Catalonia takes lead from Madrid in business creation

Catalonia beats Madrid for the first time since the recession, but companies based in the Spanish capital remain larger

According to a report by consulting firm Axesor using data provided by Spain’s Trade Registry, in 2016 more new companies were registered in Catalonia than in Madrid for the first time since the recession began. Furthermore, this new trend has confirmed itself during the first quarter of 2017.

Traditionally the Madrid region had led in new business creation in Spain. Between 2008 and 2016, for instance, 20.7 per cent of all new trading firms were registered in Madrid, with Catalonia as the runner-up at 19.1 per cent. However, 2016 saw a reversal of the norm: 21.7 per cent of all new businesses were set up in Catalonia, with Madrid dropping down to 19.6 per cent.

The change was brought about by a dramatic rise in the number of newly registered firms in Catalonia, which soared in 2016. To be precise, over 22,200 new companies were set up last year in Catalonia, nearly 3,500 more than the previous year. In contrast, the number of new firms in Madrid was just over 20,000 (only about forty more than the year before).

It remains to be seen whether this new trend will be short-lived, even though it has continued during the first quarter of 2017. From January to March, in excess of 5,700 new firms were set up in Catalonia (20.6 per cent of the Spanish total), whereas Madrid saw just over 5,400 new companies in the same period (19.6 per cent)

Size remains an issue

One thing has not changed in the last few years: Madrid-based firms are much larger than Catalonia’s. As a matter of fact, although 19 per cent of all new businesses in Spain were registered in Catalonia between 2008 and 2016, they actually only accounted for 11 per cent of the overall capital. In contrast, with only 21 per cent of all start-ups, Madrid chalked up nearly half of the total capital invested. The conclusion is clear: new Madrid-based firms have much more capital than their Catalan counterparts and, therefore, are larger.

Looking at 2016 figures alone, Catalonia led in business creation, but on average the capital per company was just shy of €41,500. In contrast, runner-up Madrid’s own average was nearly €94,000, almost twice as much.

While SMEs are the backbone of the Catalan economy, some observers have pointed out that this is also one of its weaknesses. Larger companies are able to do more research and increase productivity, among others.

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