report on the state of the economy in the city of barcelona - november 2013

Barcelona, November 2013

Report on the state of the economy in the city of Barcelona

by the Commission for Economy, Enterprise and Employment

Area of Economy, Enterprise and Employment Barcelona City Council

Executive summary

• The Catalan, Spanish and European economies have pulled out of the recession and posted positive quarter-on-quarter GDP growth in the third quarter of 2013, although economic stakeholders continue to make decisions that are conditioned by fiscal adjustment, restructuring of the financial system and the credit crunch.

• Recent behaviours of internal demand indicators –like the retail sales rate or vehicle registration rate-, the positive evolution of industrial activities and improved business confidence point to the beginning of economic recovery in Catalonia and the Barcelona area.

• The GDP of Barcelona for 2010 was €61,915 million making up 30.2% of that of Catalonia, with per capita GDP of €38,500. The city has a diversified economic structure, dominated by the tertiary sector with significant contributions from strategic sectors, while industry continues to carry significant weight in the production structure of the BMR.

Executive summary (2)

• Barcelona generates confidence among investors and companies, as shown in the increase in the volume of foreign investment in the first semester of 2013, the positive international positioning in terms of attracting this investment, and the positive trend in business creation throughout the year.

• After a fairly stagnant beginning to the year, exports and tourism have recovered

and while sales abroad have stabilised, all of the indicators related to tourism are up for the January – September 2013 period. The city has confirmed its position as an international benchmark in travel for both business and pleasure.

• The labour market continues to feel the brunt of the economic crisis, although

indicators for Barcelona show a less pronounced readjustment than seen in Catalonia and Spain. There are 109,984 registered unemployed in the city and the unemployment rate is 18.4%, particularly high among young people. The destruction of jobs has left Social Security affiliation at the same level as seen in 2003.

Executive summary (3)

• The City Council is in good financial health and applies rigorous budgetary and economic management measures that ensure suppliers are paid in no more than 30 days.

• The Fitch credit-rating agency, as of 18 October 2013, positively assessed

liquidation for 2012 and highlights the dynamic economy and good debt indicators for the Catalan capital. The agency has maintained the maximum rating allowable given the sovereign debt of the Kingdom of Spain (BBB-).

• Standard & Poor’s review of Barcelona’s credit rating in July highlighted the City

Council’s good economic management and the city’s budgetary and financial situation, maintaining the indicative credit level of ‘aa’, although the official rating is BBB-/negative/A-3 conditioned by that of Spain as a whole. This rating takes into account many positive factors like financial management, liquidity of the institution, and financial execution, in addition to highlighting solid on-going budgetary compliance.

Table of Contents

1. Macroeconomic context and current state of affairs 2. Barcelona’s Economy

A. Production structure: GDP of Barcelona 2010 B. Foreign investment, enterprise and entrepreneurship C. Internationalisation of the economy D. Production infrastructure E. Tourism F. Science and technology G. Labour market H. Proximity and social cohesion

3. Economic-financial indicators for the City Council

1.1. Macroeconomic context and analysis of state of affairs (1)

• In the third quarter of 2013 the GDP of the European Union rose 0.1% year-on-year, in a still fragile setting due to the effects of the fragmentation of the financial markets, weak economic activity and fiscal adjustments. The dynamism of emerging markets has slowed, while Japan and the USA have shown steady growth despite facing notable uncertainties in the coming months.

• The Catalan economy has also pulled out of the recession with positive quarter-on-quarter GDP growth in

the third quarter of 2013 (+0.1%) –after eight consecutive months without growth- softening the year-on-year fall in this indicator to -0.6%. These results are identical to and more favourable, respectively, than those for the Spanish economy (+0.1 QOQ and -1.2% YOY). External demand continues to be the main pillar of recovery, although the drop in internal demand has lessened.

Catalan, Spanish and European economies pull out of recession

(L) Leading indicator Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from Idescat and

INE.


• The risk premium has stabilised at 240 basis points, although the economic context in Catalonia and Spain continues to show significant risk given the persistence of the credit crunch, the effects of public budgetary adjustments and the situation in the labour market.

• In the EU, progress towards the Banking Union that will be created in 2014 –as the sole supervisory body- and measures taken by the European Central Bank to eliminate financial fragmentation in the Eurozone and promote credit for SMEs may contribute significantly to recovery of activity.

The fiscal consolidation process undertaken by the Spanish central government and that of the Autonomous Communities has been intense in 2013 with the aim of reaching approved public deficit goals, set at 1.58% of the GDP for Catalonia and 6.5% of the GDP for general government.

The deleveraging of companies and families continues and their debt in September in Spain shrunk 6.0% and 4.5% respectively year-on-year, while the savings rate for families rallied to 14.9% of disposable income in the second quarter. In any case, the financial burden is still far from sustainable in the long term and bank defaults reached an all-time high (12.12%) in August.

While the process of restructuring, recapitalising and rationalising the banking system continues, credit given to the private sector by financial entities continues to drop, reaching year-on-year levels of -10.4% in Catalonia and -12.8% in Spain in the second quarter.

Risk premium falls but restructuring of financial system and fiscal adjustments continue to condition decision-making among economic stakeholders


• Retail sales in Catalonia were up slightly in the third quarter of 2013 (with year-on-year variation at 1.3%) for the first time since 2010, while in Spain they have stabilised. In September, these figures showed year-on-year growth of 3.1% and 2.8% respectively.

• Vehicle registration in Barcelona in October was up 20.9% year-on-year and 38.9% month-on-month, results that must be associated with promotion of the PIVE Program. On the whole, vehicle registration from January to October rose 1.0%.

• The year-on-year variation in the Consumer Price Index (CPI) maintained a predominantly downward trend in 2013 and was 0.1% in October for the province of Barcelona, slightly above that of Catalonia and Spain (both at -0.1%) but below that of the European Union (0.9%).

Drop in internal demand lessens

* In current prices without adjustment for seasonality.

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the INE.


• Evolution of the industrial production index (IPI) in the third quarter of 2013 showed year-on-year growth of 2.4% in Catalonia –the second quarter with positive results after a downward trend of six quarters- and was more favourable than that in Spain (0.2%) and the Eurozone.

• The Catalan industrial GVA showed year-on-year growth in the second and third quarters (+0.5% and +1.2% respectively), driven by exports and containment of the drop in internal demand.

• However, investment in equipment in Catalonia slid back into negatives in the first two quarters of 2013 (-4.5% and -5.1%, respectively), due in part to the statistical effects of the increase seen in 2012 in the months before the VAT hike.

• The utilisation rate of productive capacity in the third quarter (70%) was above the average level seen in 2012 (65%) and is the best result posted since mid-2011, which is a leading indicator of recovery in industrial activity.

Symptoms of a positive turn in industrial activity


1.1 Macroeconomic context and analysis of state of affairs (5) • According to the BMA Business Climate

Survey carried out in the second quarter of 2013, the balance of business operations in the BMA is the most favourable since the second quarter of 2011, although 41% of businesspeople say that business is going badly and only 14% say it is going well. This quarter also showed a slowing in the drop in turnover, hitting positive figures in industry –especially for exports- and hotels.

• The short-term outlook of businesspeople as to operations has improved and are the least unfavourable since early 2012.

• Business confidence in Catalonia improved in the third quarter, as seen in more favourable results on the Business Climate Survey and better perspectives for the fourth quarter.

Business climate improves in BMA, overall still unfavourable

Source: Barcelona Chamber of Commerce and Idescat

1.1 Macroeconomic context and analysis of state of affairs (6)

• Sales of housing in Barcelona was at 22,414 transactions from January to September, up 8.6% year-on-year, while Catalonia and Spain showed growth of +7.8% and +0.2%, respectively. The positive evolution of the second-hand market is in contrast to negative results in new housing.

• Despite the difficult economic outlook for families, improvement to the market softens price adjustment: second-hand housing prices in the city were at €3,180 /m2 in October, down 2.6% from the same month in 2012.

• The number of new housing units begun in Barcelona shows cumulative variation of +7.8% compared to the first six months of 2012.

Second-hand real estate market rebounds

Housing sales January - September

2013 January - September 2013 Variation 13 / 12 (%)

Total New Second-

hand Total New Second-hand

BCN province 22.414 6.466 15.948 8,6 -9,5 18,2 Catalonia 35.746 12.337 23.409 7,8 -6,1 16,9 Spain 244.074 114.228 129.846 0,2 -4,7 4,9 Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data

from the INE.


2.A Barcelona’s Economy: GDP 2010 (1)

• From 2008 to 2010, the cumulative

nominal decrease in the city’s GDP was -2.6%, as a result of the sharp drop in the GDP in 2009 and slight recovery in 2010.

• The city of Barcelona’s per capita GDP was €38,500 in 2010, while the BMR and Catalonia are at €29,200 and €27,700, respectively. The indicator for the city is more than 50% higher than the EU average. (€24,500).

• In 2010 the GDP of Barcelona was €61,915 million, making up 30.2% of the Catalan GDP and 44.9% of that of the Metropolitan Region (€137,755.2 M), which in turn accounts for more than two thirds (67.1%) of the Catalan total.

GDP of Barcelona made up 30.2% of that of Catalonia in 2010

GROSS DOMESTIC PRODUCT mp*

2008-2010 (Millions of €)

2008 2009 2010

Variation 08-10

Barcelona 63.591 61.491 61.915 -2,6 Barcelona Metropolitan Region (1) 143.368 137.026 137.755 -3,9 Catalonia 212.894 204.226 205.315 -3,6

% Barcelona/Catalonia 29,9 30,1 30,2 % Barcelona/BMR 44,4 44,9 44,9 % BMR/Catalonia 67,3 67,1 67,1 * based on 2008 GDP

(1) Barcelonès, Baix Llobregat, Maresme, Vallès Oriental and Vallès Occidental counties. Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of

Studies based on data from IDESCAT

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from IDESCAT

2.A Barcelona’s Economy: GDP 2010 (2)

• In 2010, 81.9% of Barcelona’s GVA was generated by services, 10.6% by industry and 7.5% by construction. The economic situation has sped up the tertiarisation process in the city, while industry maintains a very significant weight (18.1%) in the production structure of the BMR.

• Government and collective services (23.1% of the total), business and real estate services (19.9%) and transport, storage, information and communications (12.2%) are the branches that have generated the most wealth in Barcelona, while the relative weight of retail is 11.5% and hotels, 8.4%, up 1.1% from 2008.

Barcelona has maintained its diversified economic structure, with significant and growing weight of strategic sectors

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from IDESCAT

• Productive foreign investment in Catalonia was €1,665.5 million in the first semester of 2013, up 42.2% year-on-year, making up nearly half (24.4%) of all that in Spain.

• Over the same period, Catalan investment abroad reached €536.9 million, down 38.1% from the

previous year.

Barcelona generates confidence among investors and companies: significant increase in foreign investment

2.B Foreign investment, enterprise and entrepreneurship (1)

Foreign investment in Catalonia and Spain In millions of €

S1-13 Variation S1 13/12

Weight Cat/Sp (%)

Catalonia 1.665,53 42,17% 24,4% Spain 6.818,35 -0,23% -

Catalan and Spanish investment abroad In millions of €

S1- 13 Variation S1 13/12

Weight Cat/Sp (%)

Catalonia 536,89 -38,13% 10,5% Spain 5.129,66 16,81% - Note: Total gross investment without entities holding foreign securities (ETVE)

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Ministry for the Economy and Competitiveness.

• Catalonia was the second region in Europe in terms of direct foreign investment by volume in the first semester of 2013 according to the Financial Times, overtaking the South West and West Midlands in the United Kingdom and the Community of Madrid. According to the same source, Catalonia is ranked fourth in Europe in number of projects attracted and third in job creation.

• Furthermore, according to the prestigious Ernst&Young European Investment Monitor Barcelona/Catalonia was the third urban region in terms of number of direct foreign investment projects attracted in 2012, trailing only London and Paris.

Barcelona generates confidence among investors and companies: Attractive urban region for international investors


FONT: Financial Times/Gencat

FDI in Europe by urban region

Rank Urban region Projects

2012 Variation 2011/12

1 Greater London (London) 313 -0,04

2 Île-de-France (Paris) 174 -0,15

3 Catalonia (Barcelona) 116 0,16 4 Madrid (Madrid) 93 -0,01

5 Düsseldorf (Düsseldorf) 84 0,00

6 Stuttgart 81 0,53

7 Dublin (Dublin) 72 0,20

8 Freiburg 71 0,39

9 Rhône-Alpes (Lyon) 70 0,06

10 North Holland (Amsterdam) 68 0,39

Other 2.655 -0,06

TOTAL 3.797 -0,03 Source: Ernst & Young. European investment monitor 2013.


• From January to September 2013, 5,425 trading companies were created in Barcelona, with year-on-year growth of 5.9%. • Subscribed capital in trading companies created over the first nine months of the year showed year-on-year growth of 110% and volume of €607 million, surpassing yearly rates for the five-year period from 2008-2012.

• Barcelona had the highest ratio of companies created per 1,000 inhabitants (3.3) of any large urban area in Spain for January to September.

• 8.3 trading companies were created in the province for each one dissolved, a ratio above the average for Catalonia, Spain and other large urban areas in the country. • According to the INE Central Business Directory, there were 438,385 companies in the province of Barcelona as of January 2013, 191,929 of which employed salaried workers and 246,456 of which didn’t, down 1.7% from January 2012.

Barcelona generates confidence among investors and companies: Trading companies

* Data for other Spanish urban areas are provincial. Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the INE

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the INE


• The entrepreneurial activity rate (EAR) for the population residing in the province of Barcelona in 2012 was 6.5%, down 0.5% from the previous year, while Catalonia as a whole, with EAR of 7.9%, was up 1.1% from 2011.

• The entrepreneurial activity rates for Barcelona and Catalonia are above those of France (5.2%), Switzerland (5.9%) and Finland (6%) –which had higher rates in 2010- and those of all the other Autonomous Communities in Spain. The rate for Catalonia is also above the European average (7.6%).

• In Barcelona, 68.9% of all people involved in entrepreneurial activities want to take advantage of a business opportunity, while 30% are driven by a lack of other labour alternatives.

Barcelona generates confidence among investors and companies: Global Entrepreneurship Monitor (GEM)

*Provincial dataSource: Global Entrepreneurship Monitor, Informe Executiu Catalunya, 2013.


• Entrepreneurs in the province of Barcelona are mainly men (69.9%) with advanced studies (65.3%), with income between €20,001 and €40,000 (38.4%) and are employed (78.2%).

• Entrepreneurship in Catalonia as a whole

is more innovative than that seen in previous years of the crisis –with a significant increase in process innovation and the use of new technology- and the percentage of entrepreneurs with advanced studies is above del 68%.

• In both Barcelona and Catalonia, the female entrepreneurial rate and that for under-35s have dropped, as has the level of entrepreneurial replacement, which has an negative impact on the number of businesses.

Barcelona generates confidence among investors and companies: Global Entrepreneurship Monitor (GEM)

*Provincial data


• Mobile technology is becoming a key vector of growth for the economy as a whole, and Barcelona's designation as the Mobile World Capital –hosting the Mobile World Congress and the industrial legacy project- are an opportunity to position the city in this arena.

• The mobile ecosystem in Catalonia in 2011 had more than 2,300 companies, more than 39,400

workers and generated business volume of €5,400 million, with the province of Barcelona accounting for 85%, 90% and 94% of these totals respectively.

Barcelona Mobile World Capital, driving force for the economy

Main data on mobile ecosystem in Catalonia and Barcelona

2011

Number of companies Number of workers

Business volume (in M€)

In absolute values Barcelona city 1.058 20.628 3.236

Barcelona province 1.997 35.438 5.077

Catalonia 2.342 39.408 5.399

Relative weight to next larger territory Bcn city / Bcn province 53,0% 58,2% 63,7%

Bcn province / Catalonia 85,3% 89,9% 94,0%

Source: Barcelona Observatory, 2013 Report. Estimation from the Department of Economic and Infrastructure Studies based on the Iberian Balance Sheet Analysis System (SABI), list of Social Security Affiliates and Survey on Idescat Services and Barometer of the technology sector in Catalonia.

Note: NACE sectors included in the table, by main activity listed in SABI: 6120 and auxiliary ecosystem: 2611, 2612, 2630, 2651, 5821, 5829, 6201, 6202, 6190, 6311, 6312, 6399.

• Exports from the province of Barcelona reached a volume of €30,212 million from January to August 2013 –slightly lower than the same period in 2012 (-0.6%). The decrease in this indicator in the first quarter was followed by a gradual recovery in the following months, in line with the European economy.

• From January to August 2013, there were 34,907 export companies in the province of Barcelona, which accounts for 29.3% of the Spanish total.

• Barcelona continues to lead the ranking of exports in Spain with nearly one fifth of the total (19.4%).

Evolution of exports stabilises

2. C Barcelona’s economy: Internationalisation (1)

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Datacomex. Ministry for the Economy and Competitiveness.

• From January to August, Barcelona generated 25% of all high and mid-high technology exports from Spain, and its weight with regard to sales abroad from the area is nearly 60% of the total.

• The chemical sector made up more than one fifth of all sales abroad from the province of Barcelona (25.7%) from January to August 2013, followed by equipment and machinery and automobiles (with 18.7% and 18.3% of the total respectively).

• The majority of exports from the Barcelona area (58%) go to the European Union, but trade with emerging economies is booming and the relative weight of Asia is growing (more than 10% of all sales abroad).


* Provisional data Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based

on data from the Ministry for the Economy and Competitiveness.

• From January to August 2013 the value of goods imported by companies in the province of Barcelona was €34,455 million, down 7.7% from the same period in 2012.

• The EU (58.6% of the total) is the main supplier to the Barcelona area. Asia now accounts for one fifth (22.1%) of all imports.

• The imports ranking is led by the chemical sector and industrial machinery and equipment (with 22.9% and 17.9% of the total, respectively).

• The coverage rate for the Barcelona area was up 5.6% in the first semesters of 2012 and 2013, hitting the highest rate seen in available data: 86.4%.

• In the first semester of 2013, sales from Catalonia to the rest of the world (41% of the total) surpassed those to the rest of Spain (34%), in line with the trend that began in 2010. Catalonia’s positive balance of trade with the rest of Spain (+€11,372 M) held steady.

Balance of trade continues to improve


50%

55%

60%

65%

70%

75%

80%

85%

90%

S1-2000 S1-2002 S1-2004 S1-2006 S1-2008 S1-2010 S1-2012

Coverage Ratio* for the Barcelona area

* Export/Import ratio for a territory over a specific period of time

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Ministry for Economy and Competitiveness.

International positioning (I): Barcelona maintains place among top 20 world cities in global competitiveness and stands out in liveability

• According to the prestigious Mori Memorial Foundation Global Power City Index 2013 ranking, Barcelona is ranked nineteenth in global competitiveness among 40 large world cities, down six positions from the previous year. Of the indicators analysed, the cities position on the liveability ranking is noteworthy, ranked fourth and surpassed only by Paris, Vienna and Amsterdam.


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Overall R&D Liveability Accessibility

Overall competitiveness in main urban areas of the world (Barcelona's rank)

2012 2013

Liveability of main urban areas of the world in 2013

Ranking City

1 Paris

2 Vienna

3 Amsterdam

4 Barcelona 5 Vancouver

6 Berlin

7 Copenhagen

8 Zurich

9 Stockholm

10 Geneva

11 Milan

12 Toronto

13 Madrid

14 Brussels

15 Osaka

16 Fukuoka

17 Frankfurt

18 Taipei

19 Shanghai

20 Tokyo Source: Mori Global Power City Index. Institute of Urban Strategies. The Mori Memorial Foundation

• The Scorecard on Prosperity 2013 –which compares 24 large, competitive world cities- puts Barcelona as the fourth most attractive city for workers, and 16th in global prosperity.

• Likewise, Barcelona is ranked first among leading world metropolitan areas in terms of commute time, with an average of 48 minutes return. The same ranking puts Barcelona at the top in terms of equality.

• Barcelona is among the top 10 European cities for the creation of start-ups, according to the magazine Wired and is eighth on the European Smart Cities ranking, according to digital innovation magazine Fast Company.

Posicionament internacional de Barcelona (II)


Labour Attractiveness

Rank City Score

1 Paris A 0,68

2 London A 0,66

3 Madrid A 0,63

4 Barcelona A 0,62

5 Toronto B 0,60

6 Calgary B 0,58

7 Sydney B 0,58

8 Oslo B 0,55

9 Vancouver C 0,53

10 Stockholm C 0,53

11 Montreal C 0,52

12 Halifax C 0,50

13 Tokyo C 0,49

14 New York D 0,49

15 Seattle D 0,49

16 Dallas D 0,47

17 Berlin D 0,47

18 Hong Kong D 0,47

19 Shanghai D 0,45

20 Chicago D 0,44

21 Boston D 0,44

22 San Francisco D 0,44

23 Milan D 0,44

24 Los Angeles D 0,43 Note: Score from 0 to 1.

Source: Toronto Board of Trade, Scorecard on Prosperity 2013

Commute time

Rank City Minutes

1 Barcelona 48,4

2 Calgary 52,0

3 Oslo 52,0

4 Dallas 53,1

5 Milan 53,4

6 Seattle 55,2

7 Los Angeles 58,3

8 San

Francisco 57,4

9 Boston 58,5

10 Vancouver 60,0

11 Chicago 61,9

12 Montreal 62,0

13 Berlin 63,2

14 Madrid 66,0

15 Toronto 66,0

16 Paris 67,4

17 Sydney 68,0

18 Tokyo 69,6

19 New York 69,8

20 Stockholm 70,0

21 London 74,0

22 Shanghai 100,8

Note: Average commute time (in minutes) to and from work

Score: Toronto Board of Trade, Scorecard on Prosperity 2013

Weekly frequency of intercontinental flights increase • The Barcelona Airport saw a total of 30,519,978 passengers from January to October 2013, with a

slight year-on-year decrease of 0.5%. On the other hand, however, the weekly frequency of intercontinental flights was up 16.5% from 2012.

• From January to October 2013 there was a slight uptick in year-on-year growth in cargo transport (+0.4%) and decrease in container traffic (-2.3%) in the Port of Barcelona, while the percentage of tonnes loaded shows year-on-year growth of 2.3%.

2.D Infrastructure and production spaces

Activity indicators for the port and airport of Barcelona 2013

January - October 13 Year-on-year variation

13/12

Absolute In % Number of containers Port (TEU) 1.452.220 -34.239 -2,3% Tonnes of cargo Port 35.133.234 138.826 0,4%

January - October 13 Year-on-year variation

13/12

Absolute In % Number of passengers Airport 30.519.978 -155.277 -0,5% Tonnes of cargo Airport 82.087 1.702 2,1% Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Port and Airport of Barcelona

2.E Tourism (1)

• After a more stagnant beginning to the year, tourism recovered in the second quarter and posted growth in all indicators for the January-September 2013 period.

• Highlights include strong year-on-year

growth in credit-card spending by tourists (+28.2%) and the increase in cruise passengers (8.4%), as well as more moderate growth in overnight stays (+2.8%) and number of tourists (+0.9%).

• Catalonia is the leading Autonomous Community in international tourism, making up 25% of the Spanish total and showing year-on-year growth of 7.5% in the first nine months of 2013.

Weight of international tourism increases

Tourism indicators for Barcelona

January-September 2013

January-September 2013

Year-on-year variation 13/12

Absolute In %

Number of tourists 5.754.173 51.358 0,90 Overnight hotel stays 12.695.295 343.601 2,78 Credit-card spending (€) 2.380.220.285 523.779.834 28,21 Cruise passengers 2.001.084 154.966 8,39 Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from Turisme de Barcelona

• According to the International Congress and Convention Association (ICCA), Barcelona was ranked first among world cities in number of delegates and third in number of international congresses for the 2008-2012 period. In 2012, Barcelona was fifth on the ranking of international congresses.

• Other international rankings highlight Barcelona’s attractiveness for international visitors.

2.E Tourism (2)

Barcelona, international benchmark in business tourism Number of international congresses in world cities 2008-2012

Rank City Congresses

1 Paris 897 2 Vienna 875 3 Barcelona 822 4 Berlin 772 5 Singapore 721 6 London 666 7 Amsterdam 612 8 Madrid 611 9 Istanbul 601 10 Beijing 598

Source: ICCA, A Modern History of International Association Meetings 1963-2012

Number of delegates at international congresses in world cities 2008-2012

Rank City Delegates 1 Barcelona 519.159 2 Vienna 516.581 3 Berlin 470.076 4 Paris 448.881 5 Amsterdam 396.072 6 Istanbul 357.476 7 Singapore 331.588 8 Stockholm 324.100 9 London 292.477 10 Buenos Aires 290.188

Source: ICCA, A Modern History of International Association Meetings 1963-2012

International tourism rankings

Name of ranking Topic Barcelona rank Mastercard Index of Global Destination Cities 2013

International visitors and tourism spending

10th in the world 3rd in Europe

The European Cities Marketing Benchmarking Report 12/13

International overnight stays 4th in Europe

Trip Advisor Attractiveness for tourists 5th in the world

Euromonitor International 2011 Report

Visited by international tourists

20th in the world 5th in Europe

Source: Reports listed in the table.

2.F Science and technology

• Barcelona was ranked fourth in Europe and tenth in the world for scientific production in 2012, according to a report by the Polytechnic University of Catalonia.

• The Max Planck Society world ranking of scientific excellence for Physics and Astronomy features

three Catalan institutions – the Institute of Photonic Sciences, the Catalan Institution for Research and Advanced Studies and the High Energy Physics Institute, which are ranked first, third and eighteenth, respectively.

Research of excellence in the area of Barcelona receives global recognition

Source: UPC-Centre of Land Policy and Valuations. Report on the evolution of scientif ic production in main w orld cities, compiled for the 2013 Report of the Barcelona Observatory

Scientific excellence in physics and astronomy

1 Institute of Photonic Sciences 2 Institute for Advanced Study 3 Catalan Institution for Research and Advanced Studies 4 Rice University 5 Perimeter Institute for Theoretical Physics 6 University of Pennsylvania 7 Stanford University 8 Partners HealthCare System 9 Harvard University

10 University of California, Santa Barbara

11 Columbia University 12 Massachusetts Institute of Technology 13 Princeton University 14 Tufts University 15 University of Chicago 16 University of California, Santa Cruz 17 Carnegie Institution for Science 18 High Energy Physics Institute Source: Mapping Scientific Excellence. Max Planck Society

2.G Labour market (1)

• Barcelona finished the third quarter of 2013 with 960,613 Social Security affiliates under all the

regimes, which is down 1.2% and represents a loss of 12,056 jobs from the same period in 2012. • The year-on-year decrease in affiliates in the city of Barcelona (-1.2%) was smaller than that

seen in Catalonia and, especially, Spain as a whole (-2.7 and -3.3%, respectively).

The city has nearly 1,000,000 jobs but net destruction of employment continues

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the INSS

2.G Labour market (2): Salaried employees by economic sector

• In the third quarter of 2013, the number of salaried employees in the three large sectors in the city fell, more moderately in the service sector (-0.8% YOY variation) than in industry (-3.4%) and, particularly, construction (-14.6%).

• By branch, those generating jobs

were: real estate activities (+2.6%), financial and insurance activities (+1.9%), government (+1.8%) and business services (+0.5%), the hotel sector held steady, and in absolute values, the loss of more than 3,800 retail jobs (-3.1%) and more than 2,000 in the transport and storage sector (-5.1%) and manufacturing industry (-3.5%) is noteworthy.

Social Security Affiliation by economic activity in Barcelona 3rd Quarter 2013

Economic Activity (CCAE 2009) Q3-2013 (%) of total Q2-2013 Q3-2012 Number QOQ

variation (%)

YOY variation

(%)

TOTAL 817.840 100,00% 826.555 830.042 -8.715 -1,1 -1,5 Agriculture, livestock and fishing 225 0,03% 262 270 -37 -14,1 -16,7 Extraction industries 29 0,00% 30 48 -1 -3,3 -39,6 Manufacturing industries 57.318 7,01% 57.824 59.393 -506 -0,9 -3,5 Power and gas 2.223 0,27% 2.241 2.330 -18 -0,8 -4,6 Water and waste 9.795 1,20% 9.608 10.045 187 1,9 -2,5 Construction 21.939 2,68% 23.244 25.684 -1.305 -5,6 -14,6 Retail and repairs 119.611 14,63% 121.586 123.468 -1.975 -1,6 -3,1 Transport and storage 37.678 4,61% 37.330 39.698 348 0,9 -5,1 Hotels 63.049 7,71% 62.223 63.002 826 1,3 0,1 Information and communications 42.767 5,23% 42.655 43.126 112 0,3 -0,8 Financial and insurance 39.739 4,86% 40.615 38.990 -876 -2,2 1,9 Real estate 9.937 1,22% 9.980 9.682 -43 -0,4 2,6 Business services 161.987 19,81% 160.594 161.246 1.393 0,9 0,5 Government 71.013 8,68% 76.073 69.790 -5.060 -6,7 1,8 Education 56.181 6,87% 55.850 56.637 331 0,6 -0,8 Health and social services 79.918 9,77% 80.677 80.006 -759 -0,9 -0,1 Arts and recreation 17.359 2,12% 18.342 17.823 -983 -5,4 -2,6 Other services 21.953 2,68% 22.367 23.727 -414 -1,9 -7,5 Personal household employees 4.783 0,58% 4.714 4.758 69 1,5 0,5 Extraterritorial bodies 336 0,04% 340 319 -4 -1,2 5,3 Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Catalan Ministry for Entreprise and Employment

2.G Labour market (3): Salaried employees in knowledge-intensive sectors

• More than half of all jobs in the city of Barcelona (53.4%) are knowledge-intensive and the city is a hub for these jobs in Catalonia, with 44.5% of the total.

• Affiliation in knowledge-intensive sectors

showed a slight uptick in year-on-year levels (+0.1%) for the second time since 2011 thanks to an increase in knowledge-intensive services (+0.3%).

• Among knowledge-intensive services and

high technology, information services and IT services are up (+6.2% and +3.2%, respectively), while research and development has held fairly stable and jobs have been lost in cinema and video (-6.9%), telecommunications (-6.4%) and radio and television (-3.7%), continuing the trend seen over the past two years.

Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Catalan Ministry for Entreprise and Employment


• The employment rate in Barcelona was 63.9% in the third quarter of 2013, 8.4% lower than in Spain, hitting the second lowest rate since 2002. Likewise, the city has lost assets compared to one year ago, although the activity rate (78.3%) is once again above 78%.

• The EAPS unemployment rate for the city

(18.4% in the third quarter) has dropped 0.7% in the past year. This indicator in Barcelona is lower –by 4.6% and 7.7%, respectively- than the Catalan (23.0%) and Spanish averages (26.1%), but 7.4% higher than the European average (10.9%).

• Unemployment is still high among young people, although the youth unemployment rate for the city (37%) is 10% and 17.3% lower than the Catalan and Spanish rates, respectively.

Unemployment rate 18.4%

Activity, employment and unemployment rates Q3-2013. In %

Activity rate

Employment rate

Unemployment rate

Barcelona 78,3 63,9 18,4 Catalonia 79,0 60,9 23,0 Spain 75,1 55,5 26,1 European Union* 72,0 64,2 10,9 * Data from second quarter of

2013

4,06,08,0

10,012,014,016,018,020,022,024,026,028,0

2001

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2013

Evolution of unemployment rate by territory

Barcelona Catalonia SpainSource: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Survey of the Active Population


• Barcelona finished the month of October with 109,984 people registered as unemployed with the SOC offices (1,278 more than the previous month), with a month-on-month increase in this indicator of 1.2% after stabilising in July, August and September.

• Year-on-year, Barcelona had the best evolution of all territories compared as the

unemployment level was down 2.2% from that registered in October 2012 –with 2,495 fewer people unemployed and the level decreasing for five consecutive months- while the drop in both Catalonia (-1.9%) and Spain as a whole (-0.5%) was more moderate.

• The number of contracts signed in Barcelona in October (85,245) was up 5,593 (7%) from October

2012. • Cumulative hiring from January to October 2013 fell year-on-year in Barcelona (-0.4%), but rose in

Catalonia (+0.3%) and Spain (+1.9%). It must be noted, however, that temporary cumulative hiring in the city showed year-on-year growth (+4%), and the relative weight of permanent contracts is higher in Barcelona and Catalonia (11.2% and 11%, respectively) than nationally (7%).

Registered unemployment in Barcelona down year-on-year

2.G Labour market (6): Profile of unemployed in Barcelona

• Service workers (21%), those without qualifications (18.4%) and administrative workers (17%) have the highest levels of registered unemployment and together make up more than half of all those unemployed (56.4%).

• The majority of the professional

groups in the city showed decreased unemployment compared to October 2012, with scientific technicians, qualified workers and unqualified workers showing the greatest year-on-year decrease in unemployment (-5.1%, -4.5, -3.6%, respectively).

Most jobs show decrease in registered unemployment in the city in October

Registered unemployment by professional group

October 2013

Economic Activity (CCAE 2009) Registered unemployment (%) of total Year-on-year

variation(%)

Registered unemployment

September 2013

TOTAL 109.984 100,0 -2,2 108.706 Executives 3.689 3,4 -2,2 3.713 Technicians/Scientists 13.737 12,5 -5,1 14.415 Technicians/Support professionals 13.617 12,4 -1,7 13.535 Administrative 18.653 17,0 -0,7 18.412 Services 23.132 21,0 0,0 22.236 Agriculture/Fishing 506 0,5 2,2 496 Qualified workers 11.790 10,7 -4,5 11.635 Machine operators 4.643 4,2 -0,2 4.517 Unqualified workers 20.196 18,4 -3,6 19.727 21 20 Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Catalan Ministry for Enterprise

Employment

2.G Labour market (7): Registered unemployment by sector

• In October 2013, the year-on-year decrease in unemployment in the power and gas (-11.7%), Government (-10.2%), construction (-9.6%), other services (-5.6%), arts and recreation (-4.6%) and business services (-3.9%) sectors was noteworthy.

The number of unemployed held

steady in retail (+0.2%) and increased moderately in the transport, health and social services, and financial sectors, with a more significant increase in the hotel sector (+3.5%) due to seasonality.

Registered unemployment by economic sectorOctubre 2013

Economic Activity (CCAE 2009) Registered unemployment (%) of total

Month-on-month i ti (%)

Year-on-year variation(%)

TOTAL 109.984 100 1,2 -2,2

Agriculture, livestock and fishing 513 0,49 10,6 -6,9Extraction industries 41 0,05 -2,4 -25,5Manufacturing industries 9.751 9,1 -0,7 -5,6Power and gas 203 0,20 -4,7 -11,7Water and waste 798 0,71 17,7 -1,4Construction 10.983 10,67 -1,5 -9,6Retail and repairs 17.701 15,63 1,5 0,2Transport and storage 3.855 3,47 5,1 1,7Hotels 10.509 9,54 6,9 3,5Information and communications 4.242 3,92 -1,7 -1,5Financial and insurance 1.790 1,53 9,6 2,2Real estate 1.117 0,99 3,1 1,1Business services 26.578 24,57 1,1 -3,9Government 1.274 1,24 -1,5 -10,2Education 3.945 3,55 -10,0 -4,5Health and social services 5.115 4,33 4,5 2,6Arts and recreation 2.270 2,18 -0,5 -4,6Other services 3.981 3,72 -2,6 -5,6Personal household employees 1.426 0,79 8,9 74,1Extraterritorial bodies 43 0,04 0,0 -12,2Not previously employed 3.849 3,24 1,9 -1,8=Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Catalan Ministry for Enterprise and Employment

2.G Labour market (8): Profile of the unemployed in Barcelona

• The profile of the average unemployed person in Barcelona as of October 2013 was: men over 45, with general education, from the business services, retail, construction or hotel sectors.

• By age, unemployment is increasing among over-45s and by level of studies, only the vocational-training segment is growing.

• The number of unemployed foreigners

was down 7.2% last year, due to many returning to their home countries.

Number of unemployed foreigners continues to decrease

PROFILE OF REGISTERED UNEMPLOYED IN BARCELONA oct-13

Number % of

Total Year-on-year variation (%)

Total unemployed 109.984 - IIII -3,0 Foreigners: 21.004 19,1 IIIIIIIIII -7,2 Gender:

Male 55.032 50,0 IIIII -3,6 Female 54.952 50,0 I -0,8

Age:

<25 5.867 5,3 IIIIIIIIIIIIII -9,9 25-29 9.235 8,4 IIIIIIIIIIIIIIIIIIII -14,0 30-45 42.512 38,7 IIIIIIIII -6,9 >45 52.370 47,6 5,6 IIIIIIIII

Studies

Primary or none 7.226 6,6 IIIIII -4,4 General education 65.231 59,3 IIII -2,9 Vocational training 18.836 17,1 1,8 III University 18.691 17,0 IIII -2,9

Length

Up to 6 months 45.425 41,3 IIIIIIIIIIII -8,8 6 to 12 months 18.958 17,2 IIIIIIIIIIIIII -9,9 More than 12 months 45.601 41,5 9,6 IIIIIIIIIIIIIII

Recipients (%): 56,05% II -1,6 Source: Compiled by the Barcelona City Council Area of Economy, Enterprise and Employment's Department of Studies based on data from the Catalan Ministry for Enterprise and Employment

2.H Proximity and social cohesion (1): Retail and markets

• With 15,732 companies and 138,204 workers, retail is one of the most significant branches in Barcelona’s economic structure, accounting for 22.7% of all companies and 14.9% of all workers.

• Barcelona is among the top 10 most attractive European destinations to set up retail shops

according to the latest ranking by Jones Lang Lasalle in 2012.

Barcelona, among top 10 European destinations to set up retail shops

Retail in Barcelona Retail (Q3 2013) Number of companies Number of jobs Municipal markets Food Specialties Number of establishments Total surface area Revenue* *Average sales per month per establishment. 2010 Source: INSS and Barcelona City Council Department of Statistics

Top 10 most attractive destinations in Europe for international retail companies (2012)

Rank City 1 London 2 Paris 3 Moscow 4 Milan 5 Madrid 6 Rome 7 Munich 8 St Petersburg 9 Prague 10 Barcelona

Source: Jones Lang La Salle, Destination Europe

2.H Proximity and social cohesion (2): Unemployment by district and neighbourhood Registered unemployment fell in eight districts last year

• The registered unemployment rate shows a

negative correlation with the average income level in the district, and Nou Barris is the district with the highest level (19.3%).

-6,7% -6,3%-5,7%

-4,1% -3,7% -3,3% -3,0% -2,6%-1,9%

-0,0% +0,7%

-8%-7%-6%-5%-4%-3%-2%-1%+0%+1%

Variation in unemployment rate by district (September 2012-2013). In %

Registered unemployment rate by district. September 2013

2.H Proximity and social cohesion (3): Breakdown of Gross Household Income

• In Barcelona in 2011, most households fell into the middle class (46.9% of the total), although this was down 11.6% from 2007.

• With the economic crisis, the population can be seen moving to the lower-middle and lower income levels from the upper-middle class, which is progressively dwindling.

The economic crisis has reduced the relative weight of the middle class in the city

Source: Barcelona Economia, Technical Programming Department, Barcelona City Council

3. Economic-financial indicators for the City Council (1)

Source: Barcelona City Council Directorate of Finance

Progressive improvement in indicators Economic-financial indicators for the Barcelona City Council

Budget indicators 2010 2011 2012 2013e Var. 13e/12 Var. 12/11 Current revenue 2.042.263 1.884.171 2.235.491 2.303.903 3,1% 18,6% Current expenditure 1.774.976 1.788.380 1.807.697 1.853.969 2,6% 1,1% Gross savings 267.287 95.791 427.794 449.934 5,2% 346,6% % Gross savings w/o current revenue 13,1% 5,1% 19,1% 19,5% 2,1% 276,4% Non-financial revenue 2.216.179 1.996.670 2.261.079 2.333.858 3,2% 13,2% Non-financial expenditure 2.516.411 2.394.973 2.200.999 2.210.546 0,4% -8,1% Capacity (Need) for Financing -300.232 -398.303 60.080 123.312 % CNF w/o non-financial revenue -13,5% -19,9% 2,7% 5,3% National Accounting Adjustment -216.299 -466.409 -57.559 -97.110 Debt level (as of 31/12) 2010 2011 2012 2013e Var. 13e/12 Var. 12/11 Barcelona City Council 1.200.101 1.090.101 1.165.101 1.165.101 0,0% 6,9% % Debt w/o current revenue 58,8% 57,9% 52,1% 50,6% -3,0% -9,9% Consolidated Debt according to Excessive Deficit Procedure (EDP)(1) 1.201.529 1.090.101 1.165.101 1.165.101 0,0% 6,9% Consolidated Debt according to Municipal Charter (2) 1.464.405 1.346.790 1.401.032 1.393.478 -0,5% 4,0% (1) Includes Barcelona City Council (SEC 95 criteria) (2) Includes City Council, OOAA, EPEs and Trading Companies held in more than 50% Credit ratings Apr-12 Sept-12 Mar-12 Current Spain Standard&Poor's (ICL)* 'aa' 'aa' 'aa' 'aa' Standard&Poor's A (-) BBB+ (-) BBB- (-) BBB- (-) BBB- (-) Fitch A (-) BBB (-) BBB (-) BBB (st) BBB (st)

Moody's Under review Under review Baa3 (-) Baa3 (-) Baa3 (-)

Note: (Perspective) * ICL: "Indicative Credit Level". Assesses the intrinsic creditworthiness of the City Council if it were not constrained by the sovereign credit rating.

3. Economic-financial indicators for the City Council (2)

• The City Council has maintained its firm commitment to pay suppliers in 30 days, as can be seen in the cumulative monthly average as of 31 October.

Commitment to pay in 30 days maintained

Source: Barcelona City Council Treasury