Europe

The coronavirus pandemic is taking its toll on the world economy. GDPs of many countries are down as unemployment numbers rise, and companies are shutting up shop, Silicon Canals reported. One of Germany’s largest fintech startups Monedo can now be added to the list as it has filed for insolvency. The fintech’s insolvency application was granted by the Hamburg District Court that has also opened the preliminary insolvency proceedings. The news of Monedo filing for bankruptcy was first reported by Manager Magazin.

Greece is the most vulnerable country in the Eurozone to a shock to tourism says DBRS Morningstar, Capital reported. According to the latest forecasts by DBRS, the recession in Greece this year will reach 7%, while the recovery in 2021 is expected to reach 4%. According to the DBRS’ adverse scenario, the contraction of the Greek GDP this year will come to 9% and growth in 2021 will move at a subdued rate of 1.5%.

Credit investors are unconvinced about the ability of the world’s weakest lenders to weather a coronavirus economic slowdown, according to Bank for International Settlements, Bloomberg News reported. The cost of insuring debt from lower-rated banks is yet to fully recover from a virus-fueled blowout, with spreads on credit default swaps tied to high-yield lenders an average of 127 basis points above pre-pandemic levels as of Aug. 21, BIS said in report published on Monday. CDS spreads for BBB tier banks were 30 basis points wider.

When European Union nations agreed this summer to set up a 750 billion euro economic recovery fund in response to the coronavirus pandemic, a major motivation was to avoid a lasting depression in Italy that could tear apart the euro, The Wall Street Journal reported. For Europe, much now hinges on whether Italy can find a useful way to spend its part of the fund: roughly €200 billion, equivalent to $236.95 billion, in EU grants and cheap loans. Astute investments that lift Italy’s ability to grow could help overcome the country’s quarter-century of stagnation.

Around half a million jobs are likely to be lost in the UK this autumn, far higher than job losses at the peak of the last downturn, a new analysis of recent dismissal notifications shows, the Financial Times reported. Figures obtained from government show that companies notified the Insolvency Service of around 380,000 staff at risk of dismissal between May and July, according to the Institute for Employment Studies, a research group. Most of these came in the latter two months, when dismissal notifications were running at five times the average rate seen between 2008 and 2020.

Lossmaking German truck and bus manufacturer MAN plans to cull up to one in four jobs globally in a move that will add to concerns about the strength of the recovery in Europe’s largest economy, the Financial Times reported. The cutting of up to 9,500 jobs is part of an overhaul of the business, designed to achieve a return on sales of 8 per cent by 2023 and generate about €1.8bn of cost savings, the company said on Friday.

Personal insolvency applications reached a record high in July, according to figures from business and credit risk analyst CRIF Vision-net, The Irish Times reported. The Insolvency Service of Ireland (ISI) received 239 applications for personal insolvency arrangements, debt relief notices and debt settlement arrangements. This is a 125 per cent increase on the 106 applications made in July last year. The number of applications to the ISI have been higher in almost all months this year in comparison to 2019, CRIF Vision-net said, but July has seen the largest spike to date.

New Look is set for another clash with its landlords next week as it prepares to ask for further big cuts in rents with a warning that it could go bust without them, the Financial Times reported. The fashion retailer, which has almost 500 stores and employs more than 12,000 people, is proposing its second company voluntary arrangement in as many years as it contends with a hit to sales from coronavirus.

EU finance ministers meeting in Berlin vowed not to cut short the recovery with a premature fiscal clampdown, as they decided to postpone any debate over when to reimpose the bloc’s budget restrictions or how to reform them, the Financial Times reported. Paschal Donohoe, the president of the eurogroup and Irish finance minister, said member states were developing new policies to boost their economies and pledged that there would be “no sudden stop, no policy cliff-edge”.

The number of firms declaring insolvency in Germany was 6.2% lower than in the first half of last year despite the coronavirus crisis, the Statistics Office said, partly because of a rule designed to keep firms afloat in the pandemic, Reuters reported. In March, the government gave companies that find themselves in financial trouble due to the pandemic a respite by allowing them to delay filing for bankruptcy. That was later extended until the end of the year.