The combined efforts of promoting the digital sector and a sound tax policy appear to be stimulants that are helping Spain’s economy recover. The new European Commission should look closely at these simple pioneering approaches.
Investments require a good framework to restore growth. Valdis Dombrovskis, Vice President of the European Commission and ex-Prime Minister of Latvia, accurately pointed this out during the Martens Centre’s annual Economic Ideas Forum in Slovakia.
Europe is in desperate need of restoring growth across the Member States. The International Monetary Fund has warned there is now a four in ten chance the Eurozone will slide into a third recession since the financial crisis. The triple dip is already a reality for some countries in Europe.
Two months ago, a new European Commission took office. It’s an opportunity for a fresh start and to find ways we can improve economies across the region. We know there are solutions to the similar problems faced in different countries.
We need to look to the digital economy. We need to think digital in everything we do. The Internet economy will impact every business and industry over the next few years. The success of Europe’s economy will, in large part, depend on how we promote the information and communications sector.
Our regulatory model desperately needs modernization if the private sector is to be encouraged to invest in the networks needed to support a European renaissance. Only a future-focused regulatory framework that embraces technological change will facilitate the much-needed investment in infrastructure, technology and research.
Creating a digital single market is the unique solution for the development of investment, making it possible to attract more money from the private sector to push the recovery and to decrease the high level of unemployment. According to its priorities, the new European Commission will soon present an ambitious plan to achieve a truly connected digital single market. It may draw some inspiration from Spain.
Last year, the Spanish government approved the Digital Agenda for Spain, which, among other goals aims to boost the digital economy; improve e-Administration and adopt digital solutions for an efficient rendering of public services; boost research and development; and promote digital inclusion and literacy and the training of new ICT professionals.
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According to data gathered by Venture Watch, startups in Spain raised €158 million for the third quarter of 2014, a 187% increase compared to the same period in 2013. Google recently announced it’s opening a new campus for entrepreneurs in Madrid “because of the thriving entrepreneurial spirit in Spain.”
Adding to that initiative, Spain has also announced a package of income and corporate tax cuts in an effort to increase investment and consumption across the country. Spain’s corporate tax rate would drop from 30% to 25% by 2016. Overall income-tax rates will drop by 12.5% over the next two years.
The combined efforts of promoting the digital sector and a sound tax policy appear to be stimulants that are helping Spain’s economy recover.
Digitalization permits simplification of procedures and the Doing Business 2015 of the World Bank shows improvement of the Government with a progress of 19 positions in the rankings.
The benefits for the economy are already clear. The unemployment is decreasing from the top levels of the last years and the economy is one of the most well performing in the Euro Area.
To break out of the present negative downward spiral and avoid economic freefall and stagnation, President Juncker and his team during their first 6 months must look closely at Spain’s simple pioneering approaches and bring forward an agenda that opens markets, encourages investment and propels entrepreneur led growth and employment creation.