Spain economy horror show as HALF of all companies don’t last THREE years

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“There is a lack of entrepreneurs” is a phrase that is often repeated in Spain. However, according to the Spanish association of small and medium-sized enterprises Cepyme “there is no entrepreneurship problem”.

Spain creates 10.6 percent of the business fabric per year, above the 9.8 per cent average for the EU, according to the association.

It claims the problem is not creating companies but keeping them alive.

Cepyme said: ”This trend is more acute in Spain in newly created companies, which are more vulnerable than in other European countries.”

In Spain only half of the companies survive three years after their creation, “a lower proportion than in the United Kingdom, Germany, France, Italy and Portugal, among other European countries”.

According to Cepyme’s study, 9.2 percent of companies with employees end up closing in Spain per year.

It added: ”This means that every year one out of every 11 companies with employees in our country disappears, a trend that was already observed before the coronavirus crisis and which has worsened as a result of the pandemic.”

One of the leading causes preventing Spanish companies from surviving, according to the Cepyme report, lies in the more than 100 regulations that “discourage” companies from growing in size.

The association said: ”These barriers (tax, accounting, labour, financial and competition) become a burden for the competitiveness of companies, slowing down the recovery of the economy, job creation and the sustainability of the accounts of the public administrations themselves in the long term.”

Cepyme estimates Spain would create 1.2 million jobs and grow by 5.2 percent more if measures leading to greater business growth were implemented.

Beyond the survival of the business fabric, the consequences are disastrous in terms of turnover and employment, and leave Spain below the European average.

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While the average Spanish company turns over 1.1 million euros a year, the average for Europe is 1.4 million, almost a third more, ABC.es reports.

Spain is further behind from countries such as Germany and Ireland, where companies turnover is up to three million.

And with employment, it is practically the same: while the average Spanish company employs 4,7 people, a company in the European Union employs 6.

This is without comparing with countries such as Germany, the United Kingdom and Austria, where the average size of companies doubles that of Spain.

This information adds to the concerns about the characteristics of the Spanish business ecosystem.

The report added: “SMEs are financed at more expensive interest rates and have fewer possibilities of attracting talent or innovating, characteristics that lead smaller companies to have less resistance to crises and a shorter life.”

Between 2007 and 2013, small and medium-sized companies lost half of the total employment lost during the construction crisis.

Now, amid the COVID-19 crisis, the consequences may be lethally similar.

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