Corona-shock could last five years, say government planners

Corona-shock could last five years, say government planners
Hospitalirty, one of the sectors likely to see a wave of lost jobs © Belga

Today the national security council will meet to discuss further relaxation of the lockdown measures introduced in March.

But according to the government’s own planning office, the effects of the Covid-19 crisis are far from being over. In fact, the autumn of this year is likely to see a wave of redundancies, bankruptcies and delayed economic effects that could continue until 2025 having an effect on the country.

The corona crisis will weigh on Belgian economic activity, employment and public finances for years to come,” is the blunt title of the report from the federal planning bureau published yesterday.

The deep recession of 2020 will be followed by an economic recovery, but the recovery is unlikely to reach the level of economic activity that would have been possible without the pandemic within five years,” the report says.

If this scenario is confirmed, it will have consequences for employment and unemployment. Public finances have become even more vulnerable as a result of the crisis.”

Until now, the government has managed to take measures to lessen the blow for many families. Those include the system of temporary unemployment, which has allowed employers in small businesses to pass the burden of paying staff on to the government.

However as the lockdown measures continue to be dismantled, the pressure of keeping staff employed while taking are down will eventually make itself felt. And when that happens, it will lead to redundancies or bankruptcies, or both.

The economic effects of the crisis have been barely registered by the population as a whole, the report says, but other research, including a paper from the National Bank, shows that certain groups, including principally the less educated, have already felt the full effects.

In concrete terms, the bureau foresees the loss of 108,000 jobs in 2021, primarily in manufacturing, transport, hospitality and the financial sector.

The following years will see the wave of unemployment spread to construction and health care.

And it will take until 2025 before the unemployment rate in Belgium drops below 9% – the level at which it stood just before the outbreak of the virus in the country.

In the meantime, the Belgian economy will shrink by 10% this year, recovering next year to return to its old growth rate by the summer of 2022. But even in 2025, the country will still not be back to the collective prosperity that could have been achieved without the pandemic, the bureau estimates.

Alan Hope
The Brussels Times

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