First steps to help virus-hit businesses, as economy forecast to shrink 5%

The Government is making an initial €5 billion available, with more details to be outlined in a supplementary budget on Friday.

File photo: economy, finance, business and banking / Credit: iStock Photo

The government has announced the first steps to hit businesses in Finland impacted by the coronavirus pandemic.

This week Business Finland will launch two new services to help mitigate the financial impact of the virus, especially targeted towards tourism companies, creative industries and all businesses whose supply chains are affected.

These new measures are part of an initial €5 billion fund the government is making available to help the economy during the crisis, with more exact measures likely to be spelled out at the end of the week with the government provides details of its supplementary budget proposal.

“As an entrepreneur, when you spot a financial crisis in your business, get in touch with your bank and finance first. We will ensure that the service threshold is low” says Mika Lintilä (Centre), the Minister for Economic Affairs.

“State funding is primarily targeted at the most vulnerable sectors. The starting point for all public funding is that the company suffers from the financial consequences of the coronavirus and has the prerequisites for longer-term profitable business” he explains.

The minister says that financing is provided to companies via Finnvera, Business Finland, ELY Centres and Finnish Industry Investment – and that decisions to help with cash can be made in a matter of days.

Think tank forecasts 5% economic hit

Meanwhile the ETLA Economic Research think tank forecasts that Finland’s gross domestic product GDP could fall by up to 5% this year due to coronavirus.

In a new report out on Tuesday, ETLA says that the drop could be minimised if the pandemic gets under control during March and April and if EU countries recover in a coordinated manner.

However they estimate it’s more likely the fall in GDP will be closer to 5%.

“The COVID-19 coronavirus pandemic is a simultaneous demand and supply shock to the global economy. Its most significant financial cost comes from pandemic containment measures” says ETLA.

The think tank, which is supported in part by Finnish companies, says that at its worst, any coronavirus-related economic hit would be about half as bad as the drop in GDP during the 2009 financial crisis.