14 May 2012

Eurozone crisis has potential to affect 2012 season

By William Mathieson

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There was a sharp intake of breath that spanned Europe on the opening weekend of May, with national election results across the continent inflicting a barrage of body blows to the superyacht industry. The eyes of the Eurozone community, and the wider world were on Greece, which was the subject of fiercely fought parliamentary elections. Unfortunately for the Eurozone, and the companies that operate within it, the predicted backlash against the incumbent government occurred, with no party establishing a parliamentary majority, a rise in the votes gained by fringe parties, and a blanket rejection of the policies that have been introduced to try and bolster the single currency.

Greece now faces a political crisis and the ramifications for the value of the Euro are obvious, with Eurozone bond prices soaring as markets opened. The worry now is that the economic woes afflicting the Greek economy will spread to other Eurozone countries, a pain that will be felt fullest by the companies that operate and trade there.

Despite being one of Europe’s most spectacular cruising grounds, and a nation of rich maritime history, the profile of the Greek superyacht industry has steadily declined since the global recession brought its economic problems to the fore; inflation has also forced the cost of services up in recent times. But according to Yannis Diamantou, captain of 44.2m Benetti build, Palama, this will not damage Greece’s ability to attract charterers this season, a fact demonstrated by his owner’s decision to spend the summer cruising the region.



“The election did not enable any party to gain enough votes to form a government. Because the situation is so unstable, we’ll probably be forced to have another election next month. It [coincides] with the beginning of the yachting season but I believe that, despite the political instability, we will have another stable season”, Diamantou predicted.

Despite the damage that inflation inevitably inflicts on the number of visitors, Diamantou insisted that there would be no problems with Greek chartering this summer. “Whatever is being said in other countries, it is very relaxed in Greece at the moment’, he said. “Everything is operating as normal and if someone wants to bring their yacht to Greece, they will find all of the businesses as they’d expect to. Already the number of cruise ships [visiting Greece] has increased by 20 per cent so we expect more yacht passengers this summer. Greece is a little more expensive than other countries but I think prices will stay the same [as last year].”

With the currency crisis hanging over its head, France also went to the polls to elect a new president, with socialist candidate François Hollande winning the premiership following a campaign fought against the ‘enemy’ of finance. Hollande, who now possesses the mandate to enacts his campaign policies, has said he intends to tax UHNWIs at a rate of 75 per cent for earnings over €1 million. If introduced this will make France the single least practical place for a wealthy individual to reside in, despite being one of the spiritual homes to the superyacht industry. Oscar Siches, ICOMIA marina consultant, hopes that Hollande and his team curb their economic reforms, which he sees as “necessary but unpopular measures that would help the EU regain the [economic] status it lost two years ago.” The impact of a tax on UHNWIs, he predicted, would be “the exodus of dubious yacht owners to Italy, at best, and Spain, which is not perfect but reasonable.” This though, will not be advantageous for anyone as it “will not be enough to make a significant change to the health of the nautical market in either country.”

But popular opinion amongst the nautical industry in Spain is that such economic measure will do little to prevent the contagion spreading to its shores. Speaking to SuperyachtNews.com Peter Franklin, editor of Palma-based news publication The Islander, said that France would continue to present itself as a more attractive destination than Spain:

"I have been to three dock parties in the last week, and its clear from what I have heard 'on the quays' that France is taking preference over Spain in many cases for this summer. This is partly due to the mat tax not being solved, the general insecurity over Spain´s fiscal/banking position, and the huge, and unfair, advantage that France retains with its zero VAT rule on ocean going yachts."



In reality the effects of the crisis have already been felt in heavily indebted Spain, punctuated by a recent announcement from the government that it intends to instigate a rapid overhaul of the capital structures of its banks. This will raise concerns over whether the embattled economy can take the burden of stockpiling vast sums of money. However, Siches believes that this hard-nosed approach is the only way to drag the Spanish economy through the mire and out the other side:

“Employing no nonsense methods is the only way the Spanish government can meet its commitment to Europe. In a land where old tradition and protocol have prevailed no matter what the outside world thought about it, reason and rationale need to spread throughout its economical sectors. [The country’s] spider webs, ghosts and myths have to be put to rest [for Spanish businesses to prosper] but we are on our way and I trust we will make it, albeit at a huge social cost.”

Related Links

Benetti Profile | Benetti Website

ICOMIA Website

The Islander Website

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