October 26, 2020


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Can the Dutch economy handle a second lockdown?

Can the Dutch economy handle a second lockdown?

Lockdown is approaching as the number of infections grows faster and health care maximum capacity approaches. One of the lessons from the first wave is that economic damage occurs before the economy is partially blocked by a lockdown.

For example, ING saw earlier this year spending in some sectors was already declining before stores had to implement a door policy. People stopped going to the store to be wary of the virus. “But the reaction with a second wave does not have to be the same as with the first,” says Blom. “For example, we know a lot more about the virus. In the spring, we were still assuming that 20 percent of people who have the virus would have to go to hospital. Now we know that’s one and a half percent.”

ING has not seen such a “cautionary effect” in recent weeks. “Sales in bars and restaurants even increased slightly,” says Blom. “Sales in clothing stores have decreased. We believe, however, that the weather played a more important role: they prefer to go out onto a terrace than into a store and are not cold, so no reason to buy warmer clothes.”

Support packages more sober

The cabinet has set aside a lot of money to absorb economic blows. Compared to the first aid kits, the programs are now stricter and are being phased out. The cabinet may be forced to re-expand the packages if the second wave stops significantly. The question is being asked even more than now: which companies do you help and which not? A difficult question, because viability as a criterion is also surrounded by uncertainty.

“They don’t yet know what will be ‘viable’ in the future,” says Blom. “It is determined in part by the policies you are now following and how they work. However, you can conclude that there are sectors that are going to be much less viable for now than they were before the corona, such as aviation.”

“ Continue to support generously ”

Transport, hospitality and the travel industry are mentioned most frequently as sectors in which the damage is still somewhat contained due to the relief measures, but which could suffer severely the next time it is closed.

Blom is asking for generous support until there is more clarity on how to get the pandemic under control, such as when a lot more testing can be done. “The phasing out of support will lead to additional bankruptcies and unemployment, and it is too easy to assume that growth sectors will automatically flourish. In a falling economy, companies will not invest heavily in new activities.”