A sunshine lifestyle and good profits: why more Britons than Spaniards set up business in Spain

FROM SELLING Marmite to homesick compatriots to taking holidaymakers out on the Mediterranean, British entrepreneurs are staging a quiet invasion of Spain.

Once it was opening a pub or teaching English, but Spain is now attracting a record number of Britons eager to start new lives and new businesses in the sun. Figures show the rate at which British businesspeople are starting companies is outstripping the Spaniards.

According to the latest Spanish government statistics, from October 2003 to October 2004 the number of foreigners who started their own business rose by 17.9 per cent compared with the year before. The number of Spanish who set up businesses rose only 3.8 per cent.

Officially, at least, 19,077 Britons have registered companies, followed by 13,166 Germans and 10,885 Chinese. There are thought to be many thousands more who run a business but work as freelancers for foreign companies and do not register with the Spanish government.

Out of one million foreigners registered to work in Spain, 121,949 are now autonomos or small-business people.

For someone earning Û60,000 (pounds 41,000) a year, the tax rate in Spain is 24 per cent - about the same as in Britain although the cost of living is much lower. Most people start their own businesses because wages are much lower in Spain. The average salary is Û17,779, or about pounds 12,300, although it rises to Û35,000 euros, or pounds 24,000, for someone with an MBA. Only Portugal and Greece have lower average ordinary wages among the "old 10" EU countries.

For an employer, the costs of running a business are generally higher in Spain than in the UK. Employers will pay 11 per cent national insurance for employees in the UK compared with 28 per cent in Spain.

One employment consultant in Barcelona said opening an office with six employees would cost Û250,000, adding: "Generally, if you go by the book in Spain, paying all the social security, health and safety and other costs of setting up a business, it is more expensive to set up here than in the UK. You will be lucky to get in the black by the third year after a sizeable investment."

Sarah-Jane Stone, the director of the British Chamber of Commerce in Spain, said: "I do get a very strong feeling that there are a lot more British people coming here to start businesses. They are helped by the fact they know there are British communities here already. But there are also more young entrepreneurs."

Every year about 250,000 people leave Britain to set up home abroad and a large proportion opt to start businesses. Spain is still the favourite destination, though many move to France, Australia, New Zealand, Portugal and Cyprus. Many are drawn by the climate and the gentler lifestyle this brings with it, but Jonathan Reuvid, the author of Working Abroad, says other factors play a part.

"People are fed up with the degree of control and bureaucracy in the UK," he said. "It is easy enough to form a company but the hoops you have to go through afterwards are considerable. In Spain it is perfectly possible to go there and benefit from social security and health services."

He said the internet has played a major part in the number of people heading abroad. "These days people are more inclined to be mobile and they are more confident. They may have already visited the country on holiday and they can find out what they need before they go."

Jose Luis Mejias, from Trans-Formando, a co-operative which helps foreigners start businesses, said: "The profile of these business people is often those who left precarious jobs and had the courage to start a business of their own."

The arrival of more Britons comes as Spain experiences the fastest-rising immigration levels in Europe. But this has brought social problems. Last September, two Chinese shoe businesses in the south-eastern town of Elche were burnt down during protests.