The owner of a coffee bar close to to our offices in the Paseo de Mallorca, tells a rather familiar tale. Before the coronavirus his business would be serving hundreds of coffees during the peak breakfast period. These days he says that he is lucky if he serves two dozen. His business is right opposite the main police station so his clients haven´t been hit by the economic crisis. They are earning the same or even more than when the lockdown started. So why has there been such a big drop in trade at this once popular bar?
People are scared to spend their money because they are fearful what the future may hold. Now, this is not good news for the Spanish government. If they were hoping for a consumer-led economic revival the case of this coffee shop rather dents their plans. Imagine other similar businesses around Palma whose clients have now been made redundant or are on reduced working hours; their loss of takings must be enormous.
We all know that this winter is going to be pretty tough, perhaps the toughest the island has seen for many years and this is one of the reasons why people are not spending their pennies, they are afraid to do so. I suspect that it must be a similar story across the country. To avoid this situation perhaps the government should be offering tax breaks for small businesses or even dropping the VAT (IVA) rate to entice clients back. Something needs to be done and fast otherwise many small businesses will be forced to close.
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