The unprecedented response given by euro partners to the crisis caused by the coronavirus served to cushion a blow that would otherwise have been very painful for the region.
The ECB dressed this Tuesday with numbers the positive impact of the stimulus activated by the five main economies of the euro zone (Germany, France, Italy, Spain and the Netherlands).
As the institution points out in a study, the set of national measures adopted by these large economies generated an additional growth of 3% of GDP both for this year and for the next, thus cushioning the blow of the biggest recession in almost a century .
The Eurobank also highlights the effect of the Spanish intervention on the business fabric, as it helped prevent the closure of a third of the companies.
“The impact of policies has been stronger in Italy and Spain than in France and Germany. This reflects the higher proportion of companies (around 36% in Spain and 40% in Italy) that would no longer be able to meet their debts without the support of policy in the two months after the pandemic shock, as well as a stronger decline in corporate cash flows, “said the document published Tuesday.
The ECB warns that without aid there will be a wave of bankruptcies and the stability of the banks will be at risk
The arsenal deployed by the euro partners in the face of this crisis has been similar. However, the ammunition depended on the fiscal space that each country had. In the case of Spain, the imbalance in our public accounts has limited our firepower .
In total, the ECB estimates that the five largest economies in the euro activated stimuli to the real economy amounting to 8% of the region’s GDP. Next year it is expected to fall to 2% of the region’s GDP.
In these months, governments have activated loan guarantees for companies (one of the main tools in Spain), ERTEs and other similar national schemes , have deferred taxes and offered direct aid to households and companies.
In countries like Italy and Spain, measures were also taken to prevent companies from laying off their workers. The burden on debtors was also eased during the pandemic, with loan repayment defaults.
The effect of these guarantees will still be felt next year, in part because they will help stimulate demand.
The ECB notes that, in the case of Germany, Italy and the Netherlands, measures aimed at the temporary suspension of company payments (tax relief, moratoriums and reduced-time work plans played a “key role” this year ) or the liquidity offered on generous terms. In the Spanish and French case, guaranteed loans to companies were more relevant.
The Eurobank notes that the effect of these guarantees will still be felt next year, in part because they will help stimulate demand. This delayed effect, together with the extension of the ERTEs, would help mitigate the negative impact of the gradual disappearance of the stimuli in 2021, says the ECB.
