The competitiveness of enterprises has solidified in the twenty-first century as the main engine of survival, economic prosperity, and geopolitical relevance for nations. Therefore, in a global context marked by rapid technological transformation, the European Union finds itself, from the standpoint of corporate competitiveness, at a critical crossroads and faces a worrying and growing productivity gap compared to powers such as the United States and China.
In this urgent scenario, the recent and exhaustive Report on the Competitiveness of Spanish Companies, prepared within the framework of the Competitiveness Mission promoted by the Foro de Marcas Renombradas Españolas (FMRE) and beBartlet, sheds essential light on our productive model. The document makes clear that, for firms to design, produce, and market goods superior to those of their global competitors, the institutional environment is not a mere backdrop, but the principal actor. Thus, regulation and normative quality play a crucial role that goes far beyond the mere existence of laws in official gazettes. The rules of the game can act as the greatest accelerator of economic dynamism or, on the contrary, become an insurmountable burden for growth.
The administrative labyrinth and the “regulatory stress” in Spain
At the European level, regulation, although often designed to protect consumers and workers, is broadly perceived as excessively complex and bureaucratic. More than 60% of EU companies consider that this regulatory framework is a direct obstacle to investment, and 55% of SMEs point to administrative barriers as their biggest daily challenge.
Translating this reality to Spain, the problem is aggravated due to our unique institutional architecture. Autonomous communities and municipalities constantly add new layers of legislation to an already extensive European and national regulatory framework. This administrative stacking generates what the report calls a deep “regulatory stress”, imposing very high costs in terms of investment and welfare. The stark reality is that, today, Spain does not have a truly functioning internal single market, which erects barriers within our own borders that add to those that persist in the European internal market.
“At the European level, regulation, although often designed to protect consumers and workers, is broadly perceived as excessively complex and bureaucratic”
Additionally, the experts consulted in the FMRE report highlight a fundamental key: the main challenge does not lie so much in the quantity of rules enacted as in how they are implemented. The way the various supervisory bodies, regional governments, and courts execute and interpret regulation determines its final impact on competitiveness. This dispersion erodes legal certainty, making it enormously difficult for companies to plan medium- and long-term investments with guarantees.
The SME trap and the vicious circle of firm size
It is also evident that, given Spain’s productive structure, there is a feedback loop between it and regulation. The Spanish productive fabric is composed of 99.8% small and medium-sized enterprises (SMEs) and presents a troubling dual reality. While our large corporations have demonstrated profitability and efficiency that stand out internationally, the vast majority of micro-enterprises lack the resources necessary to invest in innovation, digitalization, or international expansion.
“The Spanish productive fabric is composed of 99.8% small and medium-sized enterprises (SMEs) and presents a troubling dual reality”
The rigidity of our laws and the disproportionate administrative burdens cruelly penalize these smaller companies, discouraging their entry into new markets and hindering their ability to scale. This gives rise to a “vicious circle of firm size”, for, being small, these companies cannot attract qualified talent or access financing on optimal terms, which, in turn, irremediably limits their capacity to grow, innovate and become more competitive.
Uncertainty, risk aversion, and capital flight
Certainty and legal predictability are key vectors of competitiveness. When regulation becomes more complex, financing, especially venture capital and cross-border investment, does not take root in the productive fabric. Paradoxically, the barrier is not merely the lack of initial capital, but, in particular, the enormous bureaucratic hurdles that arise when effectively implementing international investment. This administrative choke reaches the extreme of pushing highly successful European companies, including Spanish ones, to relocate their headquarters to other more pragmatic jurisdictions, such as the United States.
To this procedural labyrinth is added an evident cultural factor: both Europe and Spain suffer from a strong aversion to risk and failure, which structurally penalizes disruptive entrepreneurship and cutting-edge innovation compared to North American or Asian ecosystems. In fast-evolving industries, such as artificial intelligence, the European regulatory impulse to foresee and regulate all possible cases in a rigid and exhaustive manner is proving to be a clear mistake. Experts call for a new approach based on general principles that can be flexibly applied as technology progresses.
The roadmap: simplification, regulatory quality, and digitalization
In face of this diagnosis, the Report on the competitiveness of the Spanish company not only identifies the problem but articulates a robust ten-point policy agenda to transform regulation into a growth accelerator. The first priority is to carry out a comprehensive audit of the Spanish regulatory system, with the explicit mandate to identify and remove those norms, overlaps, and barriers that discourage investment and growth. Looking ahead, the systematic implementation of a competitiveness check (SME check) for every new piece of legislation is non-negotiable, ensuring that no rule comes into force without first measuring and mitigating its bureaucratic impact on the business fabric.
“When regulation becomes complicated, financing, especially venture capital and cross-border investment, does not take root in the productive fabric”
To make the administration an ally and not an obstacle, the report calls for a profound operational simplification. This requires the creation of a truly centralized information channel for all procedures and access to aid. It is essential to implement once and for all the principle of “only once” in administrative processes, avoiding that the State requires companies data or documents that are already in the possession of another public entity.
Digitalization must reach not only the factories but also regulatory compliance. One of the most innovative proposals from the group of experts is the introduction of automated regulatory compliance systems, mirroring the ease with which citizens can today approve a draft of their income tax return, but applied to the daily life of corporations.
Solutions in motion: from the “Community 18” to the “Regimen 28”
Fortunately, concrete solutions are already being implemented in this direction to tackle fragmentation. At the national level, the project of the “Community 18” stands out, a centralized digital environment designed so that licenses and permits obtain full mutual recognition across Spain, sparing freelancers and enterprises the strain of dealing with seventeen different autonomous regulations. In parallel, and with the same philosophy scaled to the community level, progress continues with the “Regimen 28” through the proposal of the European company “EU Inc.” This figure offers a harmonized corporate framework: a twenty-eighth alternative to national systems that allows forming companies quickly, fully digital, and at minimal costs, paving the way for cross-border expansion. Both initiatives show a strategic reorientation by administrations, aimed at breaking down operational barriers and boosting the competitiveness of Spanish firms in the global framework.
Leveraging our latent advantages
We do not start from scratch nor are we doomed to failure. When there is real political will, Spain has demonstrated a great capacity for flexibility and administrative agility. The “Invest in Spain” model and the policies of support to investors that have already been successfully deployed by some autonomous communities, centralizing procedures and offering reliable information and timelines, empirically prove that the efficiency of the public sector is possible.
Spain possesses formidable competitive advantages that are underutilized, such as a network of top-level physical and digital infrastructure, undeniable talent in our human capital, and immense potential to lead the renewable energy revolution. However, none of these strengths can reach their full impact if we cannot unleash the Gordian knot of bureaucracy.
“Only through clear, simple regulation and total legal certainty will we ensure that the legal framework ceases to be the anchor that holds back our SMEs”
The momentum of recent initiatives such as the “Community 18” or the “Regimen 28” invites optimism, since they demonstrate that it is possible to transform our institutional environment for the better. It is time to seize this momentum and forge a grand pact for regulatory quality. Only through clear, simple regulation and total legal certainty will we ensure that the legal framework ceases to be the anchor that holds back our SMEs and becomes the great catalyst that definitively propels the competitiveness of the Spanish enterprise on the global stage.
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