Wednesday, May 18

Economist hopes for more bankruptcies: – Has been too generous

Social economist Steinar Juel at Civita believes the time has come to get the business community used to the support measures. He hopes for higher bankruptcy figures this year.

NEW NORMAL: It may be covid-19 will return in phases in the coming years, according to experts. Companies must be ready to endure this without calling for state aid every time, says Steinar Juel in Civita.

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– When business organizations almost get withdrawal from the prospect of the support schemes being phased out, there are signs that the medication has been too strong and lasted too long, says social economist Steinar Juel in the think tank Civita.

Juel has worked as a personal adviser to the Conservatives’ finance ministers Rolf Presthus and Arne Skauge and later was chief economist at Kreditkassen and then Nordea.

He believes that the strong reactions that came from the business organizations NHO, Virke and SMB Norway last week, that the compensation scheme is planned to be scrapped after February, were “unwise and short-sighted”.

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Should strict measures become necessary again, we know that the authorities will reconsider the situation. But even though this may still happen, the time has now come to wean the business community from the support measures. Having to live with covid-19 coming and going may become the new normal in the coming years.

Therefore, business organizations should change their role, Juel believes. From demanding more support, to being supportive in the weaning cure that is needed.

– A weaning cure will strengthen companies, even if in the short term it can lead to more bankruptcies. If weaning is to be successful, the Storting must also equip itself to withstand pressure to distribute more painkillers.

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The government and SV are abolishing the compensation scheme for business and industry

Must accept more bankruptcies

Steinar Juel points out that the situation is now completely different than before in the pandemic, then with very intrusive restrictions.

The Minister of Finance Trygve Slagsvold Vedum (Sp) has done the same.

In a proposition to the Storting earlier in January, he pointed out that “measures that support companies and people who are not active can have very unfortunate effects if they are maintained for a long time.”

Vedum opens up for a greater acceptance of companies going bankrupt, compared with earlier in the crisis.

The Minister of Finance further writes that “the further into the pandemic we get, the more it must be possible to assume that business, culture and others themselves will be able to handle moderate changes in infection control measures”.

«This means a greater acceptance that companies that do not manage on their own will be able to go bankrupt than it was early in the crisis. “

Must learn to live with the corona

These are relatively new tones compared with Støre’s statements in October. Then the message was that “the support will last as long as the crisis lasts”.

The change makes sense, Steinar Juel believes.

– It is time for a clear phasing out of measures. The business community must also get used to living with the fact that covid-19 can become something that comes and goes in the years to come. Then companies must be able to adapt, not expect new support schemes when people go to restaurants a little less often or travel less.

The phasing out will probably lead to a number of companies that have been kept artificially alive going bankrupt. Steinar Juel thinks that will be good.

Falling bankruptcy figures in 2020 and further in 2021 are a signal that the support schemes have been too generous and lasted too long.

He points out the principle that bankruptcies of weak companies provide space for better companies to grow.

– Support schemes put restructuring on hold. Over time, they will undermine companies’ competitiveness and ability to pay good wages. We actually need a little more bankruptcy.

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Want support as long as there are restrictions

Anniken Hauglie, Deputy CEO of NHO, answers Juel that they “do not get abstinences from not receiving benefits, but from not being able to operate”.

– As soon as the infection control measures are repealed, NHO believes it is important that the compensation schemes are abolished, she says.

Anniken Hauglie, Deputy CEO of NHO, believes that no one will be happier than the business community when the compensation scheme is phased out.

But NHO believes that it is reasonable for companies to be compensated in this temporary situation – as it is the authorities who prevent normal operations.

– This temporary support contributes both to securing jobs and ensuring the legitimacy of infection control measures.

Hauglie says that no one will be happier than NHO and the companies when the compensation scheme ends – because it means that the world returns to a normal situation.

– Let it be clear that the companies will and will stand on their own two feet.

E24 has examined the compensation scheme:

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Half of the companies that received pandemic support did better in 2020 than the year before

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Corona support: Companies took out more dividends in the crisis year than the year before

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Foreign owners took 722 million in dividends after crisis support

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