Tracey Walker, 54, and her regulars at the Little Britannia fear the ban was sparked by anti-UK feeling over Brexit.
She said: “My bar has had British flags outside for almost two years, and all of a sudden it’s not allowed.
“It is a British bar so what harm are some flags doing promoting my business?
“I wonder if they’d do the same if the flags were Spanish?” Tracey, from Bradford, says cops threatened her with an €800 (£708) fine.
When she refused to remove the flags, they said it would double to €1,600. She has hired a solicitor to fight the ban.
A pal in the bar said: “There are a few theories about what’s behind this.
“But there’s real concern that local bigwigs have ordered a crackdown on Brit bars.
“There’s not a lot of love lost for Brits in Europe right now, and this could be Benidorm officials giving Brits a kicking in their own way.”
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