Margins at risk
The tension over inflation keeps climbing. If it took more than a year to materialize, it wasn’t on anyone’s plan. After financial institutions and government bodies stepped in to tame a double‑digit CPI scenario, companies began feeling the heat. Forecasts point to a difficult autumn, especially as Russia’s decision to cut Europe’s gas supply tightens energy markets. The German economy has already contracted in recent weeks, and firms across the region are implementing contingency plans, according to various employers associations.
In a recent interview with Prensa Ibérica, which is part of the same publishing group as El Periódico de Catalunya, Pimec president Antoni Cañete warned that fall restructurings will be necessary. The message from Spain’s leading business groups echoed this sentiment when CEOE emphasized that many companies must adjust schedules and production plans in response to rising energy costs and tighter supplies. The overall takeaway is clear: energy pressures are reshaping corporate strategies across sectors.
The impact of persistent price rises on production lines is already noticeable. The latest business environment survey from idescat shows that about one quarter of companies have faced cost increases of 25 percent or more in the past year, with many seeing gains between 10 and 25 percent. The most affected sector remains industry. Prices are climbing and likely to keep rising, which is expected to squeeze consumer demand in the coming months and push companies to focus on resource efficiency and protecting margins, according to Antoni Cañete.
Industry bears the greatest burden from higher energy prices and some supply shortages. This reality has forced many manufacturers to take mitigation steps. For instance, around one in four industrial firms halted production at some point to shield operations from spikes in costs. Transferring higher costs to consumer prices is the usual response in the broader economy and is the path most companies prefer to soften the current squeeze.
Small and medium businesses face a stark picture. César Sánchez, the general secretary of Cepyme in Catalonia, explains that many SMBs see a brief uptick in bills followed by negative earnings once agency fees and other costs are tallied. He notes that the options are to raise prices or adjust headcount. All signs point to employment bearing a larger share of the fall impact than seasonal hiring. On energy issues, SMEs are renegotiating rates with energy providers and investing in more energy‑efficient technologies, though Sánchez highlights the tight margins involved.
Maintaining margins amid volatility
The broader rise in prices is eroding workers’ purchasing power and threatens to squeeze profit margins for most small and mid-sized businesses. Large companies, by contrast, have not shown the same margin erosion in early reports from central balance sheets, with half of large firms increasing their margins in the first quarter despite soaring IPC. This divergence underscores how scale and resilience strategies shape outcomes in a turbulent environment.
Industry observers note that the pandemic’s first year proved crucial for SMEs, who managed to preserve some margin health during the toughest period. The latest Catalan SMEs yearbook from Pimec confirms that margins have since narrowed dramatically. Leaders within the community stress the need for a shift in mindset among small enterprises. The call is for openness to partnerships, collaborations, and even mergers in the coming months to sustain growth and maintain competitive footing as the market recalibrates. The emphasis is on practical cooperation rather than solitary endurance, a stance supported by many within the sector who see merger options as a strategic path forward during ongoing economic stress. As Antoni Cañete puts it, this collective approach could help smaller firms weather the headwinds without giving up operational flexibility.