According to Reuters on February 11, an EU document shows that once the economic recovery after the pandemic starts and governments begin to rescind the relief programs on which many enterprises depend, EU enterprises will face a surge in bankruptcy and bad debts.
The European Commission note prepared for next Monday’s eurozone finance ministers’ meeting said that eurozone governments have so far avoided an increase in bankruptcy rates thanks to nearly 2.3 trillion euros (about $2.8 trillion) of national support measures.
The note shows that without these help and new loans from banks, by the end of 2020, nearly a quarter of EU enterprises will have liquidity problems after depleting cash buffers due to the economic damage caused by the pandemic.
The note mentions: “Once unprecedented public support measures expire, some businesses may default, leading to more non-performing loans and bankruptcy.”
