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ECONOMY

‘Too little, too late’: Spain’s plan to help struggling restaurants and bars slammed

Spain’s government has approved a €4.2 billion incentives package for its tourism and hospitality sector, including for its approximately quarter of a million bars and restaurants, a measure critics have already labelled as “shameful” and not enough.

'Too little, too late': Spain's plan to help struggling restaurants and bars slammed
Photo: AFP

What would Spain be without its bars, taverns, ‘chiringuitos’ and restaurants?

In 2018, there were reportedly 277,500 eateries across the country, making it a world leader in this sense with one establishment for every 175 inhabitants.

Not only is eating and drinking out an intrinsic part of Spanish culture, it’s the driving force behind its service-based economy, employing millions of people in the country who have been hit hard by the coronavirus lockdown and ensuing restrictions.

On Tuesday the Spanish government approved its “reinforcement plan” for its tourism and hospitality industries, in doing so becoming the last of the big European economies to come to the rescue of a sector that’s been crippled for months.

Germany, France and Italy, all countries where the hospitality industry represents up to 7 percent of their GDP compared to 20 percent for Spain, already rolled out rescue measures weeks ago. Holland, Romania and Luxemburg also reacted quickly.

Spain’s hospitality sector had called for €8.5 billion of direct aid to deal with the unprecedented crisis of 65,000 establishment closures and 100,000 more at risk.

But after a month of waiting, the rescue plan will not include direct aid and has been estimated by government spokesperson and Minister of Finance María Jesús Montero to be worth around €4.2 billion.

Restaurant workers in Barcelona hold placards reading “Hospitality is not a virus”. 

The standout features of this decree for struggling bar and restaurant owners is that their landlords will be forced to cut rents and certain tax reductions.

Property owners renting out more than ten establishments who haven’t agreed to a temporary discount with their renters in the hospitality sector will have to slash rents by 50 percent until Spain’s state of emergency is lifted.

If the landlords own fewer than ten establishments they’ll be able to apply the rent reduction as a deductible Personal Income Tax expense during the first quarter of 2021.

The payment of taxes will also be deferred for six months for business owners, SMEs and self-employed workers in the sector (with a three-month grace period), up to a maximum amount of €30,000.

The hospitality sector had called for direct non-recoverable aid but the government will instead offer €500 million-worth of loans that have to be paid back by companies and ‘autónomos’ who apply for these ICO credits.

Restaurant tickets, which many companies give employees as a cost-saving perk, will also be able to be used for takeaways rather than just to eat on the premises.

“The aim is to provide aid and resources to significantly relieve the burden on businesses and facilitate liquidity,” Montero concluded.

But that hasn’t been the reaction from tourism and hospitality groups, who have called the measures “insufficient”.

“The government hasn’t offered a proper rescue plan that provides the aid we need to survive”, José Luis Yzuel, head of Spain's Hospitality Business Association said in reaction to the news.

“The rent reductions will only help 3 percent of the hospitality sector and leaves thousands of families unprotected,”.

“It’s a disgrace and it’s insulting that there isn’t a single measure which offers direct help for the sector, they’re just passing the buck to the regional governments,” Héctor Cañete, Yzuel’s counterpart in Galicia, added.

“There are measures that could have been implemented, such as the one in Germany where 75 percent of earnings from the same month in 2019 are being paid by the State to restaurant and bar owners.

“The government isn’t taking care of Spain’s tourism and hospitality sector.”
 

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ECONOMY

Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).

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