A return to growth; more credit; strong exports: the Spanish Government has been talking up the country's economic recovery in recent times.
But with unemployment still at 26 percent and some serious question marks over Spain's economic health, The Local spoke to Roger Cooke, the President of the British Chamber of Commerce (BCC) in Spain, to get his view on the state of play.
Cooke has lived in Spain since 1995.
He came out with his young family and with plans to stay "three to five years maximum" in the country. He ended up spending 19 years growing the business of real estate giant Cushman & Wakefield in Spain, watching his children grow up here in the process.
Recently, though, Cooke has taken on new challenges, working both as an independent director with listed firm LAR España Real Estate and as an advisor at Ernst & Young.
He also puts in as much time as he can into his role as the unpaid president of the BCC. The Local spoke to him in the Madrid offices of the Chamber.
What are your members saying about Spain’s recovery?
There are various phases to an economic cycle. One involves admitting there is a problem and tackling it. The other is when you begin to see results. The third is the return to what I call competitive growth.
Spain is at that second phase now, very clearly. Some of the statistics are beginning to look to be improving. I think most people accept there are some risks and challenges ahead which means you might see some stop–start progress, but by and large the policies are beginning to produce results.
Whether those policies go far enough, remains a question.
There’s no doubt the economy still needs a lot of managing. There is also a question mark over whether the economic growth is of sufficient scale to reduce the deficit and create unemployment.
However, the financial system is stabilizing. We are now beginning to see liquidity come back in, although there is still more needed.
We are also seeing big companies get paid, and one of the problems companies had was getting cash. They weren’t seeing their contracts paid.
Most of the firms represented by the chamber are now significantly through their financial restructuring programmes, and can benefit from a slight improvement in market conditions and their revenues.
So even without a massive upturn, I think most companies are going to be able to see the benefits of small improvements to Spain's economy.
What about changes to labour law?
On the labour law front, everyone is talking about making it more flexible, and I think there are still some things that need doing on that front. The legal framework could also be less challenging — the labour system is very complex here.
But you can’t say it’s the worst in Europe. Sure, it’s not as flexible as the Americans are used to, for instance. However, do you really want it that flexible?
Are there any risks to Spain’s growth?
If you take out tourism and you take out exports, the figures (for Spain’s growth) are nowhere near as good as they need to be, so there is still a lot of work to be done.
It's critical that other elements in the economy perform well.
Spain still needs to tackle how it can be more competitive and accelerate that growth, not just recover from the decline and it’s interesting because it’s all coming at a time when we are going to have a new king.
The constitution is very much based on the Transition (when Spain became a democracy after 40 years of dictatorship under Francisco Franco).
Is it, for example, the right time to have another look at the constitution, including in terms of the Catalonia independence issue?
I think there are issues Spain needs to look at now as it positions itself for the next cycle.
It will have a new king. It has a new global economy it has to compete in and the last years have really been based on getting over the isolation Spain suffered, and about Spain becoming an international economy.
How can Spain take advantage of this new global economy?
Many of the new opportunities are truly global. You can do them from anywhere.
Look at the IT-based technologies: if Spain wants to have a strong position in that sector, you have to be able to attract international people who are probably going to be working in start-up style businesses.
You also have to have the right people internally to go into those businesses, because those firms can drop down anywhere.
How do you attract people to Spain?
Of course there is a lifestyle question. Spain is very receptive to foreign people living in its country: the lifestyle is excellent, and you get excellent value for money.
However, high tax rates are also a bit of a negative. In addition, everyone keeps talking about incentivizing the workforce through stock options and other means — and Spain does not have a competitive structure in that regard.
But it’s not just about getting international employees to work here.
Spain has got to have the right local employees who are perhaps more mobile. Spanish people don’t have the image of being transportable. They like to live in Spain, understandably, but this is changing a little.
Language is also heavily criticized.
I think we go over the top when it comes to criticizing the English skills of Spanish people, frankly. But I think it is precisely in the technological world perhaps, where Spaniards do need to boost their language skills.
A lot of the business school people are coming from international schools, and are perhaps being sent overseas to study, whereas perhaps the technology-based person hasn’t had that opportunity. So their language skills aren't up to speed.
Spain has got some very enthusiastic young people and it’s a very sad moment in my view that there is so much suffering there among those enthusiastic, well-trained Spanish people.
There’s a huge amount of potential and we need to get these people contributing to the country.
Which Spanish firms are getting it right?
We have some clear global brands whose external income is almost beginning to dominate their earnings within Spain. Santander Bank is one example and (builder) FCC is also investing heavily outside Spain.
I think one of the challenges of the Spanish structure is that you get a series of very big companies and a lot of small companies. The question is how are these small companies or ‘microempresas’ (very small-scale companies) going to grow?
A lot of the experts I speak to believe the economy will be a lot stronger if there are more medium-sized firms. So it’s fundamental that those companies have the opportunity and the vision to grow.
Internationalizing a business is very easy to say, and is relatively easy to do, depending on how you do it: dots on the map, or integration into selected markets. But it’s actually very complex to make that globalization possible.
A small business has to make lots of decisions because it hasn’t got all the resources, and it perhaps hasn’t got all of the advice. There are so many decisions to make.
That’s one of the challenges Spain faces. How is it going to help those smaller companies successfully go down the globalization path without making too many mistakes?
One way is that smaller business can ‘tag along’ with Spain’s global brands, but that, of course, has to be done in the right way at the right time.
The bottom line is shareholder value, though. You can’t just internationalize out of pride, or for your brand. It’s very easy to do it, lose control of it, and not make any money out of it at all.
Part of the Chamber experience, as we call it, is to help put younger Spaniards — including people working in big firms — in contact with the international business community.
That can be language training, or other forms of professional training, or just contact with people who have been overseas and have lived through the challenges.
The Chamber can do an awful lot for people at different levels of seniority.
What else can the BCC do for companies?
Our obligation is to serve our members and there are two key areas. One is networking and visibility of members.
The other is representing members. There are things perhaps that the chamber can say that perhaps the British Embassy or a company might not directly wish to attach its name to.
We are independent, and we are not trying to be a pure lobbying entity because most of the sectors have their own big lobbying entities that they belong to, so we are more like a soft lobby.
We obviously have a close association with Spanish administrations and institutions and we do events with them so people can have access, whether that is small round table debates or bigger forums.
We are totally bilateral, so it’s a very broad base of people — including nationalities — and type and size of company.
But I keep saying if you are going to join the chamber you need a business plan. Who do you want to know? What events do you want to attend? And we at the Chamber will try and facilitate that.
For more information about the British Chamber of Commerce in Spain and about their events, visit the BCC website here.