Successfully investing in Spain

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last updated on 27 May 2020 | reading time approx. 2 minutes

 

 

 

How do you assess the current economic situation in Spain?

It seemed as if Spain had emerged from the crisis – at least Corona. The unemployment rate has fallen steadily from almost 25 per cent in 2012 to 13.5 per cent in 2019, with youth unemployment still at 30.9 per cent – the second highest in the EU. However, this is also Spain's opportunity, as starting salaries are much lower than those of its neighbours, thus attracting new industries.

 

How would you describe the investment climate in Spain? Which sectors offer the largest potential?

After years of political uncertainty (four elections in four years), Spain finally has a government and, for the first time, a coalition. Whether the Left-Left Coalition will be business-friendly is not yet clear, but initial indications do not bode well. 

 

Nevertheless, the investment climate is generally positive. Spain is basically an investment-friendly country, legislation is mostly predictable, labour law is less complicated than French, German or Italian law and the tax burden is also average in Europe. The IT and communications industry has great potential due to the well-educated Spanish students and low wage levels (see above).

 

The renewable energy sector has grown strongly in the last two years – as in the years 2004 to 2010 – and is supported by politics. The tourism industry, chemicals and biotechnologies and logistics in general are other areas where growth is expected.

 

What challenges do German companies face during their business ventures into Spain?

According to our experience, the selection of the head of the Spanish branch office is the decisive factor that determines the success or failure of an engagement in Spain. The German entrepreneur should never retreat too far from the control of the Spanish branch office, as otherwise he may experience surprises – unfortunately only with a time delay. Further challenges are still the missing language skills of the local employees.

 

How has the unrest in Catalonia affected the Spanish economy?

The unrest has had a negative impact on the economy in Catalonia. Investment decisions were made against Catalonia and in favor of the rest of Spain, so the winner of the riots was the rest of Spain, especially Madrid. A central warehouse of a very large retail chain is not built in Catalonia but in Valencia. There are many examples of this and the economy in Catalonia will feel the consequences in a few years’ time. With the new government in Madrid there is hope that the conflict can be resolved. But first, the politicians in Barcelona must also want this and that is not what it looks like at the moment.      

 

In your opinion, how will Spain develop?

Without the Corona crisis the answer would have been positive. In the current situation this is very difficult to judge. Tourism is extremely hard hit. It provides 15 per cent of Spain's GDP, with more than 80 million tourists every year. The consequences of a total failure of this industry are not yet foreseeable.

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