There has long been a symbiotic relationship between the Spanish economy and British Expatriates (Expats) and the U.K. in general.
The website fullfact.org, reports that 1.3 million people form the U.K. live in other European Union (EU) countries. Of these Spain hosts the largest group of U.K. citizens at an estimated 310,000. France is in second place with 165,000 and in Ireland with 118,000 comes third.
Except for Greece, one could make a good case for Spain enduring more pain than any Eurozone nation during the sovereign debt crisis and economic meltdown. Such was the worry over a Spanish default that in July 2012 the spread of 10-year Spanish debt over Germany reached 6.10%. The subsequent action taken by the European Central Bank (ECB) and the improvement in the Spanish economy took this down to 1.03% at the close of business on March 1st.
No wonder there has been a sense of concern as to what U.K. expats might do if the Brexit process ended in an outcome of no-deal? This was doubly worrying as so much of the Spanish economy had been focused on residential property construction.
When the economy slowed, building programmes ground to a halt abandoned as incomplete by bankrupt developers. Thousands of houses and apartments stood empty. If the British left in droves, property markets would be even more depressed as over 50% of expatriate homes are owned by British citizens.
The majority of British in Spain have chosen to integrate and live among their Spanish neighbours. Only a minority have chosen to live with one another in so-called “Expat Ghettos” that are sprinkled around the Spanish Mediterranean coast.
Therefore, it is welcome news to hear that even though a general election campaign is in full flow, Spain’s cabinet acted to approve a series of measures for U.K. citizens that reside in Spain to continue living there just as they do now even if a satisfactory Brexit deal cannot be achieved.
The Spanish Foreign Minister Josep Borrell said the main purpose was that no-one would be left unprotected. That is a good step although such a measure would appear to be temporary; the plan approved by the cabinet does include a clause for Britons living in Spain to apply for a “Foreigner Identity Card” before December 31, 2020 so as to prove their legal residency status.
This should prove to be a straightforward process as the Spanish newspaper “El Pais” (“The Country”) reports that the process would be “nearly automatic” for those U.K. nationals who already have permanent residency.
Of course, nothing in life is given away as it must be pointed out that the plan is dependent on the U.K. reciprocating with similar measures for Spaniards residents.
One may call me a cynic; however, one must bear in mind the contributions British expatriates make to the Spanish economy. The British consul in Alicante has stated the figures for the Alicante province alone to amount to €1.32 billion ($1.50 billion) a year. Over 25% of all British expats live in that area).
Another factor is that Spain knows the value of good relations with the U.K. for its wider economy. Spain currently enjoys a €11 billion ($12.4 billion) surplus in the trade balance with the U.K., which is approximately 1.1% of GDP, according to El Pais.
The U.K. is also Spain’s primary direct investment destination, with Spanish companies investing €48 billion ($54.2 billion) or 14% of the annual total. Money also flows the other way as 10% of the U.K.’s total foreign investment is directed toward Spain.
Not only is Spain keen to maintain a good relationship with the British that live in Spain. There are many tourist Euros at stake. British tourists flock to Spain each year for their holidays as good weather and beautiful beaches are virtually guaranteed. The British make 25% of all tourist visits to Spain with vacation spending contributing €14 billion ($15.8 billion) to the Spanish economy.
This may be a sign of a late move by Europe to seek a deal for Brexit that the House of Commons could approve. Spain has had to overcome its frustration by not being able to build a claim on Gibraltar. It has done so because the Prime Minister, Pedro Sánchez, would love to boost his election chances with a good future relationship with the U.K. cash cow.
Maybe, other nations will look to their own economic interests, i.e. sales of German cars, French cheese and wine or Italian fashion. The EU may feel its integrity is crucial but having a good relationship with the U.K. for migration, trade and tourism will prove essential for future economic prosperity. After all, it’s all about the money.