A CHF42 billion coronavirus financial aid package may not be enough to save firms from extinction, warn business leaders and economists. The state could be saddled with a bill three times higher if the crisis drags on until the end of the year.
Earlier this week, the government increased its emergency funding from CHF10 billion to CHF42 billion ($42.6 billion). Some CHF14 billion will pay the wages of employees on short-time work, with CHF20 billion being offered as guaranteed loans and more funds targeted at specific industries.
Non-essential high street shops and services have been ordered to shut down while the hospitality and tourism industries face a severe shortfall in guests in the coming months.
It is hoped that the emergency funding will keep businesses afloat for around three months, allowing them to pay their immediate bills and retain staff. “For most companies the situation is currently not too dramatic,” Hans Hess, president of the manufacturing umbrella group Swissmem, told the SonntagsZeitung newspaperexternal link.
“[But] it is certain that some customers will start to delay payments or not make them at all. There is a great danger that companies could very quickly face severe liquidity problems.”
In an interview with the NZZ am Sonntagexternal link newspaper, Economics Minister Guy Parmelin would not be drawn on how much extra money might be required. “We only made public the figures that we judge we need for the current situation,” he said. “The government will do everything it needs to secure the health and income of people in the future. We have to see how the situation develops.”
The KOF Swiss Economic Institute has already called for a CHF100 billion fund, which it says will not violate Switzerland’s Debt Brake rules on keeping public debt in check. Should restrictions on businesses and borders last until the end of the year, companies will need CHF130 billion-worth of bailouts, the NZZ am Sonntag calculates.