Saturday 28 November 2020

Economic impact of coronavirus will hit next year, experts say

Photo: DutchNews.nl

Despite the slight drop in the unemployment rate this week, and signs of a speedier economic recovery from the coronavirus crisis, the big hit will be felt in the second quarter of next year, according to experts.

Government support measures are due to be phased out then, amid hopes that a vaccine will allow normal life to return to the Netherlands. And this, experts say, is when the real impact will be felt.

In total, 102 banking, legal and investment experts took part in a survey on the likely impact of the crisis carried out by consultancy PwC and Leiden University researchers. And 47% of them expect a surge in bankruptcies in April, May and June next year, the Telegraaf reported.

A third of the experts polled also expect the number of companies in special banking measures to have reached a maximum during the second quarter – particularly those in the hospitality industry.

Two-thirds of the experts polled say the coronavirus measures will be to blame for the bankruptcies, 15% say the lack of financing and 11% say bad management will be behind the problems.

Entrepreneurs who are now ‘lulled to sleep’ by all the support are most likely to run into problems, says Edwin van Wijngaarden, partner at PwC and one of the compilers of the final report.

‘They are building up more debt now, due to tax deferments, deferred repayments and new funding,’ he said. ‘The question is whether you will also be able to pay off those debts in the future. For example, working from home and online shopping will change the conditions many companies are used to operating in.’

Fewer companies have gone bust this year than in previous years, according to new figures from national statistics agency CBS. In the first 46 weeks of the year, 2,900 companies have failed, down 417 on the same period in 2019.

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