Combating the economic consequences: the work of the Economic Risk Management Group
How great is the impact of this crisis on the economy? What support measures are needed? Which are the businesses that we absolutely must keep running because they are currently of critical importance to our society? The Economic Risk Management Group is putting forward answers on these and many other issues.
The coronavirus pandemic does not only imply numerous challenges for our health care system. Businesses, the self-employed and households are also feeling the consequences. The absolutely vital preventive measures are actually bringing some economic sectors to a total standstill. Others continue to operate, but in slow motion. Almost every business is now feeling the impact.
On 19 March the Government decided to set up the Economic Risk Management Group (ERMG) in order to analyse and combat these economic consequences.
What is the task of the Economic Risk Management Group?
The Economic Risk Management Group has 3 tasks:
- To measure the impact of the coronavirus pandemic on businesses, sectors and the financial markets
- To ensure that businesses and infrastructures which are particularly critical for the country continue to operate (“business continuity”)
- To propose measures to the Government for combating this crisis and to coordinate those measures
What is the general objective?
The ERMG’s primary objective is to propose measures for businesses, the self-employed and households so that they can get through this crisis, thus enabling the economy to restart promptly once the spread of the coronavirus has been halted. Bankruptcies and job losses must be prevented wherever possible.
How serious is this crisis?
The ERMG is trying to map the economic impact as accurately as possible. That is not easy, because the classic economic indicators are less suitable for that purpose. The National Bank, working with various government institutions and with a great deal of support from organisations representing businesses and workers has therefore developed new measuring instruments. It is too early yet to publish objective figures on the crisis.
Nevertheless, we can state that the impact will be severe but that we expect the effect to be fairly temporary. We therefore do not wish to use the rhetoric of war. Our economic infrastructure was sound before the crisis and will not be destroyed by the crisis, so it can restart once the pandemic is under control and that becomes possible again.
What measures is the Economic Risk Management Group taking or intending to take?
The ERMG does not take any measures itself but formulates specific proposals for the Government in order both to combat the economic impact and to ensure business continuity.
The measures can be described as “vigorous and targeted but temporary”. Vigorous, because we face a very significant impact on businesses and the self-employed. Targeted, because we want to focus on the entities which are hardest hit. And temporary, because once this pandemic is under control the crisis will ease, and because we must avoid a long-term, serious impact on public finances.
What are the priorities in this crisis?
First and foremost, the health crisis must be contained, because only then can the economy and businesses recover. That is by far the most important thing, but it is outside the competence of the ERMG.
The ERMG’s top priority is to safeguard the cash situation of businesses and the self-employed. On the basis of responses by the business community, we can very cautiously conclude that this is now largely the case thanks to the various measures already taken by the government, the banks and insurers (postponement of payment of employers’ contributions and certain taxes, moratorium on the repayment of loans until September for sound businesses, government guarantees for new loans, delayed payment of certain insurance premiums by individuals and firms affected by the crisis, etc.).
At the same time we must ensure that businesses which perform a critical role for our country, our economy and our society keep working. In so doing, we must also try to prevent the emergence of serious solvency problems in the coming weeks.
Once the health crisis is behind us, our priority will be the sustainable recovery of our economy, our businesses and our self-employed workers.
Who are members of the Economic Risk Management Group?
The ERMG is chaired by the National Bank Governor Pierre Wunsch and Dr. Piet Vanthemsche. While the Governor concentrates mainly on the economic impact and the consequences for Belgium’s financial system, Dr Vanthemsche focuses primarily on business continuity and coordination with the working group dealing with the medical and preventive aspects of tackling the crisis.
The ERMG’s members also include the leading organisations representing employers and workers. For example, the employers’ organisation VBO/FEB, Unizo and the Union Walonne des Entreprises, VOKA, Febelfin, the Boerenbond, the 3 major unions, etc. Some public entities are also involved, such as the Federal Planning Bureau and the Federal Participation and Investment Corporation.
The ERMG can rely on extensive support from the National Bank. More than 100 staff from the Research department, the Statistics service, banking and insurance supervision, the macroprudential services, economic relations and communication are offering full-time support.
Can I as an individual firm present my problems to this Group?
The ERMG collects the necessary economic data on the situation in Belgium’s various economic sectors via the employers’ and workers’ organisations and via its own research. It also holds focused discussions with firms. It is therefore not the intention that individual firms should contact the ERMG themselves. We advise individual firms to pass on information meant for the ERMG to their sectoral organisations.
How is the work allocated within the ERMG ?
The ERMG has set up eight working groups, each with a specific task. These working groups comprise experts from the employers’/workers’ organisations and public entities such as the National Bank, the Federal Planning Bureau, the Federal Participations and Investment Corporation and Economic Affairs. Below is a summary:
- Real-time monitoring of the economy (led by Geert Langenus/NBB)
This working group charts the economic impact as accurately as possible and for that purpose has developed numerous (new) parameters and (business) surveys).
- Macroeconomic forecasts and scenarios (led by Xavier Debrun/NBB)
This working group analyses the crisis mainly from the macroeconomic angle and examines the many macroeconomic scenarios and their implications for the Belgian economy.
- Budgetary implications (led by Philippe Donnay/Federal Planning Bureau)
What is the financial impact? What will the proposals cost? What about the government budget and the debt burden? This working group answers these and many other questions.
- Feedback from the field (led by Luc Aucremanne/NBB)
This working group analyses any problems and proposals from those in the field.
- Finance and support for large firms (led by Koen Vanloo/SFPI)
This working group focuses on the finance and support needed by large firms.
- Finance and support for SMEs and the self-employed (led by Pierre Hermant/Finance Brussels)
This working group focuses on the finance and support needed by small and medium-sized firms and the self-employed.
- Finance and support for individuals and workers (led by Tim Hermans/NBB)
This working group focuses on the support needed by households, individuals and workers.
- Communication (led by Geert Sciot/NBB)
This working group coordinates all the ERMG’s communications.
Each week, thousands of Belgian firms are surveyed on the impact of Covid-19 on their business activities.
Under the coordination of the NBB and the FEB/VBO, several federations representing enterprises and the self-employed (BECI, Boerenbond NSZ, UNIZO, UWE and VOKA) have joined forces to conduct a large-scale survey every week, as part of the ERMG’s work, among firms established in Brussels, Wallonia and Flanders. On the basis of this survey, they examine the impact of the coronavirus crisis on economic activity in Belgium and on the financial health of the Belgian companies questioned.
It should be pointed out that the survey targets private sector firms, so please note that certain public sectors, such as education, are not taken into account, even though they are also suffering from the effects of the crisis.
Every Friday, the findings to emerge from this unique cooperation effort are published.
The results of the latest poll and those of previous surveys can be consulted here: Results of the ERMG survey.