Businesses In The Eurozone Are Becoming Increasingly Vulnerable During The Recession

Businesses In The Eurozone Are Becoming Increasingly Vulnerable During The Recession

Businesses in the eurozone are becoming increasingly vulnerable during the recession caused by the new coronavirus pandemic. But public support, including cheap cash from the European Central Bank (ECB), has so far limited the damage. It was announced by the ECB in its stability report on Monday. "Corporate vulnerability has risen to the level last seen at the height of the eurozone debt crisis, but remains below the levels it reached after the global financial crisis," the ECB said. In addition to the purchase of corporate bonds worth more than EUR 20 billion this year under the Euroregion's emergency bond purchase program, the ECB has also played a key role in providing financing to companies. But a further economic downturn could lead to a downgrade of companies in the Euroregion, which could make aid more difficult for the ECB, as it can only buy the debts of companies with a rating in the investment zone. However, companies are still struggling with issues that cannot be solved in the current situation, such as declining sales, lower current and expected profitability, and increasing leverage and indebtedness, the ECB added. "Government loan guarantees and bankruptcy moratoriums have prevented a large wave of collapses, but a significant number of companies could be forced to file for bankruptcy if these measures are revoked too soon or if credit conditions are tightened," the ECB added.