Eurozone companies weathered the COVID-19 storm better than expected

Eurozone companies have weathered the two years of the COVID-19 pandemic better than expected with fewer insolvencies than expected, eurozone finance ministers are expected to conclude on Monday according to a senior eurozone official.

The official, who asked not to be named, said the better result was a testament to the effectiveness of the 2.3 trillion euros ($2.64 trillion) national liquidity support measures taken to prevent businesses from collapsing under repeated government-imposed pandemic lockdowns and the resilience of the economy.

“We were worried about a wave of insolvencies,” said the official, involved in preparing for the monthly meeting of eurozone finance ministers.

Among the measures to avoid bankruptcies, governments have introduced subsidized part-time work programs to prevent mass layoffs and guaranteed loans taken out by companies from banks.

“At this point … business bankruptcies remain surprisingly low relative to the severity of the crisis and the historical average,” the official said.

But he warned that policymakers in the 19 countries sharing the euro must continue to support viable businesses because many ended the pandemic with higher debt and because with new waves of infections every few months , it was not clear how much longer they might need emergency assistance.

“The situation differs between countries and sectors,” the official said.
Source: Reuters (reporting by Jan Strupczewski; editing by Richard Chang)

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