CORONAVIRUS

Spain prepares support package to aid bars and restaurants hit by coronavirus crisis

Businesses are calling for urgent help as new restrictions threaten to cause more damage to the already ailing sector

An empty sidewalk café in Pamplona, Navarre.
An empty sidewalk café in Pamplona, Navarre.Jesús Diges / EFE

The Spanish government is preparing a support plan aimed at helping the hostelry industry deal with the economic fallout of the coronavirus crisis.

The plan has become increasingly urgent as Spain’s regions introduce new restrictions to contain the second wave of the pandemic – many of which affect the sector. In Asturias, Castilla y León, Navarre, Murcia, Galicia and Catalonia, the entire hostelry industry has been shut down, while in Andalusia, bars and restaurants must end table service by 6pm. Other measures, such as the nighttime curfew and earlier closing times, have also hurt businesses in the hostelry industry.

The support package is still under review and will not be launched until it is approved by all responsible departments: the economy office of the deputy prime minister, as well as the Finance, Industry, Labor and Social Security ministries.

Funding lines alone will not be enough because businesses are already heavily in debt
José Luis Yzuel, president of the Spanish Hostelry Association

According to sources, the measures under consideration include: subsidies and waivers on Social Security payments, increasing the soft loans available through the state-owned bank Instituto de Crédito Español (ICO), helping businesses renegotiate their rental contracts and opening completely new lines of funding for projects and specific needs. Another option is direct money transfers, which is what has been demanded by the industry’s main associations. “Funding lines alone will not be enough because businesses are already heavily in debt,” said José Luis Yzuel, the president of the Spanish Hostelry Association, which represents bars, restaurants and cafés in the country.

According to the Spanish Hostelry Association, the industry will lose half of its annual €123 billion earnings in 2020, and one-third of the 300,000 businesses that were open before the pandemic will be closed by the end of the year. Some €11 billion is at stake just over the Christmas period and the outlook does not look good given the coronavirus situation in the country.

“We are calling for direct support, as other European countries have provided,” said Yzuel.

Some Spanish regions have introduced their own measures, but they do not go far enough, according to Yzuel. “In Galicia and Murcia, [the measures] are a bit stronger, in Basque Country, they are so-so. The rest of the regions have either not proposed anything or, like Catalonia and Aragón, have done so half-heartedly,” he explained.

According to the Spanish union CCOO, by the end of October, the hospitality industry had lost nearly half a million jobs, with 260,946 fewer workers contributing to the Social Security system and 220,090 people still on the government’s ERTE furlough scheme.

“The regions must organize social dialogue roundtables aimed at keeping businesses active in order to protect jobs,” the Spanish Hostelry Association said in a press release on Tuesday.

No set date

The review of the plan has passed through the preliminary stage and is moving toward becoming a final proposal. The departments working on the initiative do not want to set a date for its launch, but time is running out and the Spanish government has not ruled out introducing some measures at an earlier point to maintain the productive framework until the economy recovers.

There are, however, still many details to iron out, especially given that the public coffers have been heavily depleted by the coronavirus crisis. The Industry and Labor ministries want to launch the plan as soon as possible, while the Economy and Social Security ministries prefer to define the measures when they have a clearer picture of the situation.

Sources from the inter-ministerial group said that work on the support package began midway through summer, when countries began to issue travel warnings against Spain due to the spike in coronavirus cases in the country. According to these sources, the turning point was when the United Kingdom reintroduced quarantine measures on travelers from Spain. This cut short the recovery of Spain’s tourism industry, which accounts for nearly 12% of gross domestic product (GDP) and has been devastated by the pandemic.

“These past months we have been studying the viability of different proposals. It is not so advanced that it can be immediately approved, although we are exploring several options in detail,” said sources from the Industry, Tourism and Trade Ministry.

Social Security Minister José Luis Escrivá spoke of the plan last week at a morning event with news agency Europa Press. “I know that new measures and alternatives [for the hospitality sector] are being looked at,” he said, adding that the support may vary depending on the region, which was confirmed by sources negotiating the plan.

Meanwhile, spokespersons from the Industry, Tourism and Trade Ministry said that “economic, fiscal and financial measures will be included” in the plan.

English version by Melissa Kitson.



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