The Opposition says it is "appalled" by what it describes as the Chief Minister’s "bellicose response" to the communication by some businesses that they may have to adjust prices following the implementation of the Treaty and the associated 15% Transaction Tax on imported goods.

A statement continued: "To accuse some businesses of “fraud” is a heavy-handed intervention from a Government that has consistently shown limited understanding of, and support for, the business community. It also underscores their failure to adequately prepare the retail sector for the practical realities of Treaty implementation and marks a failed attempt to divert attention away from its own shortcomings.

"The Chief Minister’s comments, including those made in the recent GBC report, reveal a concerning lack of commercial awareness. His oversimplified explanation of pricing structures misunderstands and misrepresents the concept of margins and ignores key cost components that will be subject to the Transaction Tax including freight and insurance as well as further costs, in some cases, of tariffs of up to 12%. Until now, retailers have benefited from relatively low import duties (some items as low as 0–6%), reflecting the long-standing recognition that Gibraltar’s retail sector operates on a challenging concoction of tight margins and high overheads, and cannot match Spain’s advantages in scale and lower operating costs.

"Retailers will soon be facing a convergence of new and old pressures: increased administrative burdens, inflationary effects, potential loss of trade due to an open border, the risk of paying tax on unsold goods and the direct cost impact of the Transaction Tax and applicable tariffs. In response, businesses have been compelled to assess, individually and pragmatically, what their operations can sustain and what consumers are ultimately willing to absorb."

Craig Sacarello MP, shadow for Business Trade and Industry, commented, “Rather than engaging constructively, as the Government itself has recently called for, we are seeing a knee-jerk and unnecessarily confrontational response from the Government towards a sector which finds itself at the thin edge of the wedge of this Treaty and that most requires Government support during a period of significant transition and uncertainty.

"By using inflammatory language such as “fraud and profiteering” the Government is undermining a sector vital to our economy pitching them against the consumer; this can only be advantageous to the Spanish retailer and the Spanish Treasury.

"It is clear that the Chief Minister is uncomfortable with the legitimate pressure being placed on his Government for support and clarity and it is disappointing that he has chosen to respond in this manner. Inflationary pressures would always be an inevitable consequence of this Treaty as it stands. Ultimately, pricing will be determined by market forces and consumer choice, not by Government intervention. Punishing Gibraltar businesses will not protect our economy.”