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Chamber of Commerce warns of bankruptcy fears

The chamber has called on the government to take “tough action”.

Mall of Tripla -kauppakeskuksen hiljainen aula tiistaina.
Business in Finland are already starting to feel the effects caused by the novel coronavirus outbreak. Image: Hanna Matikainen / Lehtikuva
Yle News

Many Finnish companies fear that the coronavirus has significantly increased the likelihood of bankruptcy, according to the Finland Chamber of Commerce, which wants to see greater government action to bail out the corporate sector.

The global pandemic is already causing lay-offs and bankruptcies in other countries, and in Finland the government announced a five billion euro support package on Tuesday.

Announcing the measures, Finance Minister Katri Kulmuni had said that "this isn’t the fault of a single entrepreneur or worker", and that Finland aimed to support firms.

That support is necessary, according to the chamber of commerce, which says that belts are tightening across Finland.

The Chamber of Commerce CEO Romakkaniemi said companies want to see more from the government.

"One thing is clear: the measures taken so far by the government are not yet sufficient. More is needed to overcome the crisis," Romakkaniemi said.

Kulmuni conceded on Tuesday during an interview on Yle’s A-studio programme that the government's proposed 5 billion euro support package for businesses may not be sufficient. The minister instead estimated that the actual figure needed may be up to two or three times greater.

"We may recover in the short term, but then we have to make massive structural efforts to keep our economy in good shape for future decision makers," said Kulmuni.

Layoffs imminent

Romakkienimi cited a survey conducted by the chamber of commerce which found concerns widespread in the corporate sector.

More than half of the 4,000 companies that responded to the survey said they were expecting to lay off staff within the next two months. Nearly 1,000 companies indicating that they have already convened co-determination negotiations or issued a lay-off warning to staff.

"It is clear from the survey that the coronavirus shock is shaking the entire corporate field. The situation is very serious and requires a rapid response and tough action from the government if we are to keep our jobs," said the chamber's CEO Juho Romakkaniemi.

Economic forecasts predict the full negative effects of the economic slowdown to be felt within the next two months.

"At this stage, it is already clear that due to the fall in demand, companies will be forced to adjust their costs or face bankruptcy, and thus the sharp rise in the number of unemployed can not be avoided," Romakkaniemi said.

Mauri Kotamäki, chief economist at the chamber, added that lessons from history suggest that Finland's market structure has not been resistant in the past to such seismic economic changes.

"It has taken a long time to recover from crises. Therefore, it is now particularly important that we succeed in preventing corporate bankruptcies and rising unemployment," Kotamäki said.

Sources: Yle

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