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.

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 €60,000 (£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 €17,779, or about £12,300, although it rises to €35,000 euros, or £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 €250,000, 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.

'It's the only way to be paid decent money'

John Woodward runs Voyages Orsom, which offers team-building activities and corporate entertaining on his catamaran from its base in Barcelona.

He started his company five years ago to take advantage of his sailing skills and a gap in the market. Before this he ran an English school, the classic route for Britons to earn a living in Spain.

Yorkshire-born Mr Woodward, right, 48, believes part of the reason many more Britons are starting companies nowis because it is simply much easier than when he began.

"It was pretty difficult to get started because Spanish gestors (fixers) seem to have had a monopoly on sorting out all official papers for foreigners," he says. "Now things are so much more accessible at the official offices.Also, the time frame is much quicker now. You see adverts offering to register a company in eight hours."

He says more Britons are prepared to take the risk."They know they will get paid little teaching English so they think the only way to be paid decent money and have a better standard of living is to start their own businesses or work freelance."

He worries whether there will be a backlash against foreigners, but says this is simply the new Europe where it is easier to work abroad.

'When abroad, a survival instinct kicks in'

If Richard Nazarewicz had not moved to Spain, he might never have started up his own business.

"If I was back in Britain, I would get a job fairly easily and I would be in a cushy environment," he says. "But when you are abroad, the survival instinct makes you want to start up your own company and struggle more than you would at home."

Two years ago, Mr Nazarewicz, right, started up Planet Red Media in Madrid, which offers IT services to business, working with international clients such as Microsoft and Hewlett Packard.

Mr Nazarewicz, 32, is from Reading, Berkshire, and worked as an IT consultant before moving to Spain "for a life change" four years ago. He worked for other companies before seeing a gap in the market and launching his own firm. He says he has noticed more Britons are now coming to Spain to do the same, typically starting up pubs, restaurants or language schools.

"Most people tend to end up in teaching because there are lots of jobs around," he says.

"But I would never make a good teacher, so I decided to do what I felt comfortable with."

A fluent Spanish speaker, Mr Nazarewicz says that knowing the language is "crucial" to gain respect.