Posted on Dec 9, 2019 2020 at 7:26Updated Dec 9, 2019 2020 at 10:01
How can we continue to support companies in difficulty over the next few months, when the economy continues to run into sluggishness? The question arises because, as Gilles Moëc, chief economist of Axa Investment Managers, says, “The real restart of activity should not occur until the second part of the year 2021, with collective immunity produced by vaccines, this time permanently. The second half of 2021 should mark the end of the stop-and-go ”. To “bridge the gap, accommodating economic policies will remain crucial”.
It will be impossible to stop all public devices overnight, but also to continue to help everyone for understandable reasons of cost. The State will have to put it back to the pot but mechanically, the European Central Bank (ECB) will also have to act since without its help, the interest charges of the State – not only French – would explode.
Consolidation loans
Several solutions exist to allow companies to resist until the arrival of the vaccine. Government guaranteed loans have already been extended, but it is not certain that this is sufficient. In France, François Asselin, the president of the Confederation of Small and Medium Enterprises (CPME), offers consolidation loans. This would consist of grouping together some or all of the loans contracted by the company. These loans would be transformed into a single extended loan, via the support of the banks and the State.
The idea is to spread the commitments of companies over time to enable them to meet them. With a problem: asking banks to carry these “new” loans created seems difficult. Their balance sheets would be weakened and in turn, they might tend to lend less in the future, which is the last thing the economy is going to need next year.
Not to mention that the debts that many companies accumulated during the pandemic were not used to invest but to ensure the survival of the companies. They will not produce any future income and many will struggle to repay them. “It would be preferable for the ECB to carry these private debts with an extended maturity”, says Gilles Moëc.
The monetary and budgetary authorities will have to work hand in hand for many months to heal the wounds of the crisis on the productive fabric. This is undoubtedly one of the great changes brought about by the Covid-19 in the way of conceiving economic policy.
Support part of the salaries
Another possibility, as health measures will continue to weigh on the productivity of companies in certain sectors and some of them will not be viable, depending on the importance of their fixed costs, the State could take a part of his wages for a few months. The economist Jean Pisani-Ferry has expressed this idea several times to Bercy. The Germans preferred to grant a direct subsidy to the fixed costs of businesses.
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