Public Aid Saved 25% Of Spanish Companies From Their Liquidity Risks

spanish companies

Spain is the country most affected by the decline in productivity due to the Covid-19 pandemic because its economy is more vulnerable. The reason is it depends on the most affected sectors, like tourism, hotels and restaurants, having fewer manufacturing companies, according to a recent article in the European Central Bank’s Economic Bulletin. The article analyses the impact of the Covid-19 pandemic on the productivity of German, French, Italian and Spanish companies.

Spanish firms are also at greater risk of cutting jobs than their French, Italian and German peers, the bulletin flags. Without public support, 25% of companies with employees in Spain were at risk of not having liquidity at the height of the crisis, according to ECB economists. These results agree with the calculations of the European Commission and the Organization for Economic Cooperation and Development.

While companies with strong balance sheets were able to partially weather the losses incurred with the capital buffers, the crisis may also have had a reorganising effect on firms with low productivity. Something similar to what happened to construction sector firms after the financial crisis and the bursting of the financial bubble.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.