More than 13,000 Eurozone companies are at risk of bankruptcy because of the COVID-19 pandemics, according to an analysis by Euler Hermes, one of the largest players in commercial credit insurance in the world and in our country. According to experts, these are SMEs and medium-sized companies that were rated as risky even before the pandemic erupted, and at the moment are expected to be unable to meet the new economic challenges.

The updated Euler Hermes forecast for Western Europe is set to increase bankruptcy by 16% in 2020 compared to the previous year, despite efforts by governments to curb the crisis.

However, in a pessimistic scenario, it can be as high as 20%. Businesses in the Netherlands, Italy, and Spain are expected to be worst hit with bankruptcy increases of 21% to 27% (pessimistic), 18% to 21% (pessimistic) and 17% to 20% (pessimistic). They are followed by France, the United Kingdom, and Belgium with 8% to 11% (pessimistic) growth and Germany with 7% to 9%. Construction, agriculture, and services are identified as the riskiest sectors in the euro area, but retail, machinery, the automotive and transport sectors are also problematic.

According to analysts, the revenues of companies in the Eurozone are expected to shrink by between 15% and 25% in the peak of the COVID-19 crisis, depending on whether it lasted for one or two months. The forecast for the whole of 2020 is to reduce the turnover between 12 and 18%. The combination of a shock in domestic consumption and a strong restriction on foreign trade will reduce the euro area GDP by 1.8% for a one-month quarantine and 4.4% for two-month restrictive measures, according to Euler Hermes experts.