The Diplomat
93% of foreign companies established in Spain plan to increase or maintain their investments in the country during 2022, despite the fact that just over half of them consider that the importance of European recovery funds for their activity is “low or very low”.
This is one of the main conclusions of the 14th edition of the Barometer of the business climate in Spain from the perspective of foreign investors, carried out jointly by ICEX-Invest in Spain, Multinacionales por marca España and IESE’s International Center for Competitiveness, which gathers the assessment and importance given to the business climate in Spain by more than 730 foreign-owned companies.
In general terms, the study reveals that investing companies experienced a clear improvement in their performance in 2021 and foresee a very favorable outlook for 2022 in all aspects analyzed (investment, workforce, turnover and exports). The business climate rating is three out of five, an increase of two tenths compared to the last edition. These results equal those of 2019, before the pandemic, and show the recovery path of companies after the COVID-19 crisis, according to ICEX.
The areas that have received the best valuation by foreign investors have been those related to infrastructure and quality of life, clear strengths of Spain, followed by market size and human capital. It is positive that, again this year, the most highly rated areas coincide with the most important aspects for investors. Among the least valued areas in this edition are those related to the regulatory environment, taxation and innovation. In particular, there is room for improvement in areas such as the adaptation of labor legislation to the needs of companies or the reduction of the bureaucratic burden. And costs, such as electricity costs, have also emerged as a major concern this year.
In terms of investment in 2021, foreign companies in Spain recorded a clear recovery compared to 2020. Thus, 90% of the companies surveyed increased or maintained their investments in 2021, compared to 69% in 2020. By 2022, 93% of the companies plan to increase or maintain their investments. Employment prospects also improved. Compared to 2020, when 31% of companies reduced their workforce, only 12% reduced their workforce in 2021 and 88% of companies increased or maintained their number of employees. For 2022, the forecasts are even better and 94% of companies expect to increase or maintain their employees.
Turnover figures in our country improved the most in 2021. Compared to 54% of companies that decreased their turnover in 2020, only 14% did so in 2021. By 2022, 71% of companies expect to increase their turnover, 23% expect to maintain it and only 6% expect to reduce it. Finally, foreign capital companies in Spain show a clear export profile, and 75% of them export to third markets from our country. In 2020, 26% of companies decreased their exports, but this percentage dropped to 9% in 2021 and by 2022 only 4% of companies expect their foreign sales to be reduced.
“Spain is already in a phase of full economic recovery as confirmed by all indicators and with good prospects for the future,” said the Minister of Industry, Trade and Tourism, Reyes Maroto, on the occasion of the presentation of the Barometer, which took place yesterday at the headquarters of ICEX in Madrid and was attended by the Secretary of State for Trade, Xiana Mendez; the executive director of ICEX-Invest in Spain at ICEX, Elisa García Grande; the president of Multinationals for Marca España, Beatriz Blasco; the associate director of the Madrid Campus, IESE Business School, María Coello de Portugal; and María Luisa Blázquez, associate researcher at the International Center for Competitiveness- IESE Business School.
“Foreign companies are positively valuing the fact that Spain is at the forefront of Europe in the deployment of European funds through the Recovery Plan, which has already received a first disbursement of 10,000 million euros due to the high fulfillment of milestones and objectives,” added Maroto. Despite these words, the report reveals, as regards the importance of European recovery funds for their activity, that 25% of foreign companies consider it to be “high or very high”, 23% “medium” and 52% “low or very low”.
