The pandemic has had a huge impact on the world economic situation and the Nordic countries are no exception. When analyzing data for bankruptcies during the pandemic months of March, April and May, it becomes evident how different countries approach to the Covid-19 pandemic has affected the local business climate.
We have together with Experian summarized the bankruptcies in Finland, Sweden, Norway and Denmark during the key months impacted by the Covid-19 pandemic, March, April and May 2020, and compared the data with the same time period in 2019.
The data shows that the largest increase of bankruptcies during the time period was in Finland in April with a 36 percent increase of bankruptcies, compared to April 2019. The bankruptcies in Sweden follows the trend with an increase of 30 percent in April compared to April 2019. Bankruptcies in both Denmark and Norway are decreasing during the three months the data is gathered, and there is a good explanation for this.
The monthly amount of bankruptcies has been increasing in Finland since January and the development strengthened a bit in March and April. In Sweden, the bankruptcies are also increasing, but not as much as you might have expected and there are clear signs of stabilization over the upcoming months.
Economic aid and help packages
During the Covid-19 pandemic the Finnish government has provided economic aid for companies and made some temporary adaptations to the debt collection legislation. Finland did make some strict governmental lockdown operations, which of course also have had an impact.
The main business segment in Sweden that has been struggling the most is the Hotel- and restaurant sector where we still expect a high number of bankruptcies going forward. The industry has a low profitability and many companies struggled with a reduce of revenues by 80 percent in late March and in April.
For Norway and Denmark there has been less bankruptcies during these three months, which is due to several factors. The Government in both countries have issued help packages to many companies, supporting them in times of crisis and thus avoiding bankruptcy, for the time being.
In Denmark, the Public Courts were also affected by the shutdown of society, and there has been a slowdown in the handling of the bankruptcies, which is expected to slowly get back to normal from June onwards. The ketchup effect of the bankruptcies has yet to show itself but is expected to come once the aid packages are phased out. But the Government in Denmark is very conscious of this and are looking into how they can further support the companies at risk.
Surprisingly an industry where there was an expectancy of an increase of bankruptcies, Hotel- and restaurant sector, there was a decrease, which can be due to the help packages provided by the Danish Government.
Many of the same trends that we see in Denmark also appear in Norway. Even though overall numbers are down, we can already see that Hotel- and restaurant sector are struggling. Based on the factors mentioned above, we have a firm belief that the financial situation for many companies are worse than what the bankruptcy numbers show in recent months.
But what will the future hold? Will this development continue after the summer? I would say it all depends on how long this pandemic will last and the future economic aid from local governments. Also how far off a potential vaccine is. Let us hope that the bankruptcy increase we saw during the spring of 2020 is a one off that we do not have to see in the future. Are you interested to see all the data see below.
About the data:
The data is stating bankruptcies in Finland, Sweden, Norway and Denmark during the period of March, April and May in 2020, compared with the same period in 2019. Public administration and defense has been excluded.