The latest escalation in violence between Palestinian Islamic Jihad and Israel has exacted a heavy toll on local businesses.Amid the threat of indiscriminate rocket attacks from the Gaza Strip, Home Front directives have ordered places of work, shops and schools to remain shut until the flare-up subsides. Losses to businesses in the South and central regions were estimated to total approximately NIS 1.1 billion by Wednesday afternoon, according to the Manufacturers Association of Israel (MAI).The majority of losses, the association said, were due to the temporary closure of workplaces in central Israel on Tuesday and the ongoing closure of businesses in the South.Every additional day of non-stop fighting will result in the estimated loss of a further NIS 220 million ($63m.) in goods produced by the private and public sectors, the MAI added.True figures are likely to be significantly higher, however, as the association’s estimates do not include both direct damage caused to businesses by rocket fire, or indirect losses of revenue caused by reduced confidence among foreign customers and the cancellation of transactions due to companies’ failure to meet deadlines.Business operations that suffered direct hits since the start of fighting included a warehouse belonging to mattress company Hollandia in Sderot, where goods worth tens of millions of shekels were destroyed by fire on Tuesday.On Wednesday, a food factory in Sha’ar Hanegev was struck by a rocket. No dangerous chemicals on site were released as a result of the damage, said the MAI.The Israel Tax Authority said that businesses within 40 km. of the Gaza Strip would be entitled to file a claim for reimbursement for wages paid to employees who were absent from work.Businesses will be entitled to payments through the Tax Authority’s compensation fund, which aids citizens who suffer damages resulting from “acts of hostility or war operations”; for employees who could not work due to Home Front instructions; and parents who needed to remain at home after schools closed for the day.During a Knesset Finance Committee debate on Wednesday, committee chairman Moshe Gafni told participants that the Tax Authority had agreed to pay damages to restaurant and venue owners within seven km. of the Gaza Strip border.The agreement, which will be enacted by amending existing legislation, will bring owners in line with compensation currently available to farmers and tourism companies situated in the area.In Tel Aviv, the stock exchange remained fairly stable despite the events in Gaza, confirming analyst expectations that a short-term escalation is unlikely to significantly impact the Israeli economy.