The pandemic left a historical record of closed companies in 2020 with the disappearance of 44,759 companies from Social Security records. This is equivalent to an average rate of 125 companies closed each day, although the truth is that the bulk of the casualties were concentrated during the months of strict confinement after the State of Alarm decree. From there, the number of ‘living’ companies gradually recovered until it stagnated again in the last months of the year.
A more in-depth analysis of the figures offered by the Ministry of Labor and Social Economy allows us to illustrate the profile of the company most affected by the coronavirus crisis. It is a company with less than 10 employees, which is known as micro-SMEs, and dedicated to the hospitality or entertainment sector.
In total, 34,062 companies with less than 10 employees were discharged from Social Security in the last year. Many of them were bars or restaurants whose businesses were temporarily closed or suffered severe capacity restrictions for several months of the year. The data is chilling: in Spain, on December 31 there were 8.5% fewer hospitality companies than at the end of 2019. That is, almost one in ten bars has disappeared. The proportion is similar in the group of companies dedicated to artistic activities and entertainment in which cinemas are located, for example.
The closings of 2020 multiply by more than seven the number of companies that lowered the blind in 2019, when one of the biggest economic problems in Spain was the slowdown in GDP until it grew by ‘only’ 2%. You have to go back 11 years in the statistical series, until the terrible 2009, to find a higher number of closings.
In any case, both figures are not entirely comparable since in the current crisis tens of thousands of companies are still operating thanks to liquidity programs endorsed by the State. These mechanisms have been a double-edged sword that did a great job in the first phase of the crisis since they allowed companies not to withdraw while they were closed due to sanitary restrictions.
However, many of those who obtained these loans today are in a much worse situation than in March: their businesses have not started and their balance sheet is much more in debt. According to the Bank of Spain, 10% of these companies are at risk of liquidation for this reason. In round numbers, 130,000 companies on the verge of bankruptcy.
The big question now is to know what will happen in the year 2021. January already concluded, has been a very bad month for the economy, as reflected by the great loss of affiliates published by the Ministry of Labor or other data such as the decrease in 51% in the registrations of known vehicles this Monday.
These setbacks have led some analysts such as the British bank Barclays to forecast an economic contraction of 0.8% for the country in the first quarter of the year. The AiRef has also warned today that the first month of the year has been bad, with an estimated fall in GDP of 0.7%. The consensus is that GDP will pick up strongly from the spring, although this will depend in any case on external factors such as the fact that the promised vaccines are received.
While that moment arrives, the main business employers urgently request direct aid and restructuring and refinancing mechanisms that allow them to balance their financial statements. We are still far from the entire health problem being solved and real aid is needed because the guarantees are on loans that must be repaid and the companies are closed, or at half gas, but their expenses remain, the president of Cepyme warned yesterday, Gerardo Cuerva, in an interview in EL MUNDO.