Spain has adapted well to the frictions in investment and trade caused by the United Kingdom’s exit from the European Union (Brexit), but there are still difficulties in some areas, especially in the mobility of people between the two countries.
This is the Spanish Government’s diagnosis, which was expressed in London by the Secretary of State for Trade, Xiana Méndez, at the presentation of the 5th Investment Barometer, which is produced annually by the Spanish Chamber of Commerce in the United Kingdom.
In Méndez’s opinion, after a few months of uncertainty following the signing of the free trade agreement between the EU and the UK in 2021, Spanish companies have gained in confidence and the complications have become more technical in nature.
“One of the current difficulties is the mobility of people (...), which companies need for their investment operations,” he said.
Méndez explained that she has conveyed these concerns to the British government so that they can ease their requirements in terms of procedures and costs, although she said that the cooperation she has found with her British counterpart has been “impeccable”, which has allowed “many technical and regulatory application problems” to be solved.
The secretary of state stressed that bilateral investment between the two countries is “more than solid” and continues on a positive path: the UK is the second largest destination for Spanish investment since 2018, with almost €10 billion this year alone.
The barometer, which Méndez described as a “milestone” in relations between the two countries, shows that the cumulative level of Spanish direct investment in the UK reached a total of 73,850 million euros in 2021 - the last year with available data - an increase of 22% over the previous year.
Translated into employment generation, the study found that this amount enabled the creation of up to 128,000 new jobs in 2021, 0.4 % of the UK labour market.
Although these figures might suggest that the relationship is already “very mature” and has reached its full potential, the Spanish official highlighted the numerous opportunities that are opening up in the UK in fields such as agri-food, e-commerce, health and construction.
The British Secretary of State for Business, Kevin Hollinrake, also spoke of a “buoyant” relationship, saying that “despite the widespread repercussions of the economic and political turmoil (in the UK), ties between Spain and the UK continue to improve”.
Hollinrake echoed the words of Méndez and the Spanish ambassador in London, José Pascual Marco, in calling for “greater ambition in business mobility”, something he separated from his country’s efforts to reduce immigration, “which is a totally different matter”.
The British politician drew attention to the “incredible resilience” of businesses despite the confusion generated by Brexit and described the current moment as an “enormous opportunity” for Spanish investors, especially in the technology sector.
Another of the conclusions of the barometer is the growing confidence of Spanish companies in the United Kingdom, which leads half of them to forecast an increase in revenue, investment or employment in 2024.
Ninety-one percent of the companies that responded to the survey believe that the UK will continue to be a strategic market for them, although they warn of the risk posed by inflation, perceived as the greatest concern during 2023.
The author of the study, María Romero, who prepared the barometer for the consultancy firm Analistas Financieros Internacionales (AFI), highlighted that business optimism has grown over the five years that the report has been prepared.
Despite an adverse geopolitical context, Spanish investment has been “solid”, with a clear concentration in the services sector in particular.
Despite this, the barometer warns that the telecommunications, finance and energy sectors accounted for practically all Spanish investment in the first half of 2023.
Companies judge digitalisation and fair competition to be the most highly rated aspects of the UK market, although they put the high cost of living on the other side of the scale.
The president of the Chamber of Commerce, Eduardo Barrachina, summed up the study by stating that “the UK has consolidated its position as a key location for Spanish investment”, and pointed to closing the gap with the top destination, the United States, as the next challenge.