Nearly half (48%) of firms in Spain expect to invest less due to COVID-19.
74% invested in digital technologies needed, more than the EU average (63%).
As part of a series of events organised to debate current trends in investment in different EU Member States, the European Investment Bank (EIB) and Banco de España hosted a conference entitled “Recovering swiftly to limit the scars from the COVID-19 crisis to Spanish corporates.”
More than 170 business leaders, bankers, economists, and public sector partners attended the virtual event. European Investment Bank Vice-President Ricardo Mourinho Félix presented the main results of the 2020 EIB Investment Survey for Spain, and Governor of Banco de España Pablo Hernández de Cos concluded on the outlook for Spanish corporates, and on how policies could minimise the risks during the upturn.
Speakers in the debate, moderated by EIB Chief Economist Debora Revoltella, included Birthe Bruhn-Léon, EIB Director for Operations in Iberia; Mahmood Pradhan, IMF Deputy Director, European Department; Oren Sussman, Finance Professor at the Saïd Business School; Judith Arnal, Director at the Spanish Ministry of Economy; and Sofía Rodríguez, Chief Economist at Banco Sabadell.
“The figures are clear. The economic crisis posed by COVID-19 is having a strong impact on Spanish firms, with nearly half of them expecting to invest less due to the pandemic. However, it is encouraging that large numbers of Spanish companies adopted digital technologies and expect to use them more due to the health crisis. In addition, around two-thirds of companies have already invested or plan to invest in measures to increase their resilience to climate events and to reduce carbon emissions. As the EU climate bank and one of the largest European investors in innovation, the EIB Group stands ready to support, today more than ever, Spanish firms of all sizes to overcome the challenges and barriers to investment faced," said in his opening remarksRicardo Mourinho Félix, European Investment Bank Vice-President.
In his closing remarks, Banco de España Governor Pablo Hernández de Cos said: “Thanks to the economic policies deployed during the COVID-19 crisis, and despite the significant fall in economic activity, we have not so far observed a significant increase in business mortality rates for existing firms. However, the corporate sector faces major challenges down the road. Against a backdrop of lower expected cash flows and higher debt, the solvency position of some firms has worsened, especially in the case of those operating in sectors more adversely affected by the pandemic that are still facing some restrictions. Thus, with the crisis stretching out, concern has now shifted from liquidity risk to the deterioration of the solvency position of firms. Therefore, economic policies should now focus on supporting viable businesses whose solvency has worsened as a result of the COVID-19 shock.”
Impact of COVID-19 on business investment in Spain
The new investment survey highlights the effect the pandemic had and is still having on the private sector. Nearly half (48%) of the Spanish firms that took part in the survey expect to invest less due to COVID-19. Moreover, almost two out of five companies plan to abandon or delay investment plans because of the pandemic, echoing a similar response from their EU counterparts (35%), while only 13% of firms expect to continue with at least some of their investment plans (lower than the EU average of 18%).
To recover from the current economic challenges, Spanish firms believe that expanding capacity for existing products/services is the main priority over the next three years (34%), followed by replacing existing buildings, machinery, equipment and IT (20% in Spain compared to 34% in the European Union).
Spanish firms invest in digital technologies more than the EU average
Nearly three in four firms (74%) have implemented, either fully or partially, the digital technologies needed. This share is considerably higher than the EU average (63%) and similar to the US (74%). Nearly half of firms (49%) claimed that the increased use of digital technologies will be the main long-term impact of COVID-19 in their businesses.
Almost two in five firms (38%) invested in innovation as part of their business activities, close to the EU average (43%). However, 20% of these claim to have brought new products, processes or services to the country, higher than the EU average (15%).
“It’s encouraging to see that Spanish firms place digital technologies at the top of their agenda. Firms hit by the economic crisis caused by COVID-19 have realised that digitalisation and innovation are the best available tools to recover swiftly in a sustainable manner,”said EIB Chief Economist Debora Revoltella.
Spanish businesses impacted by climate change
Three-quarters of firms (77%) say that climate change has an impact on their business, well above the EU average (58%). Three out of five firms in Spain (60%) are already investing or planning to invest in climate-related projects, slightly below the EU average (67%) and half of all firms (51%) have invested in measures to improve their energy efficiency, also slightly above the EU average (47%).
The most frequently cited barrier to investing in activities to tackle climate change is the uncertainty about the regulatory environment and taxation (81%), followed by the cost of implementing these changes (78%) and uncertainty about climate change impacts (75%).
This country overview presents selected findings based on interviews with 600 firms in Spain in May-August 2020. The survey is part of the annual EIB Group Survey on Investment and Investment Finance (EIBIS), an EU-wide survey of 13 500 firms that gathers quantitative information on the investment activities of both SMEs and larger corporates, their financing requirements, and the difficulties they face.
As part of a series of events organised to debate on current trends in investment in different EU Member States, the European Investment Bank (EIB) and Banco de Portugal hosted a conference entitled “Investment, digitalization and green financing: The Portuguese case.”
The headquarters of the Banco de España in Madrid today hosted a seminar jointly organised with the EIB and entitled “Digitalisation and Investment in Intangible Capital: the Spanish Case within the European Union.” Banco de España Governor Pablo Hernández de Cos and EIB Vice-President Emma Navarro attended the event, as did speakers from the business world as well as various public and private sector organisations and academic institutions.