Attack on La Rambla

On 17 August 2017 a terrorist attack on La Rambla in Barcelona, followed by another in Cambrils, killed sixteen people. The city responded with a large demonstration of unity. This text pauses first on what is essential: the remembrance of the victims and support for their families and for everyone affected, to whom the respect of the whole of society is due.

Once the first days had passed, and always with respect for what had happened, the city also had to face the practical consequences in the daily lives of those who work in it. The attacks struck an emblematic place much frequented by visitors and residents, and many businesses, especially those most linked to tourism, faced a period of uncertainty over how activity would evolve in the following weeks. Uncertainty, in those first moments, affects spending decisions and hiring decisions alike.

First, the victims

Before any economic consideration, what matters is the loss of life and the grief of the victims’ families. The response of the public, united and composed, was the best expression of the values of an open and caring city. That example of coexistence and mutual support at a very hard moment deserves to be remembered above any other assessment.

The emergency services, health workers, security forces and so many anonymous people who helped on those days were also part of the response. Talking about the economy in this context only makes sense if it is done soberly and with the sole purpose of helping those who, besides grief, have to sustain a business, a workforce or a family in the midst of a difficult situation.

The effect on activity

Once the first days had passed, tourism suffered in the following weeks. The most exposed sectors, such as hotels, restaurants, retail and transport, saw demand fall, and with them the suppliers and employees who depend on that activity. The impact is not shared equally: it affects more the businesses with high fixed costs and those that depend more on foreign visitors.

Falls in demand after events of this kind tend to be temporary, but while they last, expenses continue: rents, payroll, utilities, loan instalments. That is why liquidity becomes the decisive factor. A sound business can withstand a temporary dip; one at the limit of its cash may find itself in difficulty even though its medium-term viability is not in doubt. That is why support measures, public and private, concentrate on protecting cash.

Holding on with prudence

For affected businesses, this is the time to protect liquidity, talk to banks and suppliers if payments need to be made more flexible, and review what insurance policies cover. Drastic decisions should not be taken over a temporary fall. It is worth analysing calmly which costs can be reduced without damaging the capacity to recover, and what aid or deferrals may be available in each case.

Reviewing insurance policies shows whether any cover exists for business interruption, and consulting an adviser helps weigh the options. Keeping employees, customers and suppliers informed, with transparency and closeness, helps preserve trust. In situations like this, collaboration among businesses, traders and neighbours is also a form of resilience. Recovery usually comes, though at different speeds depending on the sector and the business.

Cities recover sooner when their businesses hold on together.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.