Spain’s economic growth has come on leaps and bounds in the past decade. So much so, that is it It is poised to become the world’s fastest growing major advanced economy this year. The Spanish economy is on course to grow at three times the pace of the eurozone as a whole – and is eclipsing US growth rates in the process.
Tourism, immigration, foreign investment and public spending have been credited for this economic growth. But as the co-founder of a successful scale-up, I not only have my own theories about how and why our economy has thrived in recent years, but more importantly, Where should we go from here?
An emerging tech startup scene
Access to talent in Spain continues to be unmatched across Europe. Despite Spain investing less than the EU average in research and development (1.44% of Spain’s GDP vs. the EU average of 2.27%), our universities are becoming centers for advanced research in areas such as AI, robotics, cybersecurity, and renewable energy. . For example, the Barcelona Supercomputing Center at the Polytechnic University of Catalonia is a global leader in high-performance computing. Many universities are also active participants in EU-funded research initiatives (such as Horizon Europe) and host incubators and accelerators supporting entrepreneurial ventures.
In addition to graduates, Spain is attracting an increasing number of executives to our tech scene from across Europe and beyond. According to 2023 Startup Heatmap ReportBarcelona has strengthened its position as the second most preferred EU hub for startup founders for the sixth consecutive year. Tax incentives are also stacking up for foreigners and officials from abroad.
2022 Startup Law has provided a more favorable legal and financial framework to build and scale emerging companies in Spain. Its implementation has not only created a more accessible environment for local entrepreneurs, but has also attracted more foreign investment to boot.
Spain’s ability to attract international investors is increasing every day. There is a growing realization that it is possible to create high-growth companies in Spain that can compete globally and raise capital from international funds. Today, along with Abacum, there are all Spanish tech success stories like Cabify, Glovo, Job&Talent, Idealista, and TravelPerk.
According to A Latest report from the dealroomThe combined value of Spanish startups exceeds €100 billion in 2023, an increase of 14% from 2022. They raised €2.2 billion in 850+ funding rounds at various levels last year, ranging from rounds of less than €15 million to over €100 million. . Spain now ranks fourth in Europe for early-stage investment, and this growth reflects its potential as an emerging powerhouse for European technological innovation.
Finally, Spain is a country with many commercial centers, meaning that it is not as highly centralized as other European countries. While Barcelona may dominate the headlines, it’s not the only city growing in prominence as a tech hub. The likes of Madrid, Valencia, Malaga, Bilbao and Seville contribute to Spain’s multi-layered economic draw. Comparatively speaking, the likes of the UK and France have a much higher concentration of talent in one city.
Constant challenges
It would be naïve to wax lyrical about Spain’s economic power without facing some home truths. Yes, GDP growth may be world-leading, but our collective economic impact doesn’t match it.
For example, Spain’s current GDP per capita is a huge problem. At the moment, worryingly, not only does it sit below the EU average, but it is also below Spain’s pre-Covid and pre-Great Financial Crisis levels. Per capita disposable income still really lags where it needs to be relative to overall GDP. This means that at the individual level, Spaniards are getting poorer. Recent floods in Valencia and southern Spain have exacerbated the issue due to the scale of the devastation.
Productivity levels have also been consistently sub-optimal for years and we currently have the highest youth unemployment rate in Europe. And although tourism has been an economic boon for Spain, some argue that it’s causing more problems than it’s solving these days. This distorts the housing market as expats and foreign buyers buy property in metropolitan areas, making it very difficult for locals to get a foot on the ladder.
While it may not necessarily be a silver bullet, doubling the growth potential of Spanish tech startups could go some way to correcting many of Spain’s economic imbalances.
Preliminary Law That was a step in the right direction—but we must go further. Nationally, we would be in a much better position if we had more incentives for startups and international companies to set up shop here. More favorable stock option rules, increased incentives to found a company, and lower entrepreneur taxes. Spain should also increase investment in R&D as a percentage of GDP. These are some of the levers that the government can pull to make entrepreneurship a more attractive proposition.
If Spain truly wants to be the economic jewel in the European crown, we need to be bolder and braver in a drive for greater exclusivity, a healthy supply of jobs, and more sustainable growth, and actively encourage entrepreneurial endeavors.
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