Roughly half of American entrepreneurs do not expect business to recover within two years, one survey finds
America and Europe have adopted similar strategies to preserve the fabric of their economies. First helps cut cash outgoings quickly, for example by delaying tax deadlines or even reversing past payments. Then find ways to lend or grant cash so that companies make it through the lockdown.
Such short-time working schemes, which originated in Germany and spread continent-wide after the global financial crisis, were once the purview of big firms, says Stefano Scarpetta of thes. The take-up has been rapid. Nearly 11m French workers, or roughly half the salaried workforce, are temporarily unemployed. In Germany, more than 700,000 firms have applied.. But the $349bn originally allocated to the programme ran out just 13 days after it was launched on April 3rd.
To ensure the money did not end up going to businesses with no hope of paying it back, bankers were roped in to assess potential recipients. Governments agreed to shoulder 70-90% of potential loan losses, limiting the downside for banks. Still, lending figures have underwhelmed. In Spain after five weeks only €13.4bn out of €100bn in state guarantees earmarked fors have been tapped. Britain managed to allocate a meagre £4.1bn by April 28th.
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