A PESTE analysis helps understand the macro environment that a business wishes to operate in. It identifies and predicts issues and situations that may occur in the host or new county. (Yüksel, 2012). This PESTE analysis will look at political factors within the UK and Spain, for example the level of corruption, attitudes to foreign investments and the governments stability.
Government type
UK
The UK has a constitutional Monarchy, which is based on parliamentary democracy with the Queen in a ceremonial role with three essential rights and the Prime Minister running office. There are three dominant parties within the UK; Conservatives, Labour and Liberal Democrats. (Santandertrade.com, 2017)
Spain
Spain’s monarchy is constitutional, with parliamentary democracy although power is highly dispersed. The King is head of state and commander in chief of the army, with the Prime Minister in charge of the Government. There are 4 main political parties throughout Spain which consist of the People’s Party, Spanish Socialist Workers Party, Poderno and Ciudadanos. (Santandertrade.com, 2017)
Analysis
The UK and Spain are largely similar within their parliamentary system and both have royal families at the top, although the queen has three essential rights; to be consulted, to warn and to advise whereas the King of Spain does not.
Government Stability
UK
After the referendum vote to leave the European Union (EU) in June 2016, Brexit compelled David Cameron to step down as Prime Minister, and Theresa May replaced him in July. May’s has backed a complete split from the EU, which means declining the free movement right from the EU, taking the country out of every single market. (Santandertrade.com, 2017)
Spain
Spain has currently had ten months of political blockage. Mariano Rajoy was re-elected in October 2016, as part of the People’s Party. Although Catalonia has not abandoned its demand for independence, A declaration is in the process of being signed. (Santandertrade.com, 2017)
Analysis
As the UK and Spain both bid for their independence, this makes them very comparable. As stated by The British Hospitality Association (BHA), Brexit could cost the UK Tourism and Hospitality Industry 60,000 EU workers throughout the next two years, this makes this sector the most affected area from EU migration compared to any other. Catalonia independence may go a step further and cause civil unrest throughout the country. (BBC NEWS, 2017)
Attitudes to foreign investments
UK
The UK’s attitude to foreign investment, is any individual get set up and run a private company. Although the law does state that at least one of the directors of any company registered in the UK needs to be a national. Apart from this procedure, all foreign investors are welcome. (Export.gov, 2017) The 6 main foreign investors within the UK are USA, Canada, Spain, Japan, India and Australia. (Santandertrade.com, 2017)
Spain
As the Spanish economy is still recovering from the 2013 crisis, Spain is seeking foreign investment throughout the country. As stated by the U.S Department of state Mariano Rajoy repetitively comments that it is a main government goals to make Spain progressively attractive to foreign investors. The law permits foreign investments up to 100% within companies. The 6 main investors within Spain are the United States, Luxembourg, UK, France, Mexico and The Netherlands. (Tuling and Waflar, 2015)
Analysis
Spain and the UK are alike in their attitudes towards foreign investments, and both invest in each other. Both countries do not discriminate between whether the investors are national or foreign individuals.
Level of corruption
UK
In July 2011, The Bribery Act 2010 came into power which stated the principal offences of bribery and produced a new strict liability for corporate offences of failure to prevent bribery. (Pickworth and Dimmock, 2017) This still remains a key concept in today’s government and a great concern. This is especially because the UK is placed 10th out of 174th in public sector corruption. (Transparency International Corruption Perceptions Index 2016 )
Spain
Spain is currently placed 41st out of 176th countries. (Torres, 2017) It has been ranked as the second biggest cause for unease after unemployment. Although things are changing, 1,500 people faced trail for corruption within a 5-month period in 2016 and Maraino Rajoy, has become the first ever prime minister to appear witness giving evidence in a colossal corruption court case, about his political party.
Analysis
As we can see from the Corruption Index, the UK is perceived more corrupted than Spain with 31 countries between their rankings.
Employment of migrant workers
UK
A migrant worker is described as a person that leaves their home country to work in a different. Seasonal workers are also very popular within the Hospitality Industry. The UK Borders Act 2007, was brought in to cover all aspects of immigrations, from permanent migration to asylum seekers, this includes the right to work and study in the UK. (Migrant workers, 2017)
Spain
Migrant workers wanting to work within Spain need to obtain different visas and work permits, this depends on your occupation, your economic contribution and the time you will be there. EU and Non-EU workers have different laws the need to be followed for them to work in the country legally. (Cummings, 2017)
Analysis
Spain and the UK have similar legal policies for migrant workers that cover all aspects. With the unemployment within Spain still at its highest, there are less jobs for migrant workers. The UK also believes due to Brexit, the lack of EU Migrant workers would be a challenge for the industry. (Huddleston, 2017)
Extent of tourism tax
UK
Tourist tax is charged from aged 17, this is a small fee to stay in a hotel; rented villa or apartment for the first 7 days. The UK at this moment has no tourist tax, although Sadiq Khan, London’s Mayor believes that we should start adding 5% on to hotel bills. The BHA’s chief executive, Ufi Ibrahim was quick to disagree. (Bienkov, 2017)
Spain
Tourist tax is important within Spain as it is still a very much holiday destination place. Barcelona has increased their tax by €2, this is because over the last 20 years tourism has quadrupled. This tourism tax goes towards improvement thought the cities. Although tourist tax stays €0.99 for the rest of Catalonia. (O'Marah, 2017)
Analysis
The UK and Spain have very different views to tourism tax because they have a different level of tourism. Although this could be all about to change as Bath may become the first UK city to introduce this.
In conclusion, there are many different political factors which relate to Sleepwell adding a hotel in Spain. The political blockage within Catalonia could propose difficulties due to the threat of civil unrest. Although the reassurance for foreign investments within Spain is encouraging for a starting a hotel. The high percentage of unemployment would also be tackled.