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Corona crisis and bankruptcies: where in Germany the "zombie companies" lurk

2021-02-26T12:04:29.624Z


The German economy is threatened with "zombieization", warn economists, because Corona aid artificially kept ailing companies alive. But a new study raises great doubts about the thesis.


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Action critical of capitalism before the G20 summit in Hamburg (2017)

Photo: Mike Segar / REUTERS

Zombie stories are very popular with the audience.

This applies not only to Hollywood, but also to otherwise dry-looking titles in the business press.

"Germany is haunted by the ghost of the zombie companies," wrote the Financial Times during the corona crisis.

"Zombie companies are spreading in the middle class," believes the "Börsen-Zeitung".

25,000 companies operate in an area in which they would actually have to file for bankruptcy without any help.

Behind this is the not entirely unfounded fear that state rescue measures and permanently low interest rates could keep ailing companies alive that should have been economically dead long ago.

The catchphrase is catchy, but also a bit crooked in view of the underlying economic phenomenon.

In films, the undead accumulate everything in their environment and plunge the world into an apocalypse within a short period of time.

The danger emanating from companies, on the other hand, is rather insidious: If actually unprofitable companies stay in the market, they also tie up resources such as workers that could be used more productively elsewhere.

According to this logic, the massive use of short-time work at Lufthansa is about a double-edged sword: it has prevented thousands of people from falling into unemployment.

But also that they switch to companies that may have significantly better long-term prospects than airlines.

The problems are more likely to manifest themselves in the long run: Economic and technological progress could be slowed because workers are not deployed where they are most productive and innovative.

99 percent of the companies affected are small and very small companies.

In fact, the state aid measures in 2020 apparently prevented corporate bankruptcies in Germany to a considerable extent.

Emergency aid, loans and, in particular, the suspension of the obligation to file for bankruptcy would result in a "significant bankruptcy gap", according to a study by the "Center for European Economic Research", which is available to SPIEGEL.

According to ZEW, the total number of suppressed insolvencies is 25,000 companies.

All of them should have filed for bankruptcy in 2020 due to over-indebtedness or insolvency.

This identified insolvency gap is considerable, especially compared to previous years: Since 2017, the number of company bankruptcies per year has always been below 20,000.

The phenomenon "does not extend into the middle class"

However: The ZEW study hardly found any indications for the thesis of an increasing "zombieization" of the German economy.

The bankruptcy gap almost exclusively affects small and very small businesses.

Especially the hospitality industry, which has been badly hit by the crisis.

According to ZEW, companies with more than ten employees account for just 0.3 percent of all suppressed insolvencies.

"The insolvency gap does not affect medium-sized companies," says Georg Licht from ZEW.

He therefore sees no acute danger of being "zombified" in Germany.

In retrospect, it is true that small businesses that would have disappeared from the market in 2020 even without the crisis, for example in the catering sector, would have benefited from the federal government's rescue policy.

Nevertheless, the aids could hardly have been designed differently, says Licht.

"There is an irresolvable trade-off between a detailed examination of who needs and deserves help, and the speed that is necessary to save companies," says the researcher.

For the study, ZEW analyzed the data from a large-scale company survey together with data from the Creditreform credit report.

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Source: spiegel

All business articles on 2021-02-26

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