KITE Invest had the honour of meeting with Hon. Ignacio González, the President of the Community of Madrid, prior to his participation at our “Invest in Spain” Forum. The President shared some of the great achievements and strengths about the Community of Madrid with regards to investment, the ease of doing business in Madrid and the tourism, energy, and education sectors. Mr. Gonzalez also highlighted some key statistics about the bilateral relationship shared between Spain, and especially Madrid, and the United Kingdom, and moreover, how vital both economies are for one another.
KITE: According to the latest report by the European Commission on February 25th, 2014, the Spanish economy is set to see a return in confidence, which it had lost over the past few years. Forecasts predict a GDP growth of 1% this year, after two years of recession and falling unemployment levels. At this point in time and based on these findings, do you think we can begin to start talking positively about the Spanish economy?
Ignacio González (I.G) Yes, I think so. During 2013 the Spanish economy began showing the signs of recovery and balancing after five years of an intense and difficult crisis. In the last quarter of 2013, the Spanish GDP increased to 0.2% and this growth has been consolidated in the first quarter of 2014. The Government just released its growth forecasts of 1.2% for 2014 and 1.8% for 2015, which are close to estimates being given by major international organizations and private analysts.
As of today, thanks to the efforts of the Spanish society and the political and structural reforms implemented by the Government, the worst of the crisis in Spain is behind us, but there is much more to be done, especially in terms of employment.
Regarding Madrid specifically, the region started growing in the second quarter last year, and since then it has been above the national average. We experienced five consecutive months of declines in unemployment, which translated to nearly 57,000 jobs taken over the past seven months. In the first quarter, there was a trend of investment, which resulted in a 10% growth in tourism, and an increase in mortgages by 32%, in the month of February alone. These are just some of the data that show how the Community of Madrid is on its way to consolidation and that recovery is here to stay.
KITE: Upon multiple data, the Economic and Financial Counselor of the Community of Madrid, Mr. Enrique Ossorio, stated that the Spanish capital is “the economic engine of Spain, as it represents 20% of the GDP of our country, compared with 17% at the beginning of the crisis. Also, (last year) it attracted 65% of all foreign investment in our country.” What measures, amongst those that are already being taken, do you consider to be the most successful in terms of attracting more foreign capital?
I.G: Madrid has a strong, diversified and modern economy. Its productive structure is led by the service sector, which accounts 82% of all our wealth, and is supported by a powerful industrial base – aviation, aerospace, pharmaceutical, metallurgical and electronic – that represent over 10% of our economy.
Furthermore, another proof of dynamism of Madrid’s economy is the performance of the commercial sector that is creating jobs and activity, thanks to the full liberalization of service hours and the removal of bureaucratic obstacles to start a business.
Madrid is a region that offers high quality public services, meets both deficit targets and the budget, and this has enabled us to reduce the taxes on citizens and businesses, which makes investing or saving possible.
Perhaps it is for all these reasons that Madrid attracts almost two-thirds of all new investment coming into Spain.
KITE: Spanish companies Iberdrola, Repsol and Ferrovial have managed to occupy an important niche within the UK economy and all have maintained their headquarters in Madrid. What reasons would you give to the British business elite interested in investing in Spain of the importance of establishing headquarters in Madrid?
I.G: Economic policy is aimed at creating a favorable business environment through the elimination of administrative barriers, promoting competition, and ensuring legal certainty. We are working in this regard and will not denounce any a priori business project that contributes to the achievement of the fundamental objective of job creation.
Also, it should be noted that the Community of Madrid has a unique infrastructure network with an extensive international presence, a highly skilled workforce – 23.4% of Spain’s R&D staff works in Madrid – and is a leader of investment in technological innovation, all above the European average
KITE: The link between Spain and the United Kingdom dates back several centuries, and today’s good relationship is palpable in economic terms and in relation to tourism, education, etc. In 2011, the UK invested €6.5 billion into Spain, representing 30% of its foreign investment. The UK is currently the fifth largest exporter to Spain with €35 billion in bilateral trade between the two economies, to which it can be stated that both countries have a successful commercial and economic relationship. According to the Community of Madrid, what are the most important factors in maintaining this bilateral relationship between the two economies?
I.G: Are many centuries of bilateral trade relations between Spain and the United Kingdom, and therefore, many common interests that maintain the smooth business relationship.
In regards to Madrid, it is a city with an important commercial tradition, and it is an open and dynamic economy that in a commercial sense is comparable to the City of London.
Therefore, the full liberalization of trade, bureaucracy elimination, the internationalization of our companies, appropriate tax treatment, as well as, a high qualification and expertise of our human capital are some of the factors that should contribute to consolidating and strengthening trade relations between the two economies.
KITE: The UK is the fourth largest foreign investor in Spain, which, in addition to the aforementioned data, has favored the stabilization of Spain’s economic environment. Do you think Spain has a strategic priority to maintain trade and investment ties with Britain as a prime partner?
I.G: Of course. Britain is a leading international investor for our country and for the Community of Madrid. In 2013, British investment to Madrid exceeded 1.4 billion euros, representing 73.5% of the total investment received from Great Britain and more than 16% of total foreign investment that our region received.
Also, investment from Madrid to the UK exceeded 777 million euros; therefore, accounting for more than 45% of total investment from Spain directed towards the UK.
Lastly, there are many attractive investment opportunities in a region like ours. The United Kingdom and Community of Madrid are two examples of liberalized economies that may interact in multiple sectors of economic activity.
KITE: To another topic, we would like to highlight tourism, as a sector of great importance within the economic relation between Spain and the United Kingdom. Annually, Spain receives 13.6 million British tourists, and Madrid is one of the regions with the most visitors. In your opinion, what is the essential combination needed to attract such a large number of tourists to our country, and specifically Madrid?
I.G: Community of Madrid offers diversified and high quality tourism within all areas. It has a unique historical and cultural heritage, with three cities declared World Heritage Sites by UNESCO. Its cultural and leisure options are of the same stature as to other great capitals cities of Europe.
In terms of culinary tourism, just within our region alone, there are 13 restaurants with Michelin stars, and there is also strong business tourism, thanks to the availability of venues, hotel options, utilities and communication networks.
Also, highlighting ecotourism there is the National Park of the Sierra de Guadarrama, and outdoor activities related to the environment, such as hiking, wine tourism and bird watching.
And in terms of shopping, we are the second most important destination in Europe, just after London.
We understand the importance of tourism for Madrid’s economy and therefore, we are constantly working to upgrade tourism products in order to meet current demands. In the last decade Madrid has managed to increase the number of tourist arrival by more than 40%, with 2012 bringing in 10 million visitors alone.
KITE: Spain has become one of the largest investors in the UK’s education sector and as a result, this innovative bilateral collaboration has successfully enhanced Spanish academic institutions in the UK. Each year, a significant number of British students choose Spain as a place to continue their studies, in part thanks to Erasmus. How do you think the educational sector within in Spain and the Community of Madrid could be enhanced, in order to encourage a greater number of young Britons to study in the capital of Spain?
I.G: Community of Madrid in Spain is the most innovative region in regards to education, and the results of international tests, such as PISA, show that investments in quality and demand can produce results. We have six prestigious public universities, which have an increasing number of bilingual degrees. Moreover, Madrid is an open and cosmopolitan city with a rich cultural life and a wide range of leisure and sports, all at a lower cost than other European capitals. Being one of the favorite destinations for students around the world proves this.
It also must be added that the Spanish language is one of the most widely spoken languages, and therefore, one of the foreign languages that generates more opportunities in the labor market.
Also, the Community of Madrid will soon be launching a portal on the Internet dedicated to publicizing educational opportunities and supporting the internationalization of our universities.
KITE: Spain can be considered a true pioneer in the context of renewable energy, and the Community of Madrid is one of the regions generally involved in carrying out the necessary actions to reach the country’s goals. The Energy Plan 2004-2012, prepared by the Government of the Community of Madrid achieved great importance due to the success of the numerous actions was able to carry out. Is it a priority to continue programs to promote renewable energy as with the Renewal Plan 2013?
I.G: savings and energy efficiency are absolutely fundamental in a country like ours, whose energy dependence is around 75%. Therefore, for years we have been conducted a large number of measures taken in all sectors of society.
The Renovation Plans of Madrid created more than 680,000 works between 2008 and 2013, and achieved a total energy savings of over an equivalent of 150,000 tons of oil and as a result, a reduction of emissions close to one million tons of CO2.
There have also been important awareness campaigns, outreaches and other activities such as promoting the use of natural gas, heating systems reforms and energy certifications for buildings.
The results of all of these measures have been good. The Energy Plan of Madrid established a goal of 10% reduction in consumption and achieved a significantly higher reduction of 16%.
KITE: To end the interview, we would like it if you could give a final message to the British political and business elite, in an effort to further strengthen the ties that bind both countries and to encourage and attract tourism and other UK-Madrid synergies.
I.G: Region of Madrid is full of attractions for both tourists and anyone looking for a business opportunity. In only a few areas of Europe will you find a wealth of historical cultural and leisure or as favorable an environment for entrepreneurship and development as in Madrid.
Madrid boasts a high quality and varied tourism: cultural, recreational, historic, gastronomic, shopping and business. Besides, there is a wide range of hotels and an extensive transport network that makes any tourist trip easier.
Also, we welcome to all those companies and entrepreneurs who want to settle here. It is a region with great prospects for the future, it is open to everyone, it promotes trade and investment and is a prime location for trade relations with Latin America. Madrid is the financial center and economic engine of Spain, where companies have the lowest taxes in Spain, with excellent transport infrastructures and logistics for their activities.