THOUSANDS of companies in the Balearic Islands are at risk of disappearing due to the coronavirus crisis, according to a business union.
Fundacion Impulsa has estimated that more than 30,000 businesses in the region will close permanently by the end of next year.
This accounts for a third of all companies in the Balearics and is an alarming prediction considering that some 9,000 companies disappeared in the islands after the 2008 financial crisis.
Its director, Antoni Riera, attributes the expected closures to the region’s heavy reliance on tourism which was ‘completely disrupted this year.’
Several obstacles had knocked the tourism industry this year, including the unprecedented decision by the British government to enforce a two week quarantine upon those that returned from Spain.
It is not known if that will be reversed with England now making exemptions for islands which are less affected by COVID-19 than the mainlands they belong to.
However, Riera also blames the fact that many companies have ‘poorly managed their financial risk,’ and that there will be ‘reciprocussions to the number of loans acquired to weather the storm.’
Riera believes the result will be bankruptcy as many will struggle to repay liquidity borrowed.
It comes as the Balearic Islands recorded a historic drop in its gross domestic product.
According to the latest figures, in the second quarter of 2020, during the months of April, May and June, the Balearic GDP fell by a whopping 40.5%.
This is higher than anywhere else in Spain, which saw a collective loss of 22.1%, as well as the European Union with an average drop of 14.1%.