The self-styled briefing on global affairs, business, culture and design that is Monocle magazine once again caught the eyes of our CSO for a recent article in the December 12/January 13 issue: Starting Again － Madrid. With Spain in an economic tailspin, Monocle sees a potential trend for salvation in the ‘remaking’ of the country’s capital by a new generation of entrepreneurs. With commercial rental prices in Madrid suddenly within reach of the first-time businessperson, and a supportive mayor - Ana María Botella Serrano, aka Ana Botella – trimming the layers of red tape that typically envelope Spanish enterprises, a veritable commercial renaissance is purportedly underway.
We at Mediolana would love little more than to believe that this is true. But a closer look at the article reveals just how far away Spain is from recasting itself as a place where export-led businesses can lead the way to an economic recovery:
1. Elitist Focus. By the article’s own admission, the entrepreneurs leading this charge are generally those with access to spare cash provided by their families – realistically, only a tiny percentage of people will fall into this category. While Spain’s savings rates accelerated markedly after the intensification of the economic crisis in 2008, these savings are being used for day-to-day living costs, rather than being added to any stocks of pre-existing liquidity.
2. Institutional Sclerosis. Entrepreneurs – even in Madrid – are still confronted with a waiting period of about three months for a simple business registration process – and even this has been possible only after the privatisation of the company registration sector. Given that businesses can be registered electronically or in person within a single day in jurisdictions as diverse as the United Kingdom and Turkey, this would appear to be an indefensible position to sustain; it is profoundly symbolic that despite a change of government in December 2011, this problem has still not been substantively addressed.
3. Glad to be of Service? Assuming that the businesses featured in the Monocle article are representative of this new trend of entrepreneurship – and notwithstanding the fact that we genuinely hate to knock any reasonable business idea – there does seem to be an overemphasis on price-elastic industries with high overheads. Will a country with an official youth unemployment rate of 55% and rising be in a position to support rafts of new clothing stores or bar-restaurants, however funky?