Interventions for post-pandemic rebound

The government measures for when the economy emerges from the pandemic will target companies that have suffered as a result of the coronavirus and require some support to return to sustainability, rather than those that were already problematic before the crisis and don’t have any long-term chances of survival.

In other words, the government doesn’t want to help any zombie companies to stay in business, but only enterprises that can contribute toward the economy’s growth in the long run. It intends to assist businesses that were forced to shutter due to the pandemic restrictions or suffered a great drop in turnover in 2020 through no fault of their own.

Government officials cite data from the General Commercial Register (GEMH) for the first 11 months of 2020 showing that fewer companies closed down for good than a year earlier (11,398 against 18,291) as they were able to keep their heads above water thanks to the state support measures.

The horizon for the post-pandemic measures is April. That is when the general support measures are set to expire and more focused interventions will need to start applying. They will likely include the following:

– The activation of the European Union regulation on covering the fixed expenses of enterprises that have suffered; this is not a measure for personal companies but rather for those with employees, and the support could reach up to €3 million in each case.

– Incentives for mergers and acquisitions to enhance enterprises’ size and financial efficiency, in line with the Pissarides Committee’s recommendations. These incentives are likely to be discussed this week.

– The extension of the program for subsidizing enterprises, aiming at the creation of 100,000 jobs. This measure, which started applying in October, provides for covering the entire set of social security contributions by employers and employees for six months.

Among the other measures under consideration are the creation of a very targeted guarantee program securing bank credit for pandemic-stricken enterprises, the extension into 2021 of the reduction or complete waiving of the corporate income tax deposit, and measures facilitating the shutdown of zombie corporations.