The business world is asking the Administration for help and planning a strategy for the recovery phase after the coronavirus shock. With forecasts that point to a historical economic recession due to the expansion of the covid-19, the Businessmen’s Circle summarizes in a document some requests addressed to the Government and the European organisms.
“The impact of the crisis on the economy is already more than evident, due to the sudden drop in supply and demand for goods and services simultaneously. The leading indicators and predictions of some analytical institutes allow us to see an unprecedented recession in Spain and Europe in the coming months. From the Government, and also from civil society, we must put in place formulas that allow us to overcome this situation, minimizing the number of affected citizens and, at the same time, the damage to business activity that will allow us to quickly recover, “the document details.
For this, the entrepreneurs consider it necessary to plan in advance the economic recovery phase, which will begin when the state of alarm ends and the activity can return to normal.
“We must think about the day after, in the desired recovery phase, which will be faster and more energetic the less productive activity has deteriorated, the more companies continue to operate and the fewer workers have lost their jobs,” adds the Businessmen’s Circle.
The document speaks of an intense and painful crisis, and of a duration that cannot yet be determined, so it asks to ensure the proper functioning of the measures that have already been put in place and more aid to preserve jobs.
“The most vulnerable groups need the support of the State through social measures that, although with some delay, are already being put into practice. But also companies, especially in the most affected sectors, need aid and the availability of financing and flexibility to maintain their workforce and thus overcome this difficult stage without shutting down or destroying jobs, “the statement clarifies. In addition, employers insist on the need for the Administration to guarantee the effectiveness of the measures it has approved over the past few weeks. For example, of the 100,000 million euros in public guarantees so that SMEs and the self-employed can request credits from the ICO backed by the State.
Of this amount, the first 20,000 million euros have already been activated, although there is an over demand by the business sector. Therefore, they demand an agile management of requests.
Francisco Alcalá, researcher at the Valencian Institute for Economic Research (Ivie) and professor at the University of Murcia, also believes that “in order to finance the measures and ensure that negative expectations do not affect investments by solvent and liquid agents, it is necessary that the government institutions act with unity and efficiency ”.
All these requests coincide with the alarm messages that come from some sectors. One of them is commerce, which warns that half of the companies in the business may disappear because they are unable to meet current expenses in a joint statement by the seven employers of the activity.
In addition to trade, the market foresees a strong impact from tourism and associated activities (for example, hotels) and the risk of suspending payments from many construction-related companies.
A fiscal and monetary boost
The document considers that the recovery strategy needs a “decided monetary and fiscal impulse that, as the Círculo de Empresarios has been warning us, cannot be only Spanish due to the low fiscal margin we have, but also European.” And he stresses that, although the monetary lifesaver is covered by the European Central Bank (ECB), which has expanded the debt purchase program to maintain liquidity and financial stability in the eurozone, the prosecutor “is unknown.”
To date, Spain is one of the European countries that is giving less facilities to companies to pay taxes. While powers like Germany and France are giving several months of margin for all companies to pay taxes, the measures announced by the Pedro Sánchez government are focused on SMEs and set limits.
Behind these fiscal differences with the main European partners lies the limited margin that Spain has to take measures due to the imbalances dragged down by the domestic economy (it registers a deficit, unemployment and very high public debt). For this reason, the Círculo de Empresarios supports a response at the community level, including the launch of the so-called ‘coronabonos’, a financial instrument that would aa financial instrument that would make it possible to mutualise the debt of the entire EU. “If we are able to achieve this, this demonstration of solidarity will be” vital to underpin the recovery and the integration process, since it would demonstrate that the European Union is capable of joining forces when circumstances require it, “says the Businessmen’s Circle.
However, countries such as Germany, the Netherlands, Austria or Finland are opposed to the implementation of this mechanism, so it does not appear to be a viable alternative in the short term.
The professor at the University of Murcia also does not see it feasible for the EU to contribute substantial resources in a lost fund to respond to the crisis, rather he has limited himself to giving the countries room to increase their indebtedness. And this possibility will make it necessary to reform the fiscal system in the medium term to ensure that the economic and social impact of the crisis is as equitable as possible.