Allianz boss warns over ‘zombie companies’ reliant on government support
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The chief executive of Allianz has warned there are a lot of “zombie companies” surviving only because of government support, but said that households were proving more resilient than many thought during the pandemic.
“We are camouflaging for now the underlying effects, we have a lot of zombie companies now that are just surviving because they are getting government money, we have a lot of jobs around furlough or part time that will be lost, certainly in 2021,” Oliver Baete said.
The boss of the insurance giant told The Wall Street Journal’s CEO Council that private households had proven themselves “much stronger than we think” during the coronavirus crisis, but warned that individuals were too focused on trying to save.
“People need to get out of the fear box and, with the right policy measures, start to invest again,” Baete said.
The chief executive also said there needed to be a shift towards a “more sustainable” economic model following the Covid-19 pandemic, adding that spending needs to shift from consumption to investment.
“We’re still used to too much money being spent on consumption,” he said, calling on policymakers to “use the crisis” to “really tilt and pivot the investments where they need to happen”.
Speaking at the same event, Santander executive chairman Ana Botin warned that there were tough times on the horizon as the second wave of Covid-19 infections begin to sweep the world.
“My worry is what happens from here on, my worry is that we’re going into a second wave, potentially even a third at some point, where things could get much tougher,” she said.
“And that is where we have to be very careful not to withdraw stimulus or support too early, at the same time I think it’s very important that we support companies that deserve to be alive and we’re not just giving the same to everybody,” Botin told the virtual conference.
The chairman also called for more coordination across Europe over the response to the virus to ensure that support reaches companies in need.
“We need to get EU funding to the right companies,” she said. “Even within Europe, the rules are so different. We need to have a more coordinated approach over the next 10 to 12 months.”