Markets hate uncertainty, and the United Kingdom’s withdrawal from the European Union – commonly known as Brexit – is still a political adventure plagued by doubts and unresolved issues. That said, the country is too attractive an option for a country such as Spain to turn its back on it.
More than half of the 102 Spanish companies with direct investment in the UK consider the British economic climate to be “acceptable” or “good.” That’s according to a survey carried out by the Spanish Chamber of Commerce (SCC). The implementation of a trade agreement signed between London and Brussels at the start of 2021 has brought with it stability and a legal framework that has calmed a lot of firms. A year ago, the previous survey showed that two out of every three companies had a very negative vision of the business climate in the UK.
“While bilateral trade has fallen, mostly due to the restrictions related to the [coronavirus] pandemic, Spanish companies continue to consider the United Kingdom as a priority market,” explains Eduardo Barrachina, the president of the SCC.
From a historical perspective, the UK continues to be the most important destination for Spanish direct investment. It accounts for 16% of the total, only exceeded by the 19% that flows to the United States. The financial and telecommunications sectors are the main receptors, followed by energy supply, insurance, air travel, retail and hospitality. The Spanish contribution to the British economy created 161,000 jobs in 2019, the last year for which data is available.
The main complaint from the companies consulted by EL PAÍS is in relation to the current state of the British labor market. The perception here has worsened in the last year. According to the survey, 22% of companies believe that the current laws do not allow them to cover their employment needs, and 27% report not having found staff with the appropriate qualifications. The worsening of this situation is fundamentally due to the end of freedom of movement for European Union citizens, a direct consequence of Brexit. The government of Prime Minister Boris Johnson has also introduced highly restrictive laws covering immigration.
According to the survey, 91% of firms that took part say that the British market continues to be strategic for them, while more than half, 58%, have not changed their investment plans in a significant manner during the years between the Brexit vote in 2016 and the UK’s withdrawal from the bloc at the start of this year.
The new bureaucratic processes in terms of customs checks and health controls are yet to be fully implemented by the British government, nor have some companies even started to prepare for these. The immediate future continues to be filled with uncertainty, but up to 42% of the companies surveyed are planning to boost their investments in the UK over the coming year.