The macroeconomic impact of the Easter break is limited, despite the sharp drop in turnover in certain sectors

The loss of turnover which Belgian firms are suffering as a result of the coronavirus crisis has risen only slightly from 9 % in March to 10 % in April. For most sectors of activity, turnover is relatively stable while the loss of turnover has increased considerably in non-food retailing and especially in non-medical contact professions, as these two sectors were affected by the tightening of restrictions during the “Easter break”. At the same time, the emphasis is shifting towards supply problems, particularly in the construction sector and in manufacturing industry. On the whole, expectations regarding turnover in 2021 and 2022 remain unchanged. These are the findings of the new ERMG survey of Belgian firms, conducted at the beginning of last week. Investment by large firms is relatively less affected by the coronavirus crisis, while the questions concerning certain investment categories in 2021 mainly show the effect of the change in working methods, and particularly the impact of recourse to home working.

Last week, a number of federations representing businesses and the self-employed (BECI, NSZ/SNI, UCM, UNIZO, UWE and VOKA) conducted a new ERMG survey. This initiative is coordinated by the NBB and the FEB/VBO. It was the twentieth in a wave of surveys carried out since March 2020, aiming to assess the impact of the coronavirus crisis and the restrictive measures on economic activity and the financial health of firms. In total, 3 334 firms and self-employed persons took part in the survey this week [1].

The survey was conducted between 19 and 21 April, i.e. during the last week of the “Easter break”, when schools had already reopened but non-medical contact professions remained shut down, and non-essential shops still had to operate by appointment. The results therefore do not yet reflect the lifting of these measures, applicable from 26 April, or the decisions taken by the Consultative Committee on 23 April concerning the planned easing of restrictions.

Belgian firms report a minor deterioration in their turnover

Taking account of firms’ size and the sectoral value added, the firms polled last week stated that their current turnover was down by 10 % compared to normal. That is a slight deterioration compared to the March survey conducted before the Easter break. Once again, the loss of turnover is considerably above the national average in the Brussels-Capital Region (-14 %) and close to the average in the Walloon Region and the Flemish Region


[1]    The ERMG survey is based on the opinions of the firms taking part. Comparison of the results over time should therefore be interpreted with a degree of caution, because the firms questioned may vary from one survey to the next. First, it is always possible that the federations conducting the surveys of their members may not be the same. Also, firms do not participate systematically in every survey. Although we correct any over-representation in the sample of firms from certain sectors, it is possible that the firms polled may vary according to other characteristics as time goes by.

The loss of turnover this month was, of course, considerable for non-medical contact professions and for non-food retail sales, up from 38 % and 16 % respectively in the March survey to 84 % and 23 % in the April survey. These increases are due to the compulsory closure of non-medical contact professions and the need to make an appointment in order to purchase goods from a non-essential retailer during the Easter break. The lifting of these measures from the beginning of this week will undoubtedly trigger a recovery for these sectors of activity.

In the other sectors where the restrictions remained unchanged, the loss of turnover has changed relatively little since the previous survey. Thus, it remains very high for travel agents (93 %), the arts, entertainment and recreation sector (80 %), accommodation and food service activities (67 %) and road passenger transport (41 %), whereas in other sectors it is around or below the national average.

While demand is clearly picking up, some industrial sectors (IT, electronic and optical products, electrical machinery and equipment, furniture and transport equipment), in common with the construction sector and the wholesale trade, have increasingly mentioned supply problems as the reason for the decline in their turnover since February. More than 25 % of the firms questioned in these sectors mentioned such problems, which are probably due to the global shortage of certain intermediate inputs such as semi-conductors, but perhaps also to strong demand for shipping containers and delays in that regard. In manufacturing industry, and particularly in construction, the proportion of respondents (7 % and 12 % respectively) mentioning labour shortages as the main cause of their loss of turnover is likewise well above the national average (5 %).

Expectations concerning turnover and bankruptcies remain stable, but the employment outlook has deteriorated slightly

For 2021 as a whole, the firms polled expect turnover to be 8 % lower than they would have been without the coronavirus crisis, with turnover still remaining 3 % down in 2022. These percentages are similar to those seen in the March survey. The prospect of reopening café and restaurant terraces has slightly lowered the expected loss of turnover in accommodation and food service activities for the current year, though the figure remains very high at 51 %. Conversely, the outlook has deteriorated for non-medical contact professions, which had not expected to be closed down again at the time of the March survey. The outlook for the arts, entertainment and recreation sector has also become significantly gloomier for this year and next: for 2021, the expected loss of turnover has gone up from 51 % in the March survey to 70 % today, while for 2022 it is up from 22 % to 28 %.

The proportion of firms polled which expect to apply for bankruptcy within the next six months has also remained relatively stable in April, at around 5 %. The figure is still considerably higher for accommodation and food service activities (17 %) and for the arts, entertainment and recreation sector (10 %).

The outlook for private sector employment has deteriorated somewhat, although it is highly volatile in the ERMG surveys. Firms’ expectations regarding employee numbers in 2021 now indicate a net decrease of 0.2 %, equivalent to 6 000 employees. This is a deterioration compared to the March survey, which predicted an overall increase of 14 000 employees. However, the overall figure conceals large variations between sectors of activity. While the number of employees looks set to fall by more than 10 % in the hardest hit sectors, that decline will be largely offset by marked increases in some sizeable sectors, particularly support services, manufacturing industry, construction and the information and communication sector. That said, the ultimate impact on employment will also depend on the ability of labour market policies to facilitate sectoral transitions.

Large firms are making smaller cuts in their investment

On average, the firms polled expect the coronavirus crisis to reduce their investment by 19 % and 13 % respectively in 2021 and 2022, down slightly against the March figures. However, the expected decline in investment compared to normal is much smaller for firms with over 50 employees, at an average of -9 % in 2021 and -5 % in 2022 (compared to an average of -25 % and -17 % for firms with under 50 employees). That may be due to the smaller loss of turnover among large firms, their more substantial financial reserves or the diversity of their funding sources.

The April survey also made it possible to ask firms specifically about the expected impact of the coronavirus crisis in 2021 for each investment category [2]. The responses mainly show the effect of the change in the way of working, particularly recourse to homeworking. Going by the ratio between the number of respondents indicating a reduction and those reporting an increase, the investments most likely to be cut in 2021 as a result of the coronavirus crisis mainly concern office buildings and office furniture, and means of transport. Although the question only applies to 2021, this could be a more persistent effect of the coronavirus crisis: the previous survey also showed that firms will reduce their office space because home working will remain structurally significant. The marked decline concerning machinery and other equipment is more likely to be linked to the latent uncertainty, and might therefore be more temporary.

It is encouraging to see that investment in research and development (R&D), IT and telecommunications equipment and computer software are more resilient and that the coronavirus crisis is even having a positive impact in 2021. That is particularly true in the case of large firms, which also account for a bigger share of total investment. The proportion of large firms reporting a positive effect of the coronavirus crisis for these investment categories in fact far exceeds the proportion mentioning a negative impact.


[2]    These are only qualitative indications: the scale of the increase and reduction in investment per category was not included in the questions asked.