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Restaurants closed through May – and half may be insolvent by then

Though take-out sales are allowed, a study predicts that many restaurants will quickly run into financial difficulties.

"Closed until further notice" reads a sign outside Pataässä, a karaoke bar in Helsinki's Kruununhaka neighbourhood. Image: Markku Ulander/ Lehtikuva

Restaurants, cafés, bars and pubs in Finland closed at midnight Friday through the end of May at least. They are allowed to sell food to be consumed off-premises.

The move is intended to slow the spread of the new coronavirus. Police said they were monitoring bar closures early Saturday.

An Aalto University study predicts that as many as half of firms in the restaurant and accommodation sectors will be in serious financial difficulties a month from now.

The same study suggests that within three months, 70-80 percent of these companies will be at risk of defaulting on debts.

Timo Lappi, CEO of the Finnish Hospitality Association MaRa, said on Friday that the number of bankruptcies in the branch depends partly on whether restaurants are obliged to pay rent in this difficult situation. Lappi says that some of the large rental companies have been willing to compromise, but far from all.

In deciding to shut the restaurants, Parliament ordered the state to compensate them for lost revenues. Lappi says this will be crucial.

“If that support doesn’t come through, the results will be ugly,” he warned. MaRa members employ some 70,000 people.

Restaurants spread infections

Parliament finally approved the Council of State's order on Thursday evening, after more than a week of discussion in the Constitutional Law Committee.

Committee chair Johanna Ojala-Niemelä of the SDP said the committee had to decide that the move was appropriate, proportional and essential.

Ojala-Niemelä explained that the committee eventually reached this conclusion on the basis of international studies indicating that restaurants play a significant role in spreading infections.

Prime Minister Sanna Marin’s government had been seeking to close the restaurants for well over a week, but found out that it did not have the power to do so outright under existing legislation. There was a similar delay in its plan to cordon off the populous Uusimaa region from the rest of the country, which finally took effect a week ago.

When it became clear that there still constitutional hurdles before the restaurant order could go into effect, Marin called on owners to voluntarily close their establishments. However some restaurateurs feared that their insurance would not cover financial losses unless there was a legally binding order to close.

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