ECONOMY

In a pandemic year, fewer business closures

in-a-pandemic-year-fewer-business-closures

Despite the pandemic and the resulting lockdown, company closures declined 22.7% in 2020 and new company regisrations remained at the same level, official data show.

There were 37,345 company closures in 2020, down from 48,290 in 2019, while new registrations reached 84,122, only slightly lower than the 84,164 recorded in 2019.

This despite many businesses forced to close, or limit their activities, for up to 10 months during the year, and the economy shrinking 10%.

Even in the hard-hit hotel and catering sectors, closures declined 21.2%, although new registrations were also down significantly (18.3%).

This paradox is explained by two facts. First, the government’s extensive support program, which includes tax breaks, rent subsidies and cash support, all provided on the condition that businesses remain open, and, second, a reform that lightened the burden of pension fund contributions on businesses.

With business gradually reopening in 2021 and support measures being phased out, it remains to be seen how many businesses will be healthy enough to keep operating.