One of the undeniable effects of the economic downturn has been a reduction in spending by the island's inhabitants. This results from either not having any spare money to spend on life's little luxuries, or holding onto one's money until there is some sort of improvement in the situation.
A study published in the annual report of la Caixa on the economy, cites Ciutadella as the worst hit municipality. Here 86 shops have closed down, representing a 10% drop in properties operating in this commercial sector. During the same period, Maó lost 82 establishments. Ferreries was the area least affected.
It is felt that the public is being bombarded through the various news media with gloomy tales of recession that are having a psychological effect upon their willingness to spend.
A difficult winter is being forecast by the president of the shopkeepers' association, Joan Moll. He expects it to be worse than last winter and more shops will be closing their doors for the last time. He commented that the effects are there for anyone to see in the historic town centres with shutters much in evidence.
It is thought that for those who survive the winter they will be rewarded with an upturn towards the end of summer 2011.
The economic study by la Caixa went on to say that between 2004 and 2009 there had been an increase in shops of 2.1% and 2.9% in Ciutadella and Maó respectively. A very different picture emerged in other municipalities however. Es Mercadal registered a 28% decrease in shopping facilities and Sant Lluís saw a 16% decrease.
It seems that there needs to be a mjor change in consumers' outlook towards spending. Those that have the money are faced with low interest rates on savings. Shops are slashing prices to attract customers. Perhaps a less fearful attitude to spending would fuel a recovery.
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