Restaurants in Mallorca are having to adapt their menus. | Efe


A report from Spain's national confederation of small to medium-sized enterprises indicates that businesses are activating contingency plans to cope with inflation, especially those most affected by high use of gas and electricity. In the Balearics, business sectors most linked to tourism have already highlighted the fact that while turnover is likely to exceed that of 2019, profits will be lower.

María Renart of Pimem, says that there is "the paradox" of having an excellent tourist season but with low profit or even losses. According to data from the Bank of Spain, getting on for 80% of businesses have experienced increases in production costs, but only 38% have passed these on in their final prices. This is forcing cuts elsewhere.

Restaurants are adapting by, in some cases, not opening at certain times. They are redesigning menus in order to avoid steep price increases, while if they can operate with two refrigerators rather than four, "then so much the better," says the president of the CAEB restaurants association, Alfonso Robledo. "Everything has become more expensive and we cannot pass this on to the client because there is a lot of competition."

In the retail sector, the president of Afedeco, Antoni Gayà, explains that many shops have been forced to reduce hours or even close indefinitely. The costs "are simply not affordable" and are aggravated by the impact of insularity. The worst, he warns, is yet to come. "After the end of the season, things will get really difficult."

Toni Garí, the president of Pimem's construction businesses, says that those which specialise in secondary and prefabricated materials are weathering the storm better than most, but that the likes of brick makers have been forced to stop production indefinitely. "If inflation continues and the stock runs out, businesses are going to have a very hard time." There is a worry that building projects over the winter will either grind to a halt or be postponed.