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Abu Dhabi, UAESaturday 23 June 2018

Madrid's impressive credentials as a post-Brexit base

With bankers from London already arriving, the Spanish capital has affordable property and much more 

View of skyscrapers from the terrace of the "Circulo belle arte" building in Madrid. Gerard Julien / AFP Photo
View of skyscrapers from the terrace of the "Circulo belle arte" building in Madrid. Gerard Julien / AFP Photo

Those working in finance in London who decide to step out of the searing intensity of City business and into Madrid will find themselves in an altogether more comfortable climate.

After a hard day’s slog in the financial sector, staff can breeze over to the bars around Plaza de Santa Ana to sample fine local drinks and exquisite tapas while contemplating a weekend spent in art galleries or zipping down to the coast on the fast train.

Even if the markets close late there could still be a chance of gaining entry into one of Madrid’s three outstanding museum’s during the Noche de Verano "Summer Nights" late openings. It could be a rare chance to see Picasso’s masterpiece Guernica without elbowing tourists.

Artwork aside, Madrid’s confidence is growing in its ability to lure firms out of London post-Brexit and it is moving fast to sell itself under a plan led by the ministry of economy and community.

The early signs are promising. The investment bank Morgan Stanley is planning to move 1,000 of its 5,000 employees out of London and into Madrid.

Switzerland’s UBS is exploring it as a possible destination alongside Frankfurt. “Yes, we will have to move bankers and we have an appropriate set-up in Spain,” says Andrea Orcel, the head of UBS investment bank.

Antonio Hernández, KPMG’s partner responsible for Brexit, agrees: “We are looking for locations not only for financial institutions and insurance companies, but also for automotive companies. Madrid presents a very interesting attraction for these entities.”

There are good reasons why. Spain has the fastest-growing large economy in the euro zone, heading towards its third year of 3 per cent growth. The Quattro Torres "Four Towers" business area, which faltered during the economic crisis, has some of the EU’s tallest towers, giving Madrid 1.5 million square metres of office space to fill. Average rent is €29 (Dh121.48) per square metre compared with €51 in Dublin and €60 for Paris.

Adam Austerfield, the London School of Economics director of global markets, says long-established links between Spain and Britain will also give it an advantage.

“There’s a lot of interaction between the UK and Spain and a lot of networks set up that you don’t have in Amsterdam or Frankfurt. Companies are taking it more seriously. Madrid will aim high and it will probably pick up a number of operations.”

Spain’s profile will be further enhanced when King Felipe and Queen Letizia arrive in Britain for a state visit on Wednesday. Their staff will inevitably dig out jumpers and raincoats for the British summer. Spain’s climate is always going to contribute to its attraction and its 300,000 permanent expat Brits readily boast of balmy January days.

The capital has great parks, in particular the Casa de Campo, a huge green space west of city where mountain bikers mix with sun worshippers. In winter you can be on top of a mountain skiing within an hour.

High-speed trains shuttle to the coast taking two hours to get to Alicante and three hours to Malaga.

When it comes to the daily commute, Madrid is a breeze compared to other capitals. Locals fume about “traffic jams” but the reality is that they are nothing compared to London or Paris. “I haven’t been in a jam for more than five minutes,” says Fiona Govan, a journalist who moved to Madrid a decade ago. “If someone from London or New York saw the ‘jams’ they would scoff at it.”

The new Metro is clean, cool and affordable charging €12.50 for a 10 journey carnet, compared with London Underground’s £12.30 (Dh58) for a one-day travelcard.

For those in need of British fish and chips comfort, a return flight home costs as little as £60.

Londoners will be shocked by house prices. In a good way.

Ms Govan just bought a modern apartment for €300,000. “Compared to London you’d be lucky to get a cramped studio flat in Walthamstow for that money," she says.

While other cities boast handfuls of Michelin stars, Madrid does not try too hard for gastronomic acclaim. Here they boast that Michelin stars do not matter because the quality of food is good everywhere. And it is cheap. A three-course lunch costs €12 with a glass of wine €2.50

Patrick Quinn, 35, an investment bank analyst, left London for Madrid soon after the EU referendum. While he took a small pay cut he says he lives well. “You can rent a two-bedroom flat in central Madrid for €1,000 a month, which would be at least half of what you pay in London The standard of living is considerably better and cheaper than London.”

City bankers can thank the former England football star David Beckham for saving them further thousands. Just before Beckham moved to the top Spanish side Real Madrid in 2005 a law was enacted that stated instead of paying the 43 per cent tax, foreign workers could opt for a 24 per cent rate fixed for five years.

Those of a football bent will find their own gallery of riches at Real Madrid’s Bernabeu stadium, home to the world’s most successful club.

Ed Cousins, a Madrid resident for 26 years, took a pause between sips of his mid-morning beverage to consider the city’s positives.

“People love it here, it’s so open and beautiful. Barcelona is full of tourists, Madrid is full of Spaniards. They are very entertaining and love parties with a lot of laughter.

“It’s a great place to live but difficult to do business. They punish small businesses with tax and punitive social security requirements.”

That is not all the Spanish authorities do. Small business owners would do well to examine the experience suffered by one European entrepreneur.

Stepan Chernovetskyi was at home with his children when armed police burst in, arresting him at gunpoint last July. Under Spain’s controversial "secret summary procedure" he was imprisoned for a month without charge over allegations of €10 million money laundering scheme.

The IT entrepreneur was finally freed after appeal court judges overruled detectives, saying they should have known Mr Chernovetskyi inherited a fortune from the €504m sale of the family-owned bank Pravex in his native Ukraine.

“Businesses should instead think about setting up in Britain where they are shielded by a legal system that protects both its citizens and business enterprises," says Mr Chernovetskyi. "London’s legal system offers international entrepreneurs like me more protection than I could ever hope to receive elsewhere in the EU.”

Under the secret summary procedure, suspects are not given any information about their alleged crimes. Spanish police said Mr Chernovetskyi's case was “a judicial investigation initiated by the prosecutor’s office against corruption and organised crime”.

But it continues to overshadow the Chernovetskyi Investment Group’s operations. “Stability and fairness will be the key to attracting foreign investors,” Mr Chernovetskyi says.

Spain also comes with a significant corruption reputation, although nowadays this is more confined to big corporations and political parties.

The economy has stabilised after the financial crash, with the IMF estimating GDP growth this year at a healthy 2.6 per cent. Unemployment has dropped to 3.5 million, or 17 per cent, but is still among Europe’s highest.

Employers are no longer hamstrung with ineffective workers after new labour laws made it easier to fire people.

Language is also less of a problem. Schools are bilingual and most people aged under 40 can speak English.

Education is good and there is little pressure to send children to expensive private schools and, crime-wise, less worry of mugging, gangs and knifings than in London.

Mr Quinn also believes the Madrid lifestyle will appeal to financial young guns worried about leaving behind the City’s fast pace of life. “Paris has same the problems as London with high costs and poor transport, Frankfurt is quite dull and there is nothing in Luxembourg, it’s just dead.

“The joy of working in Madrid is a secret that should be told.”