POLITICS & INSTITUTIONS - ECONOMY

Commentary: The day after tomorrow



CLC director Nicolas Henckes is pictured speaking at the Annual Real Estate Meeting in January 2019 Matic Zorman/archives

CLC director Nicolas Henckes is pictured speaking at the Annual Real Estate Meeting in January 2019 Matic Zorman/archives

Much of the future is out of our control, but there is a lot we can do to be in good shape for whatever comes next, says Nicolas Henckes of Luxembourg companies federation the CLC.

I guess everybody will agree on the fact that, as a country, we are facing a significant challenge.

First, there’s the public health situation of course and it will soon become a more personal issue, when the first people we know will fall ill and maybe even not survive the virus. The chances are that everyone will get the virus at one stage or another, with more or less unpleasant consequences. This poses an immediate threat that we have to face up to.

Second, however, we might have a larger peril looming at our door. The possibility of a strong economic crisis following up on the pandemic might prove as devastating as a tsunami after an earthquake. This would cause much greater damage on the medium term to our societies, impacting even how our democracies work. So, what can we do about that without triggering a heated and counter-productive Health vs. Economy debate? These concepts are not opposed at all, they are parts of our society and they are interdependent: the failing of one will result in the failing of the other.

I felt reassured last week when I heard our government already started to think on how to get back to some kind of normal as soon as the health situation allows. The economic stabilisation plan announced last week as well is also a first step in the right direction. It is, however, not sufficient to save enough of our corporations and independent professionals from bankruptcy. More will have to be done. The liquidity and credit problems are well  covered, but some sectors and activities have really been hit hard and will need more direct aid. Yes, cash subsidies and not a reimbursable cash advance (the latter being basically yet another kind of credit). Germany has taken a more determined position on this topic and we should consider what they have done.

The good news is that the government’s ideas on this are definitely not carved in stone, as far as I can see it. This first plan is a broad emergency package for the whole economy (thank you!). We now need to fine-tune this, sector by sector.

But to save our companies, we should not expect everything from our government. Entrepreneurs of impacted sectors should also do their homework and make sure they do all they can to improve their situation on their own: talk to their bank, negotiate the lease of their shop, maximise online sales (Letzshop.lu is open for business and very welcoming), set-up drive-in and/or delivery solutions, devise and propose new services that meet the needs of confined customers. Our companies need to maintain a minimum level of activity if they want to be ready when confinement will be loosened. After having put to the test their BCP, they need to work on their BRP: “Business Restart Plan”. I’m not a basketball player, but don’t miss the rebound (you get the idea). Now is also the right moment to invest in that digital project you never had time for before. As far as I know, investment subsidy programs have not been stopped.

Luxembourg is not an island and the recovery scenarios will depend a lot on how countries around us will perform and what their various reactions will be. This is not in our hands, but there is a lot we can do to be in good shape for whatever comes next.