How Should Spain Address Its Competitiveness Challenges?

In Europe, there is no longer any doubt that competitiveness must be at the heart of the agenda. The European Commission has advanced the Letta report on the future of the single market and the Draghi report on competitiveness; it promotes instruments such as the STEP (Strategic Technologies Platform), and begins to treat industrial autonomy as a strategic priority, with a roadmap laid out in the Competitiveness Compass. Several governments have relaunched their industrial policies, aware that simply resisting change is no longer enough: you have to know how to lead it.

In the current context there is a wide disparity in competitiveness: according to the IMD ranking (International Institute for Management Development), there are several European countries in the global top ten, but Spain, for example, does not appear until the 39th position. In our country, the word “competitiveness” remains trapped between cliché and omission. It is either mentioned in generic terms or used as an excuse for social adjustments. The result is that we have been slow both in diagnosis and in action.

The report Hacia un Pacto de Estado por la Competitividad, promoted by the Foro de Marcas Renombradas Españolas and the consulting firm beBartlet, starts from a different premise: if we want to sustain well-being, attract investment, reinforce strategic autonomy and generate quality employment, we must take seriously how the Spanish economy competes, and how it can compete better. The document was presented on June 9 in the Congress of Deputies after a process of dialogue with more than one hundred experts, entrepreneurs and institutional representatives. More than a list of complaints or technical reforms, it proposes a road map aimed at articulating a durable strategic consensus.

“Competitiveness is one of the great European priorities and it must also be so in Spain”

As stressed by Pablo López Gil, executive director of the Forum of Renowned Spanish Brands, “this proposal arises in a context where competitiveness is one of the major European priorities, and the challenge is to accept that it must also be so in Spain, respecting our particularities.” “It is a country-level document, not just a list of demands from the private sector.” Agenda Pública reports.

“Improving our competitiveness requires the effort and collaboration of public authorities as well as the private sector,” he adds in conversation with.

The value of the document does not lie only in its diagnostic capacity, but in the firm purpose of building a common platform for action: a baseline from which to transform the public debate about Spain’s productive model. It is not an abstract technocratic exercise, but a program articulated with concrete measures, scalable best practices, and clear priorities. All of this under a logic of institutional realism, willingness to pact, and commitment to the long term.

That is precisely one of its greatest challenges. As Manuel Hidalgo, professor at the Universidad Pablo de Olavide, notes, “from an economic perspective, it is the best moment for a State pact. Spain is riding a wave of growth that must be seized. Now or never.” Yet he warns, “from a political perspective, a pact of this kind is unviable in the current national context, despite broad consensus among the major parties on the diagnosis and the objectives.”

“Best moment. Spain is riding a growth wave that must be leveraged. Now or never”

This tension between economic opportunity and institutional fragmentation runs through the entire debate. It is not about launching another plan, but about building a reformist architecture sustained over time. Hidalgo insists that “breaking the blockage requires ambitious and cross-cutting reforms”: among others, a pact among administrations, regulatory policy more oriented toward facilitating business growth, and a revision of the capital market that enables scale. But he adds a key element: all of this must be done “without renouncing rights.” A pro-business strategy, yes, but also compatible with a framework of labor and social guarantees.

In a world where economic policy again has direction, purpose and geopolitics, competing does not consist solely of exporting more or attracting factories. It means ensuring our own capacities in key sectors, scaling what works, investing in what yields a future, and reforming what weighs us down. Even companies that are not internationally oriented compete in an international environment, defined by standards, prices, technologies and flows that they do not control. Therefore, although the debate on competitiveness is European, the responses must be adapted to the specifics of each country.

In Spain’s case, beyond advancing productivity and firm size, it is crucial to recognize the decisive weight of intangible assets. According to WIPO, global investment in intangibles already far surpasses investment in physical capital, and BBVA Research’s study places Spain at a clear relative disadvantage: our companies allocate fewer resources to branding, software, intellectual property or organizational R&D than their European peers. Correcting this gap is a necessary condition to sustain advantages in the knowledge economy.

As López Gil notes, “in companies there is a strong concern about exogenous factors that affect competitiveness, particularly regulatory issues. But competitiveness also depends on what the companies themselves do: digitalization, innovation, investment in intangibles. Public authorities can and should help, facilitate, and accompany, but the companies also have to implement changes internally.” In Spain, the answers pass through five concrete axes.

1. Less bureaucracy, better regulation

Spain has advanced in some regulatory aspects, but there remains regulatory overlap that generates unnecessary costs and distortions. As the report recalls, complexity does not only hinder business activity, but also erodes trust. For example, many companies report the coexistence of European, national and regional regulations that contradict or duplicate one another.

Facing this, an integrated approach is proposed that combines digitization of procedures, single-entry points, ex ante regulatory impact assessments, and above all a regulatory logic that explicitly includes competitiveness as a criterion, not something subsidiary. It is not about deregulation, but about better regulation, with predictability, simplicity and purpose.

2. Betting on intangibles

The added value of advanced economies no longer depends solely on machines, but also — and increasingly — on intangible assets: brands, software, design, algorithms, intellectual property, and organizational culture. Here, Spain lags behind its European peers: it spends only 5.3% of GDP on intangibles, versus 9.3% in leading countries. According to BBVA Research, this gap is not just about the amount invested but also about concentration: while other nations have managed to involve SMEs and mid-sized companies in intangible investments, in Spain it remains too closely tied to large corporations. Correcting this gap is a prerequisite to sustaining advantages in the knowledge economy.

López Gil emphasizes that “in a world dominated by the knowledge economy, intangibles (brand, design, innovation, know-how, etc.) are essential. Falling behind in this area creates vulnerabilities. Moreover, there is a clear correlation between investment in intangibles and productivity, but also with economic complexity and growth. Therefore, this transition toward a more intangible-based economy must be a policy priority, not only a commercial one.

As the report notes, reversing this gap is not merely a matter of spending, but of institutional framework: it is necessary to review the accounting treatment of these assets, create financing instruments tailored to their nature, and generate coherent tax incentives. Betting on intangibles is not a fad; it is about building structural competitiveness in the knowledge economy.

3. Scale to compete

Size matters. Spain has an extremely atomized business fabric: 94% of companies have fewer than ten employees. This fragmentation limits their capacity to innovate, invest, internationalize, or withstand crises.

“It is not just about adding new incentives, but also about reviewing which regulatory obstacles are preventing companies from growing”

The report proposes a battery of measures to foster business growth, not only through financing, but by reforming regulatory thresholds that penalize growth in company size, strengthening support mechanisms for internationalization, and organizing sectoral consortia. The document also emphasizes the importance of investing in reskilling and upskilling the workforce, and proposes advancing in models such as dual apprenticeship or university–industry collaboration.
As Hidalgo notes, “it is not just a matter of adding new rights or incentives but of carefully examining which regulatory barriers are preventing firms from growing. Too often regulation is enacted without considering its impact on employment or investment.” Hence the importance of truly pro-business regulation that does not erase guarantees but does facilitate scaling, innovating, and competing. Because scaling is not only about growing: it is about connecting more effectively to value ecosystems and to the most dynamic markets.

4. Advanced and useful digitalization

Although Spain is relatively well positioned in digital connectivity, it suffers a clear deficit in technology adoption among firms. Only 11% of SMEs use tools such as big data, and the penetration of advanced technologies like AI, IoT or cloud computing remains low. The report proposes a more personalized and strategic approach: promote tailored digitization programs, develop specific digital competencies (for example in cybersecurity or AI), and harness the pull of large companies to drag the smaller fabric along. It is not merely about “becoming digital,” but about using technology to be more efficient, faster, more creative, and more resilient.

5. An industrial policy for the 21st century

For years, the best industrial policy was the one that did not exist. Today, the best is the one that exists and works. The report states this clearly: in a context of energy transition, geopolitical tensions and technological disruption, strategic autonomy and competitiveness are no longer separable.

Spain needs a modern industrial policy that combines horizontal instruments (taxes, training, regulation) with selective vertical bets (energy, health, defense, digital technologies). It proposes strengthening multi-scalar institutional coordination, providing more resources and stability to the responsible bodies, and aligning this strategy with European instruments, from PERTEs to innovation funds. It is not about returning to protectionism, but about designing a framework that makes it viable to produce, innovate, and compete from Europe.

More than a technical exercise or a compendium of proposals, the report bets on something politically much more ambitious: a State Pact for Competitiveness. Not as an empty slogan, but as a starting point for a long-lasting agenda, shared among institutions, political parties, businesses and civil society. “It is important that states identify where they are worst positioned and implement structural reforms at the national level to tackle these competitiveness gaps,” says Judith Arnal, senior researcher at the Real Instituto Elcano who participated in presenting the report in Congress.

“It is important that states identify where they are worst positioned and implement structural reforms”

In a country accustomed to partial reform or improvised adjustment, what is proposed here is a durable, non-ideological action framework capable of transcending terms and shifting majorities. As Hidalgo notes, this is not about isolated actions or one-off measures, but “a huge task that requires working simultaneously in different areas, with a pro-growth philosophy that does not renounce rights.” The great political challenge now is: will we be able to elevate this technical consensus to a national institutional commitment? Is there the will to build a shared agenda that combines economic ambition, regulatory stability and democratic legitimacy? Concludes López Gil that both the report and its presentation represent a first step, a starting point to open a constructive conversation between businesses and the public powers. Competitiveness is not solved in a document; it is built with a shared and sustained effort over time. That is the discussion Spain deserves. The rest —cuts or patches, complaints or resignation— is already well known.