Cover of Policy Brief 31

The Impact of the COVID-19 Crisis on European Businesses: Evidence from Surveys in Austria, Germany and Spain

Raquel García (SIMPLE LÓGICA, Madrid), Christian Gayer (European Commission DG ECFIN), Werner Hölzl (WIFO - Austrian Institute of Economic Research, Vienna), Sergio Payo (Ministerio de Industria, Comercio y Turismo), Andreas Reuter (European Commission DG ECFIN), Klaus Wohlrabe (EconPol Europe, ifo Institute, CESifo)

A survey of German, Spanish and Austrian firms in the industry, services, retail trade and construction sectors finds that the overwhelming majority expect a negative impact of the corona-crisis on annual turnover (to the tune of 20% in Germany and Austria and 25-44% in Spain). The sub-sectors hardest hit are manufacturing of consumer durables and investment goods, services in the field of tourism and gastronomy and retailers selling neither food nor beverages. If confinement measures aren't lifted or countered by appropriate policy support, say the survey's authors Raquel García (SIMPLE LÓGICA, Madrid), Christian Gayer (European Commission DG ECFIN), Werner Hölzl (WIFO - Austrian Institute of Economic Research, Vienna), Sergio Payo (Ministerio de Industria, Comercio y Turismo), Andreas Reuter (European Commission DG ECFIN) and Klaus Wohlrabe (EconPol Europe, ifo Institute, CESifo), the prevailing confinement measures will cause insolvencies or bankruptcies of 30-50% of all businesses by the end of July, rising to 50-80% by October.

Abstract

This note presents the results of two ad-hoc questions on the impact of the corona-crisis, which were included in the April-wave of the European Commission’s Joint Harmonised EU Programme of Business Surveys. The questions were asked to German, Spanish and Austrian firms in the industry, services, retail trade and construction sectors and focused on the effect of the crisis on expected annual turnover and the ability of firms to survive in the presence of the prevailing confinement measures. The results illustrate the sweeping effect of the crisis on firms’ turnover and provide alarming figures on a potential insolvency/bankruptcy wave caused by the current confinement measures.

Citation

Raquel García, Christian Gayer, Werner Hölzl, Sergio Payo, Andreas Reuter, Klaus Wohlrabe: The Impact of the COVID-19 Crisis on European Businesses: Evidence from Surveys in Austria, Germany and Spain, EconPol Policy Brief 31, May 2020