Europe faces a wave of bankruptcies and the lost of 15 million jobs

European governments must help businesses boost their equity

The International Monetary  Fund (IMF) estimates massive public cash handouts during the pandemic helped save 30 million jobs, but the share of insolvent companies still increased, with small firms particularly affected. To lift European business out of danger, it said a combination of public and private support totaling 2% to 3% of economic output is needed.

“Healthier firms will forestall a return of “doom loops” between Europe’s real and financial sectors,” Laura Papi and Alfred Kammer, director of the IMF’s European department, wrote in a blog published on Tuesday. “Most importantly, healthier firms will create more jobs.”

Euro-zone non-financial company debt soared in first nine months of 2020 and to avoid pitfalls like wasting public money trying to save non-viable firms or allowing businesses that get support to be mismanaged, the economists said there should be a principle of involving banks, so the private sector has “skin in the game.”