Why Spain Has a Big Problem

Normally I don’t write things that are cutting about Spain on this particular blog because when all is said and done it is a great place to live. (I often do post polemics in my other blog) However as I have said before there is a huge economic crisis going on at the moment and the Spanish government seems content to fiddle while the country burns in one sense.

Why Spain Has A Big Problem

This week they have announced measures to reduce speed limits on roads to reduce fuel consumption and reduced train tickets by 5% to try and encourage people to use more public transport. However these are measures that may or may not be welcome but they don’t address Spain’s main problem, the economy.

Don’t get me wrong Spain is still a great place to live if you can get yourself up and running in a business and make that business work well, the lifesyle options in Spain are excellent. Nevertheless, the government doesn’t make it easy for you to get going.

Let’s take some examples. If you want to set up a business in Spain you need to start paying your “autonomo” fee, social security in effect. This is around 240 Euros per month. To get up and running doing this it is usually a good idea to employ a gestor to do all of the paperwork and other related things to make sure you are legal. The gestor themselves will probably cost you around 100 Euros per month. You need to buy a couple of books that you will probably never use again in your life once you have bought them, one of them the “Libro de Visitas” has never been used by any business I know in eleven years here. So straight off you have costs of around 400 Euros and 340 Euros of that is month on month.

If you need premises you obviously need to pay out for that and it would seem that landlords don’t want tenants at reduced rents they would much prefer to have their shops empty, this can be the only reason that I still see rental prices at the same levels as 2007 when the boom peaked.

Employing staff is expensive due to the social security payments and you are discouraged from taking people on permanent contracts because if you do the cost of trimming staff if you should happen to have problems or to not be as successful as you would like is extremely high, not to say prohibitive.

If you need investment forget it because banks are not playing ball with anyone at the moment and business angels are not very noticeable by their generosity in Spain, in fact they are much more noticeable by their complete absence.

If you need plant and equipment then you best have some serious cash to put down because credit terms are now ridiculously restrictive from financial groups, the banks and the shops themselves.

In effect Spain has a big problem. All of these disincentives to entrepreneurship are placed in your way if you are thinking of starting up a business here. In the next post I will tell you what most people do.

So why do I still say starting up a business in Spain is the most likely way to have a good living in Spain?

Well that will be in the post after the next one I suppose.

I need to think up the reasons first.

Related Posts

1) The Dynamism Of The Spanish Entrepreneur

2) Why Spain and Websites Don’t Mix

3) Spanish Business Culture – Just Behind Mongolia for Entrepreneurs