Moderate increase expected in Belgium
"This increase in insolvencies was inevitable. Thanks in particular to state support measures, the number of bankruptcies reached a historically low level during the Covid-19 crisis. This situation will gradually come to an end," says the trade credit insurer. "We estimate that massive government intervention has prevented one in two bankruptcies in Western Europe and one in three in the United States," adds Maxime Lemerle, Head of Sector & Insolvency Research.
Belgium well below pre-crisis levels
For Belgium, Euler Hermes forecasts a slight increase of 3% in the number of insolvencies in 2021 (7,400 in total) and an increase of 10% in 2022 (8,150 bankruptcies). Nevertheless, these figures remain well below the pre-crisis record levels (over 10,000 bankruptcies in 2019).
In terms of sectors, Euler Hermes expects that Benelux wholesalers will face more difficult times. With the current rise in energy prices, the energy sector is also at risk. In addition, the trade credit insurer mentions as risk factors the disruption of supply chains, whether or not inflation will continue to rise and the shortage of personnel. "The question is to what extent companies are able to pass on rising costs to their customers. In many sectors, this is not competitively possible.”
In addition, Euler Hermes points to the risks associated with zombie companies: "For years we have seen this trend: unhealthy companies are kept alive by 'free' money via extremely low interest rates and central bank purchase programs. Added to this is the massive state support for the coronavirus. Now that this support is going to disappear, some of these zombie companies will go bankrupt.”
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