"Saving businesses" is the alarm cry of the latest Congiunturaref, the periodic newsletter of the Milanese economic analysis and forecasting center Ref Ricerche.
“Policies – warns the newsletter – are called to address the health emergency, but also to protect the production facility, to allow the economy to restart when the epidemic has been overcome".
The effects of the inevitable closure of countries on economies in the face of the Coronavirus speak for themselves. An estimate produced by Insee for France but also valid for Italy “indicates that one month of lockdown affects the annual change in GDP by 3 percent. For example, two months of lockdown would account for 6 percent, to which should be added the fact that the recovery in the following months is gradual".
For this “exceptional measures” are needed to really support businesses and households without wasting the huge resources made available by central banks, because "the economic costs of the epidemic will be very significant and moreover difficult to contrast with traditional economic policy instruments” .
Above all, it is necessary to "limit - writes Congiunturaref - the extent of the consequences of the recession on the balance sheets of companies, so that it is in fact a liquidity problem and does not turn into a solvency problem“. The sample of measures that can be activated - from social safety nets to the postponement of taxes and social contributions to the state guarantee on bank loans and more - is varied but must be aimed at the particularity of the situation triggered by the lockdown and take into account the fact that "traditional measures of support to demand, for example transfers to families, may not be effective in relaunching growth”.
In addition to national economic policy interventions it is to be hoped that Europe will emerge from the current conflicts on the instruments to be adopted and play its part to the end, but Europe also means the European Central Bank and the resources made available by the ECB are really very significant if "between now and the end of the year the ECB will buy through the central banks of the Eurosystem (as to be ready to make) over one trillion shares". Which means – underlines Congiunturaref – that Italy's share would be over 180 billion, a sum that would largely exceed this year's public deficit” which should come to 100 billion, even if “the remaining resources will not be sufficient to cover even half of the issues of securities maturing between now and the end of the year which will amount to over 200 billion”.
