Europe

Record numbers of hotels and restaurants went bankrupt in March in Sweden as customers stayed at home to avoid spreading the coronavirus, figures from credit information firm UC showed on Wednesday, Reuters reported. Bankruptcies in the restaurant and hotel sector shot up 123% in March compared with the previous year, with the transport sector also seeing a big jump, up 105%. “In the next stage, this is going to hit banks and real estate firms which will have to negotiate debt write-downs with these firms,” Richard Damberg, economist at UC said in a statement.

German department store chain Galeria Karstadt Kaufhof is seeking protection from creditors to stay afloat, it said on Wednesday, after nationwide store closures to help to contain the spread of the coronavirus, Reuters reported. Galeria said that all its outlets have been closed since March 18, leading to about 80 million euros ($87.5 million) of lost weekly revenue while the company continues to incur the bulk of the costs.

Spanish bankers and lawyers are bracing for a steep surge in insolvencies, amid the country’s rising death toll and strict lockdown measures. In an attempt to offset the economic cost, Prime Minister Pedro Sanchez last month announced a 117 billion euros ($128 billion) fiscal stimulus, but some business leaders say aspects of the government’s response risk making things worse, Bloomberg News reported. All those who work in non-essential services must remain at home over Easter, but the government says that companies must pay employees in full during that time.

The head of the eurozone’s bailout fund said it would take between one and three years to set up a new European institution to issue so-called coronabonds, the Financial Times reported. Any extra joint debt issuance would in the short term have to come from existing mechanisms. With political temperatures rising over calls for euro area governments to collectively issue bonds to tackle the coronavirus pandemic, Klaus Regling, the managing director of the European Stability Mechanism, said European institutions have already issued more than €800bn of mutual debt in aggregate.

Spain offered more help to households and small companies on Tuesday to try to calm fears about the country’s mothballed economy and shield the population from losing their homes during the coronavirus lockdown, Reuters reported. Infections and deaths from the virus are still rising, but health officials said the pace had slowed in the past few days. Confirmed cases rose by about 11% to 94,417 and the death toll hit 8,189 after 849 fatalities were reported overnight.

Irish medical diagnostic company Trinity Biotech has booked a $24.4 million (€22.2 million) non-cash impairment charge, is closing a facility in California and is exiting two markets in which it operates, The Irish Times reported. In more positive news, however, the group also said it was close to completing a test to quickly detect Covid-19, and developing a second test that will indicate who has immunity. The Nasdaq-listed group on Tuesday announced a 6.8 per cent decline in 2019 revenues to $9.4 million.

The doomsday predictions have started. The Economic and Social Research Instiute (ESRI) last week forecast the Irish economy could shrink by 7 per cent in 2020 and that we could have 350,000 job losses as a result of coronavirus-triggered shutdown, The Irish Times reported. However, this was based on the restrictions lifting within 12 weeks. EY Ireland upped the ante yesterday by suggesting the hit could be as big as 13 per cent if the shutdown extends over a more prolonged period to August.

Critics have accused the Netherlands of jeopardising the future of the European Union with its strident opposition to joint debt issuance in response to appeals for solidarity to deal with the fallout from the pandemic, The Irish Times reported. Dutch finance minister Wopke Hoekstra wrote that issuing joint debt in the form of so-called coronabonds or eurobonds risked undermining “incentives for sensible policy”: the so-called moral “hazard argument” familiar from the last euro-zone crisis that countries with more debt should essentially learn from their mistakes.

The European Commission has approved a €200 million State scheme to provide loans to Irish manufacturing or exporting businesses that are struggling during the Covid-19 restrictions, The Irish Times reported. Margrethe Vestager, the competition commissioner, gave the green light to the scheme, which she said would “help companies affected by the coronavirus outbreak to weather this crisis and bounce back strongly afterwards”.

German officials expect unemployment in Europe’s largest economy to rise sharply as a consequence of the coronavirus crisis, even though hundreds of thousands of companies have applied for their staff to join a government-subsidised short-term work programme designed to avoid lay-offs, the Financial Times reported.