With Spain struggling to escape the European debt crisis and facing the threat of another recession, strapped companies in the country are increasingly looking abroad for new business and financing and losing their Spanish accent in the process.

While it is hardly a corporate exodus, the fear that the trickle will become a flood if the Spanish economy worsens is generating concern at a time when the government in Madrid is struggling to find additional revenue to close a gaping budget deficit.

Telefonica, the former public telephone monopoly, set off alarms in September when it said that it would create a digital unit in London for its most promising mobile and online businesses.

The news came soon after it announced significant layoffs in Spain, where unemployment is already higher than 20 per cent.

Other companies are taking smaller steps, like using foreign subsidiaries to avoid punitive borrowing costs at home. At the same time, some multinationals, like the two biggest Spanish banks, Santander and BBVA, are playing down their nationality to reassure investors as they seek to expand their business outside the country.

The value of Spain as a corporate brand has become “a lot worse,” said Pablo Vazquez, economist, Fundacion de Estudios de Economia Aplicada, a research institute in Madrid. The effect is felt not only in falling earnings, he said, but also “in terms of the intangible benefits that the Spanish brand transmitted before, those of a dynamic and youthful European society.”

Avoiding an exodus should be a priority of the next government, after a general election November 20, he added. Company executives have been reluctant to discuss publicly their concerns about being in Spain, particularly before the election.

Telefonica insisted that the decision to shift the digital unit, which includes its popular social network Tuenti, should not be viewed as an abandonment of Spain, even though the reorganisation also involved folding its Spanish unit into a broader European business.

Guillermo Ansaldo, Telefonica executive, said at a conference a day after the relocation announcement that the group would continue to invest heavily in Spain after spending 24.5 billion Euros, or nearly $34 billion, in the country over the last decade.

Still, since the onset of the financial crisis, the proportion of Telefonica's investments in Spain has fallen to 24.5 per cent of its global capital investments in the past fiscal year, from 27.6 per cent in 2007.

Spanish companies are really getting hit very hard in terms of their ability to issue shares and raise financing in general. It might not boost the market capitalisation immediately, but it does make sense to shift assets to safer jurisdictions, should things really get more sour here.

But given the public outcry that any full-fledged departure could generate, Mauro Guillen, a professor of international management at the Wharton School of the University of Pennsylvania, said companies were instead likely to use “lots of intermediary solutions.”

A company that followed Telefonica’s lead would be likely to benefit because “being based in London would give them more favourable access to financing,” said Luis Garicano, a professor at the London School of Economics.

Abertis, an infrastructure group, took a different direction. In March it issued 750 million Euros in bonds through its French subsidiary. The deal allowed Abertis to benefit from the stronger credit rating of its French unit.

Whatever happens to Spain, almost every Spanish multinational has set ambitious targets to derive more earnings from outside the country.

Aside from Latin America, Britain has arguably become the main target of Spanish companies. Most of that investment occurred before the financial crisis, notably the 2004 acquisition of the mortgage lender Abbey National by Santander and the 2006 takeover of BAA, the British airport operator, by Ferrovial.

But it has started to pick up again, according to Justine Winterburn, senior investment adviser at the British Embassy in Madrid.

“As a result of the economic downturn, we are experiencing a rise in the number of companies interested in the UK market,” she said, with 2012 expected to show a further increase.

Britain welcomed 56 new Spanish investment projects in the past financial year, up 47 per cent from a year earlier, according to UK Trade & Investment, a government agency.

The latest Spanish investments in Britain generated 3,542 jobs there, an increase of 116 per cent over the previous year. That is good news for Britain but not for Spanish labour unions.

Still, Fernando Casado, director of the Business Council for Competitiveness, a lobbying association that represents the largest companies in Spain, said it was unrealistic to expect Spanish companies to stay put.