June 19, 2021

Spain captures more British investment with Brexit despite not attracting companies | Economy

Spain captures more British investment with Brexit despite not attracting companies | Economy

The president of the National Securities Market Commission, Sebastián Albella, criticized at the time the scant results of Spain when it comes to attracting business from the City relocated by the Brexit. The Bank of Spain already warned that national exports were suffering due to the expectation of the UK leaving the EU. However, despite not being able to attract company headquarters, British investments in Spain are not losing. On the contrary, they shoot up 80%, much more than the rest of the countries, according to data from the State Secretariat of Commerce. From 2016 to 2018, they hovered around 7,000 million.

British investments in Spain are in good health since the UK voted in favor of Brexit on June 23, 2016. In this period of almost three years until the third quarter of 2018, productive investment has skyrocketed by 80% compared to the previous three years. It could be said that a triennium is being compared in which the crisis was still emerging with another one of greater economic vigor and that, therefore, the comparison is not valid. However, if the same periods are compared for the set of countries, the result is that the total grows from 2016 by 40%. That is to say, the investor flows of the United Kingdom have doubled the growth rates of the average since the Brexit was voted. Thanks to these figures, the United Kingdom remains the main investor after the United States in the accumulated. The amount exceeds 50,000 million of about 1,000 British companies.

According to ICEX (the state body that promotes foreign investment), the data handled by the United Kingdom confirm this trend: the USA, Hong Kong, the Gulf countries, Germany and Spain are the main destinations where British companies direct their investments. In addition, a survey by the British Chamber of Commerce shows that almost two thirds of companies based in Spain expect to increase their investments. The figures are very important because they are productive injections dedicated to buying a company, opening a factory, establishing a subsidiary or hiring personnel.

However, according to the experts, they must be taken with caution, since they are quite volatile; they are subject to periodic reviews because there are long periods to declare them, and they may be influenced by large specific operations. Hence, it is risky to draw definitive conclusions.

In any case, despite these very positive data, Spain is not succeeding in attracting companies from the United Kingdom to the heat of Brexit. "Although it is true that investment figures are good, we do not see large movements as a consequence of Brexit in Spain," says Raúl Mínguez, an economist at the Chamber of Commerce of Spain. Except for an insurer, Admiral, and a small unit of Citigroup, the changes of headquarters announced have always gone to other places. Frankfurt, Paris, Dublin, Amsterdam or Luxembourg have been the most awarded sites. But Spain does not count.

"Little English is spoken"

"There are two clear reasons. Little English is spoken and Madrid does not have the necessary infrastructure of consulting firms to assist investment banking. For that reason, it seemed impossible from the beginning that Spain could opt to receive a part of the business that leaves the United Kingdom once it loses the European financial passport. Not even with the public impulse or with fiscal aid ", explain financial sources. Neither the group coordinated by Vice President Sáenz de Santamaría achieved anything. Ni Guindos was able to approve a tax incentive plan for the Montoro opposition. It also hurt the uncertainty in Catalonia and the rise of Podemos, financial sources point out. "You could have done more. It's a shame, "said Albella.

In any case, the authorities remember that it can still be soon. "Uncertainty makes companies cautious. Although all the large ones have contingency plans designed in the chamber, most of them continue to wait and hope that in the end the understanding will prevail, "says Mínguez. If a hard Brexit occurs, the consequences could go beyond the financial sector. A clear case is that of the automobile. For example, the future of the Nissan and Honda plants in the United Kingdom would be at stake.

Even so, not even the contingency plans that are known mention Spain. So the good investment data are due to the differential growth recorded by the Spanish economy: the euro zone grew by 1.8% in 2018 and by 1.2% year-on-year in the last quarter of last year. In contrast, Spain added 2.5% in 2018 and 2.4% year-on-year. That gap in favor of Spain explains that not only British investments are rising a lot. Also the whole. As of the third quarter of 2018, Spain has collected close to 40,000 million euros in nine months, a record figure.

These statistics do not include real estate investments that, except for a slight dip in 2017, also show good performance. Even so, a report of the European Committee of Regions points to the Canary Islands, Andalusia, the Balearics and Valencia as the territories that could lose real estate investment because "the British would have decreased their access to health and insurance with the change of status."

The ICEX lowers its rates

The Brexit date is March 29. In view of the imminence, the Government has approved the call Brexit check: the ICEX will offer discounts of up to 80% in the rates of its consulting services. In this way, companies with businesses or sales in the United Kingdom will be able to turn to the organization run by María Peña to better deal with possible changes in the conditions of access to the country. Or to look for a diversification towards other markets. In the first nine months of 2018, Spanish investments in the United Kingdom have plummeted to 1,600 million. The president of the Circle of Entrepreneurs, John de Zulueta, warned that Spanish companies are not prepared for a hard Brexit.


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