Was it enough? An impact study: supporting companies during the Covid-19 pandemic? Flanders, Belgium
Shortly after the first Covid-19 case in Belgium, the federal and Flemish government introduced safety and support measures to better manage the impact of the crisis. Now, one and a half year into the pandemic, Flanders Innovation & Entrepreneurship (VLAIO), the agency responsible for companies’ support, requested an evaluation of the implemented support measures.
The key question for VLAIO was: “What would have happened in case the Flemish government didn’t support companies during the crisis?”
We found that the support for these companies and sectors was clearly effective, and the Flemish government was able to reach companies and sectors that were hit the hardest by the crisis. Analyses showed that without the support
- the Flemish economy would have been hit a lot harder;
- gross regional product would have fallen by 12,4% compared to the observed 6,1% decline; and
- part of the effect stems from innovation activities, as some supported companies used the funds to explore other business opportunities to generate turnover like online sales of products while their store was closed.
At the same time, the largest differences between companies and sectors as the result of measures, have been observed at meso and micro levels. As example, for the sectors, which have been hit the hardest, the support has managed to protect only partially the liquidity, raising questions about the long-term effects of the Covid-19 pandemic. Also limiting the dependence on company funds (buffers) was only partially successful, likewise with protection of the financial stability (outcome level).
Overall, the type of support instruments, which was mainly used, was costs coverage, which helped to maintain essential payments (personnel, suppliers, etc.) and prevented bankruptcies. Through this, at outcome level, the companies were able to maintain business & supply chains and jobs.
Background: Technopolis Group performed the evaluation of the support for companies in Flanders during 2020 in collaboration with academic experts from the universities of KU Leuven and the Université libre de Bruxelles. Using both qualitative and quantitative (econometric) methods, the effectiveness of the support measures was analysed at the macro, meso and micro level. in terms of the overall Flemish economy, the sectors and types of companies as well as individual companies through impact cases.
