PESTEL analysis of Spain
This detailed PESTEL analysis of Spain aims to address some of the political, economic, social, technological, environmental, and legal factors that affect Spain today. Spain is officially known as the Kingdom of Spain. It was once a world power and maintained a vast empire until the 19th century.
Political factors affecting Spain
Spain is a parliamentary democratic country. It is also a constitutional monarchy. The hereditary monarch is the Head of State, and the Prime Minister is the head of government. Spain consists of 17 autonomous regions which are known as ‘Comunidades Autónomas’ in Spain.
Spain is a member of a number of world’s powerful institutions e.g. the United Nations (UN), the European Union (EU), the Eurozone, the Council of Europe (CoE), the North Atlantic Treaty Organisation (NATO), the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organisation (WTO). It also plays an important role in the EU and beyond, particularly in international security activities.
However, political instability in the country has hurt its global image. Catalonia, a semi-autonomous region, has been campaigning for independence for a long-time. The independence bid, regular demonstrations (pro & against), violent clashes, and jail sentencing of some Catalan politicians and activists deepened the crisis badly in the last several years.
Spain also has a territorial dispute with the United Kingdom over Gibraltar. Likewise, disagreements between political parties and multiple general elections in a relatively short period do not do much good to the country. What Spain needs urgently is a political reconciliation.
Economic factors affecting Spain
The next element to address in the PESTEL analysis of Spain is the economic environment. Spain’s GDP is forecast to reach around $1450.00 Billion in 2023 and $1509.00 Billion in 2025 (Trading Economics, 2023). It is worth noting that Spain is one of the biggest contributors to the eurozone.
Spain is a modern and prosperous country, with a diverse and dynamic economy. Its economy is based on a mix of industries, including tourism, manufacturing, agriculture, and banking. It is also home to many multinational companies, including Santander, Telefonica and Repsol.
The key industries that contribute significantly to Spain’s GDP are tourism, manufacturing, agriculture, energy, and electricity. Spain’s exports mostly end up in countries such as France, Germany, and Italy, while it imports consumer goods, machinery, chemicals, and other commodities mostly from Germany, France, and China (World Atlas, 2023).
However, the global lockdown affected Spain badly in 2020/21. The economy has not recovered fully yet. The rate of poverty is high, and many jobs are temporary creating on-going uncertainties. However, exports have gone up and domestic consumer demand is on the rise as well.
The general corporate income tax rate is 25% in Spain; however, other tax rates may also apply depending on the type of company. Personal income tax rates range from 19% to 28% depending on income (PwC, 2023).
Social factors affecting Spain
The people of Spain are called Spaniards. They are generally very friendly and perhaps more open to chat with anyone than most other European nationals. The current population of the country is 47.1 million, and the major languages are Spanish, Catalan and its variant Valencian, Gallego, and Euskera.
Life in Spain is generally relaxed which benefits from an excellent climate and a relatively affordable cost of living. The life expectancy for men is 79 years, while 85 years for women (BBC, 2022).
Spain has a highly developed education system. It has a large number of universities, which offer a wide range of courses and degrees. It also has a highly developed healthcare system, which is free for all citizens and residents.
Spain is renowned for its delicious cuisine, which is a reflection of its cultural heritage. Spanish food is known for bold flavours, fresh ingredients, and unique cooking techniques. Some of the most famous dishes include paella, tortilla de patatas, gazpacho, and churros.
However, there are some social challenges facing Spain today. For example, ageing population, pressure on the health care system, child poverty, low incomes, little credit, and drug epidemic particularly in big cities to name but a few. Likewise, the gap between the richest and the poorest families is also concerning.
Technological factors affecting Spain
Technological environment is a key area of discussion in the PESTEL analysis of Spain. Spain is an advanced nation in technology. It is one of the first countries in the EU to have issued all national identity cards in an electronic format.
Spanish companies have been at the forefront of technological development and innovation. Their contributions in air and road traffic control, international securities, renewable energies, civil engineering, and mobile communications are well-known around the world.
The Spaniards are well known for their widespread use of social media. The major social networks in use in Spain are Facebook, Instagram, Pinterest, Twitter, YouTube, Reddit, and Tuenti. However, it is worth noting that the country needs more IT staff. In fact, ICT experts belong to high shortage occupations in the country.
Environmental factors affecting Spain
Spain is one of the greatest holiday destinations in the world. It is one of the sunniest countries in Europe. Its sunshine, world’s most visited cities such as Barcelona, Madrid, Valencia, Seville, and Malaga, great Alhambra, stunning beaches, ancient sites, beautiful mountains, and world class food make it a great tourist destination. In fact, tourism is one of the dominant industries contributing approximately 11% to the Spanish economy.
However, environmental challenges such as deforestation, air pollution, water pollution, and desertification have been some of the major concerns for the country. Likewise, over focus on tourism has been blamed for high levels of noise caused by airplanes and cruise ships, abuse of natural resources, and loss of public spaces.
Legal factors affecting Spain
The last element to address in the PESTEL analysis of Spain is the legal environment of the country. Spanish judiciary is independent; however, its reputation came into question due to Catalonia’s crisis.
Direct or indirect discrimination in workplace is against the law and employees are entitled to protection and privacy. Full-time employees must work 40 hours a week (average), and they cannot work more than 9 hours a day unless there is an agreement in place.
Summary of PESTEL analysis of Spain
To sum up, Spain offers visitors a rich cultural experience. From its history and culture to its food and entertainment, it has something for everyone. However, it is not without some challenges as outlined above.
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Last update: 22 March 2023
BBC (2022) Spain country profile, available at: https://www.bbc.co.uk/news/world-europe-17941641 (accessed 22 March 2023)
PwC (2023) Spain, available at: https://taxsummaries.pwc.com/spain/individual/taxes-on-personal-income (accessed 20 March 2023)
Trading Economics (2023) Spain GDP, available at: https://tradingeconomics.com/spain/gdp (accessed 22 March 2023)
World Atlas (2023) The biggest industries in Spain, available at: https://www.worldatlas.com/articles/the-biggest-industries-in-spain.html (accessed 22 March 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.