The state in Austria saved 60 percent of companies from bankruptcy

Austrian state aid has protected many companies from bankruptcy. The latest study concludes that state aid has prevented 60% of expected bankruptcies. At the same time, however, it points to the "coronabublin" and it is still questionable how long the support measures will be effective, or how quickly and to what extent the bubble will burst. The extent of the potential wave of bankruptcies was examined by Walter Schwaiger, Professor of Financial Management Research and Controlling at the Institute for Management Sciences (IMW) of the Technical University of Vienna. In 2019, 1.15% of Austrian companies went bankrupt, and as a result of the pandemic, an increase to 1.87% was expected. Last year, however, only 0.76% of companies declared insolvency, which is 1.11% less than expected. This 1.11% represents the potential for a wave of bankruptcies and is practically as large as the actual number of bankruptcies in 2019. It is not yet clear how quickly and to what extent this potential will be translated into reality. It depends on the development of the economy and the moment of termination of state pandemic support. "The Austrian government's support measures have so far been effective, and if the coronabubella does not burst completely due to the rapid economic recovery, the support measures have had lasting effects," Schwaigera was quoted as saying by APA. According to preliminary data from the statistical office Statistik Austria, 3,155 companies reported bankruptcy last year, in 2019 there were more than 5,000. The development of corporate bankruptcies is most evident during the year. While in the 1st quarter there were 1144 of them, in the 4th quarter there were only 538, which represents a decrease of 53%. In the first half of the year, 1968 companies declared bankruptcy, in the second half of the year there were 1187.