Thousands of coronavirus bankruptcies ahead for NL: credit insurer
A wave of bankruptcies will roll through the Netherlands from this autumn, credit insurer Coface said in a report on Thursday. According to the company's calculations, nearly 8 thousand companies will be declared bankrupt in the 18 months after the summer. For comparison, last year 3,792 companies toppled in the Netherlands, Trouw reports.
Coface based its calculations on its large collection of business data, taking the current government coronavirus support measures into account.
The intelligent lockdown implemented to curb the spread of the coronavirus was a massive blow for thousands of entrepreneurs, and the current easing of restrictions will not make up for that, according to Coface. Households will also consume less and companies invest less as they were made cautious by the crisis. This depresses economic growth, triggering bankruptcies.
Four sectors were particularly hit hard - catering, tourism, retail and transport. The first two are more or less self-explanatory as travel restrictions kept tourists away and fewer customers can be accommodated with social distancing measures in place. The retail sector also saw fewer customers, and was already in heavy weather before the crisis as consumers increasingly ordered online. The transport sector is struggling with social distancing and extra safety requirements. "Think about logistics around the ports, inland shipping, aviation and truck transport."
The Netherlands is currently in the stillness before the storm as far as bankruptcies are concerned, Edwin Busio of Coface Nederland said to the newspaper. It takes a few months to go through all the procedures that precede filing for bankruptcy, he explained. "For example, unpaid invoices cannot immediately be claimed by the suppliers. And again it takes a few weeks before suppliers transfer the claims to debt collection agencies or credit insurers. Then you're a few months further in total."
The wave of bankruptcies will not necessarily have a disruptive effect on the Netherlands Busio said. Many of the companies that will topple later this year were already financially unstable before the crisis, but managed to scrape by in the economically fair weather. However, the sudden disappearances will affect consumer confidence, he added. Hospitality and retail in particular are very visible industries, so it is noticeable when they go bankrupt. That can cause unrest, affecting people's spending behavior.