• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

Power price surge threatens Spanish recovery

September 23, 2021 by David Barret Leave a Comment

September 23, 2021

By Belén Carreño

MADRID (Reuters) – Surging natural gas prices across Europe could hinder the economic recovery in Spain, where small businesses crucial to local employment are more exposed than elsewhere on the continent to steep rises in power bills.

Energy bills have more than doubled in Spain and other European countries as gas prices rocket on factors such as low storage stocks, tipping companies into crisis and forcing governments to come up with measures to cushion the blow.

The fallout from record high gas prices has hit even food producers as suppliers of carbon dioxide – used in the vacuum packing of food products to extend their shelf life and to put the fizz into beer and soft drinks – seize up.

Spain is particularly exposed to the spike in household fuel bills due to a high share of customers with flexible tariffs, which are sensitive to price movements, analysts say.

Small businesses, which account for a disproportionately high 61.3% of Spanish economic activity and 71.9% of total employment, are suffering especially.

Less able than large corporations to weather the high prices, they say they are struggling to invest in re-hiring and expansion as the economy emerges from the COVID-19 pandemic which saw gross domestic product shrink a historic 10.8% in 2020.

“We can hardly cover expenses,” said Mayra Maldonado, 41, who runs a historic dry cleaning shop in the centre of Madrid with her partner, Gladys Mariscal.

“In a pre-COVID August, we had a turnover of 6,000 euros and about 600 euros of power bill. This August we have made 3,000 euros and we paid 1,050 euros for electricity.”

Maldonado worked through an August heatwave when the temperature routinely exceeded 40 degrees Celsius with hardly any air conditioning in an effort to keep down bills in a business needing electrical appliances during peak hours.

After working as an employee for 15 years she took over the business in March 2020, a few days before the first major lockdown was imposed.

“We have a turnover 40% of what this dry cleaner was making, remote work has affected us a lot.”

POTENTIAL SAVINGS DRAIN

Recent indicators pointed to a solid revival of the economy, as high vaccination rates bolstered activity and tourists flocked to sunny destinations over the summer. The government expects the economy to rebound to pre-pandemic levels by the end of 2021.

However, the recovery so far has been heavily dependent on spending by consumers who are now facing 35% annual rises in their power bills.

That could drain 20 billion euros in savings for households and small businesses, according to estimates by Raymond Torres, chief economist of the Funcas thinktank

“The impact of the power hike comes after a terrible crisis. It is not the same to assume these costs now than in 2019,” said Luis Aribayos, secretary general of Spain’s association of small and medium-sized companies.

The Bank of Spain, in line with the European Central Bank, said the rise is temporary and will not affect the economy. But analysts reckon that even if transitory, this will erode profit margins and competitiveness.

“Small businesses have had to empty the coffers and go into debt. They can’t take it anymore,” Aribayo said.

The government approved last week an emergency package to mitigate the rise in prices, reducing taxes and putting a cap on gas, so that it does not pick up all the increase in the wholesale markets.

Italy and Greece are in a similar position and are looking for Spanish-style solutions to prevent sudden price rises from hitting consumers’ pockets. Britain too is mulling support for energy companies and has warned that more of its energy suppliers could be forced out of business.

For the time being, Spanish businesses – who could see the impact of the government salve in upcoming bills – have decided to absorb these increases and not pass them on to their customers, slowing the inflationary spiral.

“Prices can’t be touched, they can’t be raised. If you go up 50 cents, the customer leaves. But for us, the increase in electricity is much more. We have not touched prices for five years,” said Maldonado.

Torres estimates that inflation will reach 4.5% by the end of the year, the highest in more than a decade, and said that although transitory, the impact on the recovery will have a negative impact.

“The rise in prices is more pronounced in Spain than in Italy and France, even exceeding euro zone inflation and that is not a positive element for our competitiveness,” said Alicia Coronil, chief economist at Singular Bank, also warning of a deterioration in consumer sentiment.

(Reporting by Belén Carreño; Editing by Emelia Sithole-Matarise)

Source Link Power price surge threatens Spanish recovery

David Barret
David Barret

Related posts:

  1. China Evergrande debt woes raise financing pressure on peers
  2. Philippines’ Duterte accused of stifling scrutiny in senate probes
  3. SpaceX launches its first batch of Starlink satellites aimed at new coverage areas from California
  4. EU says it has no option but to talk to Taliban

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • Finally, A Successful Starship Launch – What This Means For The Moon Landings
  • 26 Years After Launch, The ISS Will Try A New Way To Stay In Orbit Next Month
  • The World Map As You Know It Is Misleading – Now Africa Wants To Change That
  • “It’s Totally Wacky”: Oldest Known Ankylosaur Had A Kind Of Armor Never Seen In Any Vertebrate – Living Or Extinct
  • “Lost City Of The Amazon” Wasn’t Destroyed By A Volcano After All
  • Why Do Hammerhead Sharks Have A Hammerhead?
  • Neanderthals In Iberia Had Funerary Practices – They’re Just Not What We Expected
  • Monochrome Rainbows: In The Right Circumstances, Rainbows Can Look Very Strange Indeed
  • Shark Teeth Are Losing Their Bite As Ocean Acidification Takes Hold
  • Wasp “Riding A Broomstick” Among Fantastic Finalists Of Wildlife Photographer Of The Year
  • Long-Lost Sailback Houndshark Not Seen Since 1973 Rediscovered In Papua New Guinea
  • How Do You Age A Gas Giant? Jupiter’s Age Revealed By “Molten Rock Raindrops”
  • JWST Observes Interstellar Comet 3I/ATLAS: “One Of The Most Unusual Comets Ever Seen”
  • A Woman Injected Crushed Black Widow To Get High, And It Was A Very Bad Trip
  • Man With 31-Year History Of Depression Feels “Overwhelming Joy” After Experimental Brain Stimulation
  • The Pythagorean Theorem Predates Pythagoras By 1,000 Years: “The Proof Is Carved Into Clay”
  • Asteroid Bennu Is A “Frankenstein’s Monster” Of Material From The Inner Solar System, Outer, And Beyond
  • Canada Is Home To The World’s First Official UFO Landing Pad
  • Path Of Hurricane Erin, One Of The Fastest-Strengthening Storms On Record, Captured In Dramatic Satellite Images
  • What Did Ancient People Think When They Found Fossils?
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version