Will Spain be saved by the Digital Single Market (DSM)?

If you are reading this sentence then you must be curious to see how a country that is currently racked with political uncertainty, multiple regions seeking independence, a financial crisis, and both high public debt and unemployment can resolve its issues in the near future. Spain is suffering from ‘jobless growth’ and social and territorial cohesion cracking along the seams. While the DSM will not be the solution to resolve these issues, the future is clearly digital, driving e-commerce, online services and Spain’s growth potential.

After chairing a lunch discussion here at FleishmanHillard’s Brussels offices with leaders in the financial, consumer and government I was left with more questions than answers on if it was possible.

Let’s start with the facts. Economically it remains the 5^th largest economy in the EU with its exports 3% higher than imports. According to the IMF, Spain’s expected GDP growth is set to outperform Germany and France in 2016. It was also earmarked by the Davos crowd in their Global Competitiveness Report to be in 10^th place for having a world class infrastructure. Its public debt, unlike many EU countries, is dropping and there are signs that jobs (many short term) are returning back to the market with less people leaving the country looking for opportunities. But there is still a lot more room for improvement.

Some areas called out during the discussion included longer term investment in education and digital skills. Spain also needs to tackle the challenges being felt for cross border e-commerce. This includes problems of delivery often attributed with high costs, differing VAT regimes from country to country and ensuring there is a level of security that can increase consumer confidence. It would be safe to say this is not unique to Spain only but endemic across the EU.

Some felt that the DSM is too lengthy in its processes to tackle the issues Spain is experiencing. Many of the legislative processes will take several years before they are agreed and even longer to be implemented in each member state. There were calls for more urgency and more of a top down approach fast tracking specific legislative areas.

Clearly there was consensus in the room that DSM has a lot to prove to deliver results to Europe as a trading block helping it compete internationally. It will require massive coordination by local authorities throughout the 28 Member States as well in Brussels to ensure the goals of the DSM are not politicized and distorted.  Many pointed out the European Commission goals on key areas such as data flows, ecommerce geo-blocking, and cloud computing still remains unclear and definitions for each of those should be clarified before any legislative proposals are made. There was also concern on the changes to the upcoming legislative proposal for the DSM, as it makes its way through the European Commission, Council and Parliament.  But the rewards are also high with a professed €415 billion in growth and hundreds of thousands of new jobs.

Ray Pinto