When Britain leaves the European Union next March, it will leave a void of political leadership within the EU as well as economic leadership for companies in Britain that have substantial business in the bloc’s markets. One or more Member States will have to step in to fill the gap left by what was once the powerful influence of the United Kingdom. Spain is a likely option, and indeed has already been making progress on this front.
Spain is the fifth largest economy in the EU. The country has enjoyed a robust recovery since the economic crisis eliminated 10 per cent of its gross domestic product (GDP) throughout the early 2000s. The Spanish economy grew 2.5 per cent in the second quarter of 2018 – a growth trend that has been consistent for the past few years. The unemployment rate is down, and the country’s competitive tax rates make it an attractive destination for investors.
Another green light for multi-national investors is the country’s substantive ties with Latin America and Africa. The latter is geographically close to Spain – the Strait of Gibraltar connecting Spain and Morocco in North Africa separates the continents by less than eight nautical miles at it’s narrowest point – and Spain has built up extensive business ties with the continent over the years. The majority of Latin American countries, though far in distance, share the same language as Spain, which serves as the European country of choice for businesses in many Central and South American nations.
“Madrid is the region that has the best access to Latin America”, said one partner of financial and advisory services company KPMG responsible for Brexit, in an interview with The Guardian newspaper. Thus, as City of London businesses plan for potential relocation – particularly the ones that require authorisation to operate in the European economic area – Spain looks like a viable choice.
Financial services companies may stand the most to gain from relocating to Spain. In December 2016, six months after Britons voted to leave the EU, Spain’s stock market and financial regulator launched a number of initiatives aimed at attracting London-based businesses, especially financial institutions. These measures include fast-track authorisation for financial companies relocating to Madrid, the option to submit all documentation in English, and a promise to not impose regulatory requirements beyond those laid out in EU law.
That being said, other EU countries are also vying for post-Brexit business, including Germany (with its large financial capital of Frankfurt), France (Paris), and Ireland (Dublin). But Spain – especially the capital Madrid – is pushing hard for its position at the top of the relocation list.
Operation Chamartín, a multibillion-euro project that has been years in the making, is aimed at redeveloping a section of northern Madrid, creating a new financial district to rival England’s capital. In August 2017, Spain’s Ministry of Public Works and Transport, the Madrid City Council, and a subsidiary of Spanish bank BBVA, agreed to the terms for a major redevelopment around Madrid Chamartín Train Station – a sign of more things to come for the buildup of this district.
As Spain continues to welcome and call for British ‘migrants’, the country is also taking a leadership position on handling one of the EU’s biggest crises of the century: refugees and mass migration from Africa and the Middle East.
A new Pew Research Center study found that Spain is the most refugee-friendly country out of 18 nations surveyed, including 10 EU countries, with 86 percent of Spaniards saying they welcome refugees. This reflects the role that Spanish institutions have played in the crisis. For example, in June, Spain chose to accept 630 migrants on the humanitarian ship Aquarius, after the ship was turned back by Italy and Malta. This act of solidarity was widely applauded across Europe.
With Spain’s front-line experience with migration and the responsible role it has been willing to play in it, the EU could stand to learn a lot from the country’s handling of the crisis.
But Spain’s current and potential future leadership in the EU goes far beyond migration. Spain’s new prime minster, Pedro Sánchez, assembled a strongly pro-European cabinet in June when he took office, signaling that his government wants to push for deeper European integration. Sánchez has always defined himself as a believer in the European project.
While Spain is not without its anti-EU parties or separatist movements, the country does not face the plague of populism in its ruling classes as seen manifested in an increasing number of EU countries over the past few years.
This, combined with the country’s open policies on migration and increasingly business-friendly environment, are showing more and more that Spain may be the answer to the looming Brexit void.