Starting a business: perhaps the main obstacle to starting a business in Madrid is the at times Kafka-esque bureaucracy that can befall the entrepreneur. In Spain, it takes an average 47 days to go through the administrative processes to create a new company – the average for OECD countries is 19. However, the various administrative systems are slowly being dragged into the 21st century, thanks to more and more administrative processes coming online.

Support for start-ups: regional government programmes such as AvalMadrid offer loans to young entrepreneurs looking to start businesses.

Economy: Spain is the ninth largest world economy with a GDP of €870bn and an annual growth of 3.8 per cent, a rate that outpaces the EU average and surpasses the UK, Germany, and France.

If you live in London, like us, you’ll no doubt have a well-thumbed escape plan that you reach for in times of despair. The gentle tug of warmer climes, bluer skies, better coffee, reasonably priced restaurants, friendlier neighbours and a less taxing work ethic is often too tempting to brush off. A quick spin of the globe might have your finger settling on Barcelona for location, Sydney for latitude or maybe São Paulo for a bit of BRIC laying. How many of us, however, would consider Madrid? It might be time for an addendum to your getaway dossier, a more realistic plan B if you will. Madrid is dying to have you, the Ayuntamiento is clamouring for you to go and do business, and a spot of reconnaissance has left us with an overwhelming sense of opportunity.

Sadly, “underwhelming” or “complicated” are the adjectives most associated with doing business in Spain. Consult the World Bank’s annual international business survey and Spain ranks number 38 in a list of 178 countries polled for their ease of enterprise. This might appear respectable, but Spain only trumps Italy, Greece and Luxembourg in the “developed” European market. Forget Juan Carlos and Sofía, bureaucracy reigns supreme in Spain. Starting a business takes an average of 47 days when you take into account all procedures and the time spent on paperwork. Compare that to an average of six days in the US and 13 in the UK, and the thought of setting up shop suddenly seems impractical.

But don’t give up on the gatos yet. Pedro Solbes, Spain’s deputy prime minister and minister of economy and finance, is spearheading an initiative to cut through the red tape. Investment incentives granted by the EU, the government and regional authorities also far outweigh the tiresome bureaucratic procedures.

In fact, the Madrid council has created a number of organisations aimed at simplifying the start-up process by actively assisting local and foreign business ventures and providing financial incentives. “PromoMadrid and Interes were created to promote, attract and maintain foreign investment in Spain. AvalMadrid was founded to assist businesses in securing financing from government and private investment sources,” explains María Cristina Mateo Rebollo, technical adviser for international business strategy at the Madrid Ayuntamiento. All three agencies also provide companies with comprehensive services at every stage, from planning and evaluation to start-up and post-investment.

Despite current scepticism wracking global finance markets, Spain is the ninth largest world economy with a GDP of €870bn and an annual growth of 3.8 per cent, a rate that outpaces the EU average and surpasses Germany, the UK and France. “We have seen a great deal of interest in Madrid from overseas, especially from northern Europe. Many corporations have a significant presence here ­including GE, Boeing and LG. The business climate is favourable and it goes without saying that quality of life is high,” says Jaime Mesia, fund manager at Gartmore’s asset management Madrid office.

“We don’t find it difficult attracting people to Madrid,” says Gaulbert Pereira, founder of Nations Group, a financial headhunter specialising in placing foreign executives. “When people visit for the first time they are surprised by just how high the standard of living is. While working hours are less relaxed than before, cultural activities, climate, the restaurants and bars and a healthy infrastructure make Madrid an attractive alternative to other big international cities.”

If one was to rank European cities purely on their business credentials, then London would take first place followed by Paris and Frankfurt. Of course, these cities are business destinations with bona fide financial infrastructures making short work of operations, but wouldn’t you rather live in a city where it’s too warm for top buttons and most meetings are held over breakfast because of the quality of the coffee and empanadas? OK, you can find all this and more in the larger hubs, but there is a breezy outlook in Madrid that wasn’t present even 10 years ago. Madrileños have adopted an attitude of youthful optimism and pride in their city. “When I moved here 15 years ago the city was so conservative,” says Italian architect Teresa Sapey. “Since then I have seen the city relax. A more liberal perspective has washed over the place. I just hope it will help inform the city’s future architectural standing. I’m sure it will.”

Creatively, Madrid has also stolen some thunder from its offbeat cousin, Barcelona, a city that has lost some of its edge. Once the most spirited artistic centre in Spain, if not Europe, Barcelona seems to be reviewing its role as niño terrible and withdrawing into Madrid’s shadow for some reflection. Barcelona is no longer the default Spanish destination for young creatives wanting to make a name for themselves.

“The young guys I have working under me are desperate to break new ground. The work I’m seeing is improving immeasurably. I have a feeling Madrid and Spain could become a serious creative force. I’d like to see us compared to last decade’s Scandinavian movement,” says Rafa Anton, executive creative director of advertising agency Leo Burnett.

Inspiration for Anton’s creative revolutionaries is spread liberally across the city. Residents have access to more than 350 museums including the fêted Golden Triangle of the Prado, Thyssen-Bornemisza and Reina Sofía art museums. Spain’s enduring love affair with cinema means there are Madrid movie houses in every district – chin-strokers tend to head for Cines Verdi on Calle Bravo Murillo for an exemplary edit of independent, blockbuster and foreign celluloid. What’s great about Madrid is the effortless bustle of activity. It feels like a capital, but there isn’t the sense of urgency you might encounter in London. A café culture similar to Paris and Rome slows the pace somewhat as Madrileños can’t resist a cortado en route to anywhere.

At any time of day cafés and restaurants are stuffed with locals enjoying a quick bite or long three-hour lunches. Isolée, a café, deli and boutique is popular among young patrons for its lunchtime menu and international alimentación. “If you don’t like food then forget about enjoying Madrid. Eating out every day is the norm. That’s partly the reason I settled here eight years ago,” smiles Karen Bell, a chef from Wisconsin. “When I opened my restaurant Memento two years ago we had no problem filling it. Madrileños are willing to try anything new and I was surprised how easy it was for an outsider to start a business. All right, things took a bit longer than they would in the US, but who cares? I can’t see myself moving back to the States any time soon. Anyway, my family enjoy visiting Madrid much more.”

And getting to Madrid is a breeze. Earlier this year Barajas became the 10th busiest airport in the world. A Richard Rogers-designed terminal and two runways were opened in 2006, accounting for the airport’s 14 per cent growth in 2007 to over 52 million passengers, the third largest airport capacity in Europe. Madrid’s reputation as the gateway to the Americas is also an important trade catchment for the city, and now that the AVE high-speed train link to Barcelona is finally up and running, journey times to the rest of Europe via France have been wound back considerably.

Madrid’s recent renaissance from conservative financial powerhouse to youthful ciudad de la posibilidad of the Iberian peninsula is reason enough to book an Iberia flight to Barajas for a swift recce of your own. For all its cosmopolitan posturing, opportunities still abound in the capital for a canny investor who wants to introduce a service-driven retail or hospitality concept. Madrid’s retail market plays a strict two-note tune of high-end brand boutiques and middle-of-the-road shops with El Corte Inglés mopping up the overspill. If you have an attractive, small-scale department store concept or a rural family-owned hotel property that would suit a secondment in the city, then the Ayuntamiento will welcome you with open coffers.