With Brexit only a few weeks away, the incoming Spanish Foreign Minister Arancha Gonzalez has confirmed that Madrid is seeking close ties with Britain after it has left the EU. Given that the UK is a hub for the service industry, the Spanish government is hoping in particular for a positive deal on regarding the sector and has begun to swear in both the Spanish and British business communities to the work that lies ahead.
The UK is similarly pushing for a close post-Brexit relationship with Spain, and for good reason: close to 19 million Brits visited Spain in 2017, and some 300,000 British citizens are residents of the Iberian paradise. At the same time, at least 200,000 Spanish people currently call the UK home.
A special relationship
Indeed, the two countries have long enjoyed a special economic relationship among the EU countries, demonstrated by a highly integrated market with the benefits of bilateral trade spread across both populations. With its free movement of goods, services, people and capital, Spaniards and British citizens alike have inarguably made the most of the European Single Market. Amid the ripples of Brexit, it is in both countries’ interest to keep it that way.
After all, British investors made up more than 13% of all capital flows into Spain in 2017, and this figure has only risen since then. Moreover, a survey by the British Chamber of Commerce has indicated that close to two-thirds of British companies operating in Spain are making plans to increase their financial footprint in the country, from opening factories to hiring more personnel. The strong economic exchange between the two countries is partially to credit for above-average economic growth of 2.5%, compared to the Eurozone’s 1.8%.
For British firms from all industries, the implications of Spain’s promising reputation have been huge. A case in point is British solar energy company Solarcentury. This month, the renewables giant secured financing to build not just one, but two of the largest solar plants in Spain – thanks to a £47.6 million guarantee from UK Export Finance (UKEF). Soon, Solarcentury will oversee the generation of enough energy to power more than a quarter of a million homes with renewable energy each year.
British businessmen hitting it big in Spain
What’s more, it’s not just British businesses that are making the most of the opportunities present in Spain. Many top British business executives have themselves relocated under the Iberian sun and made a mark on the Spanish market. Britain’s Richard Alden, for example, was once the founding director and CEO of Spanish telecommunications firm ONO, subsequently turning it into a major player on the Spanish market between the late 1990s and early 2000s.
By the time he left the company in 2009, the 56-year old had helped develop the business into a regional giant serving more than 1.9 million customers with annual revenue in the billions of Euros. ONO’s dominant market position lead to it eventually being acquired by Vodafone in 2014 for €7.2 billion. Today, Alden heads up Spanish parcel delivery startup Citibox, a growing disruptor in the logistics industry and is an active investor in a host of other Spanish businesses.
Another noticeable example of Brits making it abroad is Willie Walsh, who has left a permanent mark not only on the Spanish airline industry, but Europe’s in general. Starting out at Aer Lingus in 1979, Walsh rose through the ranks to become chief executive two decades later. Later, as the head of British Airways, he led the merger of the airline with Spain’s Iberia to create what is now one of the most profitable airline groups in the world, International Airlines Group (IAG). Flying in the face of initial controversy, the move undoubtedly revolutionised the entire commercial flight sector.
Changing winds?
However, on the eve of Brexit, many in the regional business community are now uncertain about the future and fearing about their investments. While Brexit is the perpetual question mark, it is the political winds in Spain that are causing concern. After close to a year without a government, a parliamentary vote last week narrowly approved a hard-left coalition led by Prime Minister Pedro Sanchez. Now, Sanchez’s Socialists are free to form a government with the far-left Unidas Podemos, leaving many in the regional business community uncertain about the future and fearing for their investments.
It doesn’t help that the new government will be a fundamentally fragile one. For starters, it controls only a minority of seats in parliament and depends on the support of myriad smaller parties. Then there is the eternally pressing need to deal with the ongoing crisis that is Catalonia’s unceasing fight for independence. With the Spanish benchmark index falling a full 2% in 24 hours in November amid the uncertainty, Madrid surely faces turbulent waters ahead.
Given the precarious state of affairs on both sides of the Channel, one hopes that the goodwill between London and Madrid prevails.