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