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Spain, last in creation of companies |
| 20 / 12 / 2011 |
The number of new business startups in Spain is decreasing faster than most other major economies, according to UHY, the international accounting and consultancy network.
UHY professionals studied data on new business registrations over the last five years in 19 countries across its international network, including the G8, as well as key emerging economies, including the BRIC nations (Brazil, Russia, India and China).*
The research shows that the number of new business startups in Spain has decreased, on average, 14.6% per annum over the last five years. This means that Spain is ranked last out of the 20 countries surveyed. By comparison, the number of new businesses created in The Netherlands has risen by 4.8% per annum; in the UK, Italy and Germany the number of new startups has decreased by 0.4%, 0.8% and 3% per annum respectively.
Just 76,622 new companies were registered in Spain in 2010, compared to 143,859 in 2006. There was a 2.1% increase in the number of new companies incorporated in Spain over the past year.
According to UHY professionals, policymakers have been taking measures to encourage greater entrepreneurial activity during the financial crisis, but the research highlights the need for some countries to do more to help new business startups, which in many countries are struggling with low demand and restricted access to bank finance.
While in some countries the number of new businesses being created has increased by double digits over the last five years, in others the number of new business startups has declined by a double digit percentage.
The country with the fastest increase in new business startups is Russia, one of the so-called BRIC nations, which has seen a 25.6% annual increase in the rate at which new businesses are being created over the last five years. Nearly 3.2 million new businesses were registered in Russia in 2010, compared to 1.3 million in 2006.
The country which has seen the biggest slowdown in the rate of new business creation is Spain. The annual growth rate over the last five years is minus 14.6%. 76,622 new companies were created in Spain in 2010, compared to 143,859 in 2006.
Max Gosch, Partner of UHY’s member firm, UHY Fay & Co in Spain, which has seen the largest decrease in startups – comments.” Spain has suffered greatly from the global crisis and it has clearly affected the creation of startups. However, it is encouraging to see that the number of new businesses increased by 2.1% in 2010 so we would urge the government to take appropriate measures to ensure this momentum is not lost.
These measures will need to focus on a reform on labour laws to make them more flexible, to create confidence in the country to attract foreign investment and to reopen bank funding to companies to enhance business activity as in Spain, like in other countries, small and medium-size companies are the key drivers of competition, growth and job creation”
John Wolfgang, Chairman of UHY, comments: “The difference between developed countries and the emerging economies is quite staggering, with the number of new startups created decreasing for about half of the countries in our study. The BRIC nations are all in the top half, while among the G8, only Canada, France and Russia have seen an increase in new startup formations over the last five years.”
“Small businesses are seen as the engine of growth and employment, so are critical to economic prosperity. Many governments – particularly in the West - are under pressure to increase tax revenues to reduce public deficits. Unlike large multinationals, which can shift economic activity to low tax jurisdictions, the tax burden falls disproportionately on small businesses.”
He adds: “Governments can do more to encourage business startups. Many of the respondents to our study highlighted high taxes and complex employment regulations as barriers to growth for small businesses.”
The research shows that, among the G8, France has the highest growth rate for business startups. This is due to a new structure for small companies called ‘Auto Entrepreneur’ which was introduced in 2009. These are micro businesses with turnovers under € 80,000 for industrial enterprises and under € 32,000 for services.
Auto Entrepreneur companies are exempt from business taxes for the first two years, and have considerably lighter compliance requirements than other companies.
* Figures obtained from official sources. In the majority of countries, data is only collected on incorporated entities. The five most recent years of data for each country was obtained. Data for Italy, a member of the G8, was unavailable.
Article published at Expansion (December 2011)
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