In this PESTLE analysis of Spain, we'll review the external factors holding Spain back from achieving new heights and why it's standing in unclear waters.
Known for its warm weather, sunny beaches, and rich culture, Spain is one of the world's most universally recognized Mediterranean nations. Although it may have a name for itself as a popular tourist destination, the Spanish macro environment isn't all sunshine and rainbows. In this PESTLE analysis of Spain, we'll review the Political, Economic, Sociocultural, Technological, Legal, and Environmental factors holding Spain back from achieving new heights.
Political Factors Affecting Spain
As far as the political landscape is concerned, the most notable factor is that Spain is a member of the European Union. However, Spain has had a high fiscal deficit for the best part of ten years, meaning that the government spends more than it earns, which has led to a growing sovereign debt. Unfortunately, corruption is ripe in the country: several high profile examples of corruption have been identified in the last five years alone.
Economic Factors Affecting Spain
Spain has suffered from an economic recession for more than 10 years; only recently has it begun showing signs of life. With high unemployment rates and unfavorable loan conditions, Spain isn't the best candidate for starting a new business. What's more, the growing number of part-time workers has given Spanish businesses a large amount of leverage over potential workers. As a result, the economic situation in Spain is unpleasant even on the household level.
Despite all of this, Spain is still a popular destination for tourists and expatriates alike, thanks to its climate and convenient geographical location within Europe. This has allowed certain areas of Spain, such as Barcelona or the Costa del Sol, to perform much better than others.
Sociocultural Factors Affecting Spain
As far as society and culture are concerned, Spain is extremely unique. Many of the countries inhabitants follow a workday schedule like no other — with long, lunchtime siesta breaks and late bedtime. With regard to demographics, Spain has almost a 50:50 split between biological males and biological females, while the vast majority of individuals are Spanish-born Caucasians. There is also a small number of immigrants from Northern Areas of Africa, while the proportion of Asian individuals is much lower than in some other European countries (most notably, the United Kingdom).
The most prominent religion in the country is Catholicism. In addition to the more common Catholic holidays, such as Christmas and Easter, Spaniards also celebrate Three Kings in the month of January.
Technological Factors Affecting Spain
Technologically, Spain is on par with much of the rest of Europe. Advanced computers and mobile phones are widespread, with powerful cellular networks working across the country. Spain even has its own high-speed train system, although the list of destinations is fairly limited. The level of healthcare is acceptable but not as impressive as in other Central European countries.
Spain is no particular technological behemoth within the European continent. There are few technological startups, while government interest in the technology sector is also relatively lackluster.
Legal Factors Affecting Spain
The legal environment in Spain is what you would expect of any European country. With strict copyright and data protection laws, the country has laws in place for the digital era. Notably, Spain is a highly bureaucratic country, which means there are a fair number of legal hoops to jump through when investing in the country or opening a local business.
Environmental Factors Affecting Spain
The environmental category in PESTLE analysis can refer to the environment itself — in terms of natural resources, pollution, and climate change — but also to the consequences of awareness for the environment. In the latter sense, the environment is a serious topic within Spain, as within other European countries. This means companies and individuals alike are subject to various regulations in the amount of pollution they create, the resources they use, or even the segregation of their rubbish.
More than 70% of Spain's energy comes from fossil fuel. However, the use of renewable energy sources is growing. Currently, 12% of Spain's energy is nuclear energy — the leading renewable energy source in the country. This means that Spain has been slow to adopt renewables, in comparison to, say, many Scandinavian countries, but there is consciousness of the need to do so.
The Spanish Macro Environment and Brexit
Aside from the factors we've laid out within this post, there's one big variable will which could play a significant role in Spain's future. That is Brexit — Britain's upcoming departure from the European Union. The reason we didn't include this within the PESTLE analysis itself is because it's still unclear exactly what effects this could have.
A very likely negative for Spain's economy is slowing trade with the United Kingdom. The United Kingdom's decision to invoke Article 50 (i.e. to proceed with Brexit) has already led to somewhat of an economic slowdown. As a result, Spain's exports to Britain — which account for 5 to 10% of Spanish sales abroad — fell by more than 6% within 2017 alone. If Brexit sends the UK into further economic troubles, this may affect Spain's economy more than you think.
Aside from that, there are several other theories on how Brexit could affect Spain's macro environment. If the United Kingdom proceeds with a "hard Brexit", where the UK would leave the single market and customs union, this could have further economic consequences for Spain. Otherwise, if Brexit were in any way to affect the rights of British citizens within the European Union, that could affect Spain's tourism industry. After all, Brits are some of the leading tourists and expatriates within Spain.
PESTLE Analysis of Spain: Final Thoughts
As you can see, Spain is standing in unclear waters right now. The future of the Spanish economy is extremely uncertain, especially given the United Kingdom's departure from the European Union, while the political situation in Spain is far from optimal. While the country does indeed have a rich culture, its environmental and technological progress is nothing more than you'd expect. Finally, the country's bureaucracy gives rise to a large amount of legal paperwork for both citizens and businesses.
Image by M W
