The Eurogroup meeting yesterday afternoon in videoconference has begun to discuss how to recalibrate public support policies for companies, which so far have partially absorbed the shock of the Covid-19 pandemic, avoiding insolvencies and bankruptcies. We must begin to envisage measures that distinguish between economically sustainable companies, which were healthy before the pandemic but suffered from its impact, and to which it is therefore right to continue to provide public support, and unsustainable companies, for which we will have to think instead of exiting the market in an orderly manner.
But we must do it with caution: it is a very difficult distinction to make, especially in the sectors (such as tourism, hotel, restaurant) that have been hit hardest; and without losing sight of the fact that we are talking about people who will lose their jobs. This is essentially the conclusion reached by the ministers, according to what the European Commissioner for Economy, Paolo Gentiloni, and the president of the Eurogroup Pascal Donohoe reported tonight in the press videoconference at the end of the meeting.
“We talked about the issue of corporate solvency, recognizing the fact that the initiatives we have taken” in the Eurozone and the EU “have been successful in reducing the risk of corporate bankruptcy and insolvency. And these risks were there: the note we distributed to ministers – Gentiloni said – shows that if there had been no public support measures, or new loans, 23% of EU companies would have suffered from liquidity problems. (‘liquidity distress’ ed.) after having exhausted their capital reserves “.
“But the percentage of companies that have liquidity problems – specified the commissioner – varies significantly between the different sectors: from 8% of all companies in the computer and electronics sector, to 75% for the hotel and catering sector. “.
«In short – continued Gentiloni -, thanks to the public guarantee schemes and debt moratoriums, and also to other common instruments such as the European Sure mechanism (for supporting layoffs, ed.), These risks have remained low. But – he stressed – we must avoid a sharp increase in insolvencies in the future, and it will be crucial to manage very carefully the withdrawal of public support measures ».
“First of all – explained the commissioner – it will be necessary to move gradually, from the current undifferentiated approach to more targeted actions, with the distinction that it will not be easy to make between the companies we consider not economically sustainable (‘non viable’, ed) and those that we consider sustainable ». And in some sectors – Gentiloni warned – this definition will not be easy ».
Secondly, it will be necessary “to facilitate a diversification of the financing of these enterprises, and to preserve an effective credit channel especially for the smaller ones”. And finally, it will be necessary to “organize an orderly exit for unsustainable companies” from the market “ensuring sound insolvency procedures”.
«In short – Gentiloni summed up – we should take the right decisions to decisively face the challenges of business insolvency in the coming months and years, bearing in mind the social implications of our decisions. We are dealing – he recalled – with jobs, workers, people, not with abstract entities ».
«It is not easy to make this distinction – the Commissioner insisted – with this level of uncertainty, and with some sectors of our economy so strongly affected. So – he concluded – we must work with caution and gradualness ».
“The measures that have been prepared by the Eurogroup and the EU – recalled Donohoe, connected from Dublin – have already played a very important and very positive role in reducing financial difficulties from the moment the crisis began,” and we have seen unemployment and financial tensions that have been limited by those measures ”.
“I think – continued the president of the Eurogroup – that this has been very important and positive in helping society to deal with the pandemic in 2020, and when we look at the end of 2021 and 2022, we must recognize the challenges that we may have to face in ‘European Union and the Eurozone regarding corporate insolvency and non-performing loans, and recognize that this will affect the support measures and budgetary decisions we take.’
“How we will encourage employment and economic growth in the Eurozone is a vital element behind a sustainable recovery; and therefore the issues of corporate solvency and non-performing loans will truly be important indicators to understand what economic support decisions we will make as we approach summer, and then the right level of economic support for the year 2022 “, concluded Donohoe .
(with source Askanews)
Source: RSS DiariodelWeb.it Economia by www.diariodelweb.it.
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