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Poverty threatens more and more Belgians

The use of social assistance is racing as 50,000 bankruptcies are potentially expected in 2021.

Max HELLEFF

The use of social assistance is racing as 50,000 bankruptcies are potentially expected in 2021.

From our correspondent, Max Helleff (Brussels) – His pretty face has been in the media. At 24, Alysson had opened his “small business”, a barber shop. A new business, fatally fragile, which had nevertheless resisted the first confinement. The second lockdown and the closure of so-called “non-essential” businesses left him no chance. The young Liégeoise would have waited for public aid in vain. She ended her life.

This drama which would pass for a news item in normal times has become emblematic. Alysson’s death has been the subject of government statements in the House. “It touched us all enormously,” said Prime Minister Alexander De Croo. It is clear that the psychological impact is greater than what we saw in the first wave. Along with financial support, human support is also important. “David Clarinval, the Minister for the Independents, recalled that they have the possibility of accessing unemployment and CPAS.

Problem: the public social assistance centers (CPAS) are overwhelmed. Christine Mahy, Secretary General of the Walloon Network for the Fight Against Poverty, notes that the second pandemic wave is “much more serious than the first, something whose horizon we no longer see which may well lead to a generalized depression” . The lines are getting longer from week to week in front of the CPAS, which expect to pay up to 30% of additional integration income in the medium term. Students, small self-employed people, broken up families … are threatened with extreme poverty. “The emergency plan is no longer enough! It hasn’t always been adequate. Here, we are in a collapse of means and resources, ”says Christine Mahy.

Snowball effect to be expected

This sad record would however be incomplete. While an entire part of the national economy has been brought to a halt since last March, the number of bankruptcies has not exploded so far. In the first ten months of the year, the courts even declared 30% fewer bankruptcies than in 2019. The percentage of defaulted loans is only 2% of the total outstanding. This is in large part the result of money injected by the government to artificially support the economy. It allows to say that, overall, “the second confinement will be less serious than the first”.

But this situation cannot last. If aid makes it possible to pay the first bills and if temporary unemployment reduces the wage bill, the dynamic of many companies is broken. Consumers have become cautious, busy stocking up. Order books are empty. Subcontractors sidelined. A snowball effect is announced. A second bankruptcy moratorium has been decided, but it will end on January 31 next.

According to the economic information bureau Graydon, Belgium should register “50,000 additional bankruptcies, beyond the 10,000 that are declared year after year in the country”. This bubble threatens companies, those that were fragile before the outbreak of covid-19 but above all many viable “good companies”.

In an emergency, the Regions are seeking to create mechanisms to channel part of the savings of Belgians – potentially some 300 billion euros – towards small and medium-sized enterprises. There is also the European manna, the 750 billion euros that we expect to share here and elsewhere, despite the blockage exerted by Poland and Hungary.


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