Billions extra to companies, โ€œno more conversation about survival of the fittestโ€

There will be 7.6 billion euros extra corona aid for businesses, announced yesterday by the Cabinet. More entrepreneurs receive a fee for the fixed expenses and the subsidy for wage payments goes up. In addition, there will be a separate scheme for start-ups, the stock fee for stores will increase and a guarantee fund for events will soon be established. And that‘s not even all.

The arrangements and the extra money are intended to prevent businesses from beaches with the port in sight. Because of the vaccine, the end of the coronacrisis seems at your fingertips, and the cabinet wants all companies to be able to reach the finish line. โ€œThe whole conversation about supporting more selective companies, survival of the fittest, is no longer held,โ€ says economist Mathijs Bouman.

Fear of zombie companies

During the first lockdown, the cabinet came up with a large support package to help all affected companies. After that, the arrangements were sobered. There was still no prospect of the end of the crisis, and the Cabinet openly wondered whether all sectors should continue to receive support.

There was fear of zombie farms: non-viable businesses that are kept up with public money. That is wasted money and wasted manpower, was the reasoning: the staff could also have worked at a company where things are going well. โ€œYou can be afraid that we will save businesses and jobs that post-corona has no place for at all,โ€ says Bouman.

โ€œ Six months ago, the cabinet said that we had to slowly think about whether we should save everyone. Whether there should not be a structural change in the economy. They did not dare to do that at the time, and it is no longer a discussion at all.โ€

Tricky Choosing

Bouman mentions three reasons why the cabinet now wants to keep all businesses afloat. โ€œFirst, the end of the crisis is in sight. There’s a vaccine. Secondly, there will be elections soon. Having to decide which companies you can and which ones do not save is not a nice position for politicians. Thirdly, it is inconvenient to choose anyway. It changes quite a few companies are hit hard. In the summer, for example, there were many profiteers.โ€

Mark Betting started a sports bar in April but was not able to open it until the end of July because of the lockdown. After ten weeks, he had to close again. His pandowner has suspended the rent, but he holds 5,000 euros a month. Betting calls it โ€œscandalousโ€ that there is only now to be a scheme for starters:

A decrease in aid measures would probably hurt the economy more. So far they work pretty well, says Bouman. โ€œMuch better than anyone would have dared hope. The number of bankruptcies is very low. The measures are cheaper than budgeted, and it seems that they are not being misused.โ€

And compared to the countries around us, our economic recession is not so deep and the recovery is strong. In addition to the solid support packages, according to Bouman, this is due to the fact that our economy was less silent last year than elsewhere. โ€œIn Belgium, for example, construction was shut down. Moreover, we have relatively little industry, which is suffering greatly from the stagnation of world trade. And we have very good internet so we can work at home efficiently.โ€

No worries about depth pockets

However, ABN Amro recently warned that a large number of companies are in danger of bankruptcy. โ€œCompanies are becoming more vulnerable, the buffers are running out,โ€ says Bouman. But he expects that the extra support money will be enough to keep the vast majority of companies afloat.

Afraid that the billions will run out if the crisis lasts longer than expected, we do not have to be, says Bouman: โ€œNo one in the cabinet is concerned about the depth of the pockets of the state. The interest rate for the Netherlands is still negative on average. We get money on what we borrow.โ€

CCItoP3 already explained how exactly this can be done: