Paris – Roman Rosier’s cafe should be bankrupt by now.
With a coronavirus hit last spring, sales at a once-buzzing lunch spot in northern Paris are down 100 percent. The only customers of recent days were a couple of Uber Eat Couriers and kept a distance from a lot of people at the counter who ordered the outing.
“We’re on the verge of death,” Mr Rosier said, comparing the euro () 5) to બનાવે 1,500 he made from the lunch shift, which he was pulling down to € 1,500. Is due to financial aid. “
France and other European countries are spending huge sums of money to keep the business afloat during the worst recession since World War II. But some worry that they have gone too far; Bankruptcy is sinking to a level not seen in decades.
Aid has halted rising unemployment, large risks turning the reversal of the economy into a kind of confluence, where companies are overwhelmed with debt but receive enough state aid to survive – the so-called zombie companies. Unable to invest or innovate, these companies can contribute to what the World Bank currently describes as a potential “lost decade” of stable economic growth due to the epidemic.
“We need to get rid of all these subsidies at some point – otherwise, we will have a zombie economy,” said Carl Bild, co-chair of the European Council on Foreign Relations and former prime minister of Sweden.
France and Britain saw a 40 per cent drop in bankruptcy last year and an average of 25 per cent in the European Union. Without government intervention, European billions of business failures would have almost doubled last year, including billions of state-backed loans and subsidized payrolls, according to a study by the National Bureau of Economic Research, a private American organization.
In the Commercial Court of Paris, Judge Patrick Coupeud, who has been handling bankruptcy cases for nearly a decade, sees this difference. “I have about a third less people coming to me, because the state helps a lot of troubled businesses,” he said, pointing to the court’s almost empty colonized marble hall.
In contrast, Chapter 11 bankruptcy in the United States rose in the third quarter to the highest level since the 2010 financial crisis, a trend that is expected to continue into 2021, according to U.S. According to the index compiled by the law firm Polcinelli.
President Biden has proposed a new 1. 9.9 trillion rescue package to deal with the economic downturn and the Covid-19 crisis, and last week the government reported that 900,000 Americans had filed unemployment claims.
Those figures shape the debate over whether Europe’s strategy of protecting businesses and workers “at all costs” will cement recovery, or make economics less competitive and more dependent on government assistance when the epidemic recedes.
“There has been only a delay in parts of the country,” said Bert Collins, chief eurozone economist at Dutch bank ING. He added that whenever support measures are withdrawn, there will be a huge increase in unemployment and a rise in unemployment.
Analysts say government programs are already crippling the economy with thousands of disabled industries with fundamentally high potential after low productivity, high debt and low interest rates normalized.
According to the French economic think tank Rankcode, an estimated 10 percent of companies in France have escaped bankruptcy due to government funding.
Jeffrey Franks, head of the French mission to the International Monetary Fund, said that in order to develop in a competitive field, it would be necessary to allow it to come under compulsive business, despite the painful consequences.
The wave of bankruptcy “is not something that is too bad.” “It’s part of a general constructive destruction process to revive the economy.”
The Organization for Economic Co-operation and Development urges governments to better ensure their support measures to ensure a resurgence in growth. Failure to do so could impede recovery by trapping resources in unproductive ‘zombie companies’ and jobs, the organization said in a recent assessment.
Most European governments planned to provide support last fall, and the coronavirus should be kept under control. But in other cases the hospitals are overflowing, followed by the rapidly spreading variants of the virus, increasing the aid to all. The યુન 2 trillion recovery package was approved by the European Union late last year.
In France, investments are seen as a way to buy social stability by preventing mass unemployment. The finance minister, Bruno Le Mare, has promised to maintain support “as long as the crisis lasts”, a strategy he described as adding “spirituality” to the economy.
Almost no businesses can leave large-scale if they lobby hard enough – not even the French Ascargot farmer, who recently won a fight for limited financial support while restaurants that are their main buyers remain closed.
European monetary rules have been put on hold as governments’ cowardly debts skyrocket. France is among the many countries that have announced that they will not consider paying a hefty bill until the economy changes.
For now, financial aid is often preventing the collapse of healthy payments, the main misfortune of which was the epidemic. In Paris Commercial Court, Judge Kupiud said the move helped avoid a domino effect by encouraging traders to use state-backed loans and other assistance to pay off suppliers and debts.
France’s bankruptcy system, unlike other countries, encourages troubled companies to come forward before default and helps negotiate with creditors.
“Failure is not a word that the French want to use,” said Dominic-Paul Valli, a court judge in charge of helping business owners avoid bankruptcy. “We like to say we’re saving companies.” He added that there has been a sharp rise in the number of people going to him for help.
Those who filed for bankruptcy protection in 2020 are thought to be large workforce companies such as retailer Kayamu, a furniture manufacturer with 3,900 workers and 2,000 employees, and large companies such as Alina. It was a transformation from the small and medium-sized business cases that courts normally hear.
Still, the safety net extends yet. Numerous businesses face mounting debts, declining profitability and limited capacity to run epidemics for longer.
Mr. Rosier is an issue. He started his own organic-themed cafe, Make Your Lunch, in 2016 in the bustling business and cultural district. The idea was so successful that he opened another cafe near the high-traffic Paris Opera.
After the epidemic hit, thousands of workers, like office fees, were left stranded and unethical for most of the year.
The government helped pay most of the salaries of its employees, and Mr. Rosier received a low-interest, 30,000 state-backed loan, the repayment of which was deferred until May, which the government last week extended for one year. After a new national lockdown in October, restaurants like his received 10,000 10,000 a month for each aid.
But that money didn’t make up for the month’s lost sales. “My coffers have sunk,” said Mr Rosier, who sold his cafe near Opera in the summer and spent more on government loans paying off suppliers. With a percentage of less customers, it is three months behind on its monthly rent of 000 4,000,000, and struggles to pay social security taxes, electricity and other expenses.
The government only allows restaurateurs to offer takeouts. Mr Rosier has become an unofficial spokesman for restaurant owners, demanding that the government allow them to seat supporters again with social distance.
After the New Year’s holiday break, he said, his morale plummeted when he resumed the business.
“I was waiting. And I was waiting. And three people came to the door, ”Mr. Rosier said.
“At this point, there’s a real danger that I’ll have to stop in a few months.” “I’d rather sell the business than go to bankruptcy court.”
Two of his friends, restaurant owners, have also declared bankruptcy.
“There will still be a lot of people following in his footsteps,” Rozier said. “We know for sure.”
Antonella Francini contributed to the report.
