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The Mirage of Business Growth in the Canaries: Have As Many Emerged as the Figures Suggest?

July 10, 2025
in Atlantico
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The Mirage of Business Growth in the Canaries: Have As Many Emerged as the Figures Suggest?

The creation of businesses in the Canary Islands surged by 37.5% in May, according to the National Institute of Statistics (INE).

At first glance, this may seem like a sign of economic recovery.

However, experts warn that it is an statistical illusion: many of the new companies are replacing others that were voluntarily dissolved, without this indicating a real expansion of the productive fabric.

In total, 429 new companies were established in the Archipelago, compared to 312 in the same month last year.

By province, Las Palmas recorded 204 new companies (+44.7%) and Santa Cruz de Tenerife 225 (+31.6%).

Dissolutions also increased: 70 companies closed, eleven more than last year.

This phenomenon is also occurring at a national level.

In May, 13,229 commercial companies were created across Spain, 36.9% more than in May 2024.

Dissolutions also rose by 25.3%, with 1,706 companies closing compared to 1,361 the previous year.

These figures, although positive in appearance, do not necessarily imply a strengthening of the business fabric, according to specialists in economics and employment.

“There is no net creation, only substitution”

“What we have is a change of ownership, not a net creation of productive fabric,” warns José Miguel González, director of Consulting at Corporación 5.

“When one analyses these statistics, it is not only important to look at the companies created but also at those dissolved and the reasons behind those movements,” he explains.

According to his calculations, 90% of the dissolutions in the Canary Islands are voluntary and are concentrated in sectors such as insurance, real estate, construction, and commerce, the same sectors that lead in the creation of new companies.

The pattern is clear: what is dissolved is re-registered under another name or ownership, maintaining the business structure almost unchanged.

Small and fragile businesses

González further emphasises that all the new companies created in May in the Canary Islands are limited, that is, they have a small structure and restricted capital.

“55% of our businesses have between one and two employees,” he recalls.

These figures reveal that the increase in businesses does not have a real impact on employment or productive capacity.

We are not dealing with large investors or companies with significant resources but rather with survival or replacement initiatives.

Employment: little real traction

“Employment is a consequence of economic growth. If there are more companies, it is because there is more growth. But if they are very small, they probably won’t generate much employment quantitatively,” the economist clarifies.

To check the real labour impact, González refers to other statistics, such as the Active Population Survey or the data on Social Security affiliations.

The figures from the INE alone do not allow for an assessment of the effect on employment.

Persistent barriers

González points to another structural problem that continues to hinder entrepreneurship in the Canary Islands: bureaucracy.

“The procedure is identical for any type of company, and this particularly penalises the smaller ones,” he laments.

In his view, the administration should facilitate economic activity with tools such as positive administrative silence or responsible declaration, which would allow entrepreneurs to start before completing all the procedures.

“Not all investments can endure for long while incurring costs without generating income,” he concludes.

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