The Bank of Spain highlights that public policies mitigated the effect of the pandemic on companies

The number of active companies contracted by 1.1% in 2020, compared to a reduction of 1.5% in the years of the financial crisis

MADRID, 28 Jun. (EUROPA PRESS) -

The Bank of Spain relates the impact of the public policies deployed during the pandemic with the "very moderate effects" that the coronavirus crisis had on Spanish companies, as it concludes in its article "The evolution of solvency and business demographics in Spain since the beginning of the pandemic", published this Tuesday.

The supervisor points out that the economic measures adopted during the pandemic "could have been key" to explaining the lower repercussions of this crisis compared to those of previous years, as shown by the different indicators exposed in its analysis.

Throughout 2020, the number of active companies, understood as the set of commercial companies and individual entrepreneurs, contracted by 1.1%, with 37,858 fewer companies and a total of 3,366,570 active companies, according to data from the Directory Central of Companies (Dirce) of the National Institute of Statistics (INE) to which the Bank of Spain resorts. During the financial crisis, that reduction was 1.5%, on average, between 2008 and 2013.

The reduction in the number of companies showed a heterogeneous behavior, with a more pronounced fall in the hotel industry, of 3%, and in commerce, of 2%, than in other sectors. By size, the coronavirus had a greater impact on the contraction of small and medium-sized companies than on micro and large companies.

The Bank of Spain explains that the fall in the number of active companies throughout 2020 responds to "a decrease in registrations and not due to an increase in cancellations". The fall in registrations shows a behavior in line with that registered in 2008, while in the case of cancellations the figure not only did not increase but also contracted by 1%.

To analyze the recent data on business demography, the Bank of Spain studies the figures of companies registered with Social Security, while for entries and exits it is based on the data on constitutions and dissolutions from the statistics of commercial companies of the INE .

Regarding the registration of companies in Social Security, "a sharp drop" was observed during the months of confinement, with a subsequent recovery that lasted during 2021 and part of 2022. In May of this year, the number of active companies was barely 0.3% below pre-crisis levels.

For its part, the data on constitutions and dissolutions of commercial companies reflect "pronounced decreases during confinement", in particular in the constitutions, followed by a recovery, until currently exceeding the pre-pandemic figures. The breakdown of constitutions by sector of activity shows that the only sector that has not recovered these levels is industry and energy. As for dissolutions, they have returned to pre-crisis levels, especially in construction, hotels, transport and storage, among others.

The Bank of Spain, based on information on bankruptcy proceedings, confirms "an intense rebound" in the case of individual entrepreneurs since the second half of 2020, with figures "almost five times higher" than before the pandemic.

However, it specifies that "the absolute figures continue to be low", so that for a population close to 1.9 million individual entrepreneurs, bankruptcy proceedings barely stood at 2,036 in 2021.

In the case of commercial companies, the number of insolvencies grew in the second half of 2020, above the levels of 2019, although in a "much more moderate" way than in the case of individual entrepreneurs, as the report of the Bank of Spain. In 2021, the bankruptcies of commercial companies stood at 1,944, for a population of nearly 1.5 million companies. In the first quarter of 2022, company insolvencies returned to levels similar to those of 2019.

The supervisor recalls that these data must be valued within the credit moratorium in force since March 2020, extended later and about to expire at the end of this month.

The Bank of Spain also looks at the situation of bank loans to analyze the evolution of business solvency. The total volume of non-performing loans granted to non-financial corporations (NFCs) and individual entrepreneurs has decreased from the pandemic onwards, although with a slowdown in 2022.

On the other hand, the credit balance shows that the ratio of doubtful loans to total loans granted to companies has fallen from 6.3% at the end of 2019 to 5.4% registered between January and March 2022 .

The Bank of Spain warns that "the rebound in credits under special surveillance, especially in the sectors most affected by the crisis, shows the existence of latent risks for business solvency in the medium term". This situation may worsen "in a context in which a high percentage of state-guaranteed loans end their grace periods this year."