Number of active firms falls in Spain

09 August 2012

MADRID: The number of companies trading in Spain has hit a five-year low as the financial crisis continues to greatly impact business conditions in the country.

According to the INE, the government body, the number of firms active in Spain fell by 1.6% over the course of 2011 to 3.2m, marking a fourth year of decline in the number of active businesses.

This can be measured against the record high of 3.4m organisations, which was registered at the end of 2008. Nearly 250,000 have shut down since then.

Gerard Lane, an equity strategist at Shore Capital, argued that the fiscal pressures facing Spain, and other European countries like Greece and Italy, are extreme. "It's a difficult environment for any company to operate in," he said.

The sectors seeing the greatest declines included construction, where 13,206 more companies ceased trading than those which were newly registered. The business loss figure stands at 4,637 for retail and traders.

While 2,759 players specialising in advertising, market research and similar services registered in 2011, almost double that number – some 5,221 – closed their doors. These ratings stood at 906 and 2,679 for research and development firms.

The unemployment rate in Spain reached 22.9% by the end of last year, with 5.4m people out of work, an increase from 4.1m in 2101. The total number of unemployed is currently 5.7m.

"[Spain] is going through a massive reduction on government spending, which is having an impact on the economy at large," Jan Hommen, chief executive of ING, the financial services group, said.

Data sourced from INE, Reuters, Fox; additional content by Warc staff