In the aftermath of the COVID-19 pandemic, the Dutch government’s substantial support measures have been instrumental in preventing a significant number of bankruptcies, according to Rabobank’s analysis. The financial assistance, which included wage costs subsidy (NOW), fixed costs allowance for small and medium enterprises (TVL), and tax deferral, has been estimated to have prevented at least 12,500 bankruptcies over the past four years. Without this support, the Netherlands might have faced higher unemployment rates and a more severe recession.
Rabobank’s assessment is based on conservative estimates, taking into account the potential for the Dutch economy to have experienced an even more significant downturn if government support had not been provided. The bank has calculated that the NOW and TVL schemes have saved at least 4,000 companies from bankruptcy, while the tax deferral has kept at least 8,500 companies afloat. The support measures’ positive impact is expected to continue, saving another 5,000 companies up to the end of 2027.
However, the government’s intervention has not come without cost. The high public expenses, as noted by the Bureau for Economic Policy Analysis (CPB), and the fact that the support lasted longer than necessary and was not targeted enough, have raised concerns. Moreover, the continued support has kept non-viable companies afloat, potentially hindering healthy business dynamics in the Netherlands.
Rabobank acknowledges that the support has helped maintain economic stability and confidence, averting a wave of bankruptcies that could have affected even healthy businesses. This would have led to the unnecessary destruction of capital, knowledge, and skills, and potentially resulted in a deeper economic contraction and higher unemployment rates.
Nonetheless, the bank also suggests that there are valid critiques. The high public costs of the support measures and the potential negative impact on business dynamics by keeping non-viable companies afloat are areas that require careful consideration. The importance of sufficient business dynamics for a healthy economy is emphasized, as unprofitable, non-viable companies should be allowed to exit the market, freeing up resources for more productive companies.
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