Closed shops, restaurants, hotels: the corona pandemic has temporarily paralyzed some economic sectors – with massive consequences for the companies affected. Their turnover collapsed rapidly – according to the employer-related Institute of the German Economy (IW) by 69 percent in the catering trade and even by 87 percent in the hotel and restaurant industry.
In order to contain the economic consequences of the measures and to prevent a wave of insolvencies, the federal government has launched comprehensive rescue programs for particularly affected companies. But the disbursement of this aid is slow, found the IW in a study.
According to the study, only 18 billion euros of the originally planned 50 billion euros were available for emergency aid in the last supplementary budget. And only 76 percent of that was paid out. The payment was probably delayed even more in the case of bridging aid I and II. 24.6 billion euros were available for this aid, of which, according to the study, just eight percent was paid out. A total of 42.6 billion euros were available in the federal budget of last year – according to the IW study, only 15.8 billion were paid out. The economic stabilization fund has also hardly been used so far.
In the current year, 39.5 billion euros are planned in the federal budget for corona corporate aid. According to the IW, 1.5 billion of this has so far been paid out. The study authors assume, however, that this sum will increase significantly as the applications for November and December aid are processed.
The faltering disbursement of aid has consequences, as the study authors state: “If the funds to rescue the company come too late, the very collapse that is to be prevented in the crisis threatens,” it says. There is a threat of a split in the economy into a robust industry and an existence-threatened middle class in the heavily affected consumer sectors.
“Despair and maximum frustration”
According to the hotel and restaurant association Dehoga, around three quarters of restaurateurs and hoteliers fear for their existence. Around a quarter are specifically considering giving up their own business. Of the promised November aid, the companies have so far only received advance payments, many of them have not received these either. According to Dehoga, the December aid is still pending. “The November and December aid promised must finally reach all companies,” demands Dehoga President Zöllick.
Jörg Haas is the managing partner of the Invite Group Bonn, which operates hotels, restaurants and leisure facilities. As a large group of companies, the Invite Group Bonn is not entitled to either Bridging Aid I or Bridging Aid II, as only small and medium-sized companies receive this. For the first time, the group was able to apply for November aid, which is limited to a small grant of one million euros. The money has not yet been paid out, and no notice has yet been received. A December aid is excluded due to the small aid limited to 1 million euros, said Haas.
But even if the company should still receive the November aid – it would probably only be a small aid in view of the massive economic losses. Last year, the group made over 40 percent – or 28 million euros – less sales and 16 million euros in losses, this month it should be another 3 million euros, says Haas. “If we get the November aid of one million, that will make up 6.25 percent of our loss. That means we hardly got any loss compensation, ”he says.
“We don’t yet know what to expect”
Because the group of companies is facing another problem: they can only submit one application for the entire group, not one for each associated company. This may sound like a formality, but it has concrete effects, because the same upper limit for payouts applies to the group of companies as to a single large company. “If every company had been able to submit their own applications in a manner comparable to that of small and medium-sized companies, we would have been entitled to EUR 12.35 million in 2020,” says Haas. “We would have got along well with that, we would have accepted and cope with a loss of around 4 million euros last year.”
Instead, the Invite Group received a KfW loan of EUR 1.4 million and agreed a bridging loan of EUR 5 million with its savings banks. Haa’s hope is now directed towards Bridging Aid III: “We hope that we can take full advantage of this aid,” he says. But one could not yet submit an application, and detailed information would still be missing. “Basically we don’t yet know what’s in store for us,” says Haas.
He understands that the federal government is imposing drastic restrictive corona measures to protect the health and life of the population, says Haas. “But the economic collateral damage must also be borne to some extent by the state, and thus by the protected society.”
The companies had relied on the promised sales-oriented aid to flow in full after deduction of the short-time work allowance, says Dehoga President Zöllick. “Instead, they are now experiencing that the aid is paid very slowly and that it does not arrive in full due to crediting elsewhere,” said Zöllick. This leads to “despair and maximum frustration in the ailing companies.”
HDE calls for revision of the aids
Even the retail sector is under pressure despite the aid: According to a survey by the trade association HDE, the current aid is not enough for 80 percent of the retailers affected. According to HDE, the entire German retail sector received bridging aid amounting to 90 million euros last year (until December 19) – at the same time, non-food retailing lost 36 billion euros due to the pandemic and the closings.
“If Minister Scholz now quickly revises the bridging aid that has been promised and adapts the application criteria better to the situation in the retail sector, then there is still a chance to prevent the worst,” says Stefan Genth, Managing Director of HDE. “Otherwise 2021 threatens to be a year of disaster for many retail companies and, as a result, for entire city centers.”
“Credible help must not only be targeted and sufficiently extensive, it must also be provided in good time,” write the authors of the IW study. Otherwise, the statement is not convincing that the lockdown could be held out for a long time.
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