The financial aid that was given to more than 190,000 companies in Flanders by the regional government, around €1.89 billion, helped businesses avoid a loss of €6.5 billion during the pandemic.
The money from the economic support measures was given to the companies that were hit hardest by the pandemic. In particular, these were businesses in the hospitality and retail sectors that suffered losses in turnover and employment, as well as from the measures put in place to curb infections, according to a study commissioned by Flemish Economics Minister Hilde Crevits.
‘Protecting these many businesses was necessary during difficult months when businesses were forced to close or face severe operating restrictions. In this way, bankruptcies were avoided and we were able to support our economy,’ Crevits stated in a press release.
We gaven bescherming aan ondernemingen tijdens corona. Op mijn vraag is onafhankelijk onderzoek gebeurd. Elke euro die we investeerden zorgde voor 3,5 euro minder verlies van welvaart.https://t.co/101Ct0fkRl
— Hilde Crevits (@crevits) December 9, 2021
The tweet reads: “We gave protection to companies during the coronavirus crisis. Independent research was done at my request. Every euro we invested reduced the loss of wealth by €3.50.”
The study, carried out by the Technopolis Group, together with Vives and KU Leuven, was commissioned as Crevits feared that the financial aid had little effect in limiting the financial fallout of the crisis and the impact it had on Flemish businesses.
Yet research showed that without support, a company would have experienced, on average, 12% less turnover growth, 8% less growth in the workforce and 9% less growth in productivity.
It also found that although the Flemish gross domestic product shrank by 6.1% in 2020, this contraction would have risen to 12.4% without economic support. “The study shows that the corona aid helped to avoid a major economic crisis and contributed to the rapid recovery of the companies affected,” Crevits stated.
Lump-sum payment and compensations
All support measures implemented since the start of the coronavirus crisis were analysed by the study. One measure was the “corona hinder premier,” loosely translated as the “Covid inconvenience premium,” which was given in the form of a lump-sum compensation to companies that were forced to close down.
Meanwhile, those able to keep working but that suffered heavy turnover losses could count on the “corona compensation premium” of around €3,000.
The first measure proved most beneficial for small enterprises. The study found that for one in six businesses, it even surpassed the normal turnover for the same period in 2019. This is why Crevits said this measure would not be sustainable, and that a system for support based on turnover loss was needed.
This resulted in the introduction of the Flemish protection mechanism in August 2020, and finally the support measure which gave financial aid based on lost turnover. This was presented at the end of November after the government announced new measures that would impact businesses, especially nightclubs.