Blog post

Government-guaranteed bank lending six months on

In March and April 2020, European governments announced massive credit support programmes. After an initial surge, take-up appears to be stabilising (

Publishing date
29 September 2020

Credit-support measures, such as loan guarantees, have been one of the main tools to soften the economic blow of COVID-19. Early in the pandemic, European governments deployed unprecedentedly huge credit support to mitigate the liquidity shock facing businesses during lock downs. Concerns about the effects of these programmes quickly followed their announcements.

An often-expressed worry was that less-indebted countries would have more fiscal capacity to help their businesses, and thus unequal support would distort competition in the EU single market, providing an unfair funding advantage to firms in countries with more fiscal space.

Our preliminary findings, published in July, suggested that these concerns had already become somewhat obsolete (relatedly, André Sapir found that low fiscal capacity did not worsen counties’ economic contractions; he concluded that the European Central Bank’s pandemic emergency purchase programme, which was launched in March 2020, has been successful). Firms in less-indebted countries did not appear to disproportionally benefit from national credit support schemes. Updated September numbers confirm these findings: German firms are still collectively the lowest users of the scheme as a share of GDP, whereas by the same yardstick, Spain still tops the chart and Italy is now ranked second (Figure 2).

Figure 1: Government-backed credit support for businesses, € billions

Figure 2: Government-backed credit support for businesses as percent of 2019 GDP

Figures 1 and 2 show that the amount of support provided has gradually levelled off in most of the covered countries, from weekly growth rates of 6%-7% in June, to 1% in September. The exception is Italy, which is still catching up from a late start. But even there commitments are stabilising – growing at a mere 3% per week in September compared to 30% in June.

This stabilisation trend has been apparently unaffected by health-related shocks: there has been no spike in commitments in Spain or France to match the dramatic rise in cases witnessed over the summer. This could indicate that firms were sufficiently buffered or, if not, that most eligible firms had already benefited from the maximum amounts allowed under the scheme. Alternatively, firms might be unwilling or unable to take on more debt.

Our ongoing research project on credit support programmes attempts to clarify some of these trends. We will publish frequent updates of government commitments in this new Bruegel dataset. Please refer to the note accompanying the dataset for more information on our methodology and the programmes included in Figures 1 and 2.

Recommended citation:

Anderson, J., F. Papadia and N. Véron (2020) 'Government-guaranteed bank lending six months on', Bruegel Blog, 29 September

About the authors

  • Nicolas Véron

    Nicolas Véron is a senior fellow at Bruegel and at the Peterson Institute for International Economics in Washington, DC. His research is mostly about financial systems and financial reform around the world, including global financial regulatory initiatives and current developments in the European Union. He was a cofounder of Bruegel starting in 2002, initially focusing on Bruegel’s design, operational start-up and development, then on policy research since 2006-07. He joined the Peterson Institute in 2009 and divides his time between the US and Europe.

    Véron has authored or co-authored numerous policy papers that include banking supervision and crisis management, financial reporting, the Eurozone policy framework, and economic nationalism. He has testified repeatedly in front of committees of the European Parliament, national parliaments in several EU member states, and US Congress. His publications also include Smoke & Mirrors, Inc.: Accounting for Capitalism, a book on accounting standards and practices (Cornell University Press, 2006), and several books in French.

    His prior experience includes working for Saint-Gobain in Berlin and Rothschilds in Paris in the early 1990s; economic aide to the Prefect in Lille (1995-97); corporate adviser to France’s Labour Minister (1997-2000); and chief financial officer of MultiMania / Lycos France, a publicly-listed online media company (2000-2002). From 2002 to 2009 he also operated an independent Paris-based financial consultancy.

    Véron is a board member of the derivatives arm (Global Trade Repository) of the Depositary Trust and Clearing Corporation (DTCC), a financial infrastructure company that operates globally on a not-for-profit basis. A French citizen born in 1971, he has a quantitative background as a graduate from Ecole Polytechnique (1992) and Ecole Nationale Supérieure des Mines de Paris (1995). He is trilingual in English, French and Spanish, and has fluent understanding of German and Italian.

    In September 2012, Bloomberg Markets included Véron in its second annual 50 Most Influential list with reference to his early advocacy of European banking union.


  • Francesco Papadia

    Francesco Papadia is the chair of the Selection Panel of the Hellenic Financial Stability Fund (HFSF). He was, between 1998 and 2012, Director General for Market Operations at the European Central Bank. He worked previously at the Banca d´Italia, first as Director of the International Section of the Research Department and then as deputy head of the Foreign Department. Mr. Papadia has a degree in law from the University of Rome and attended postgraduate studies in Economics and Business at the Istituto Adriano Olivetti in Ancona and at the London Business School.

    Mr. Papadia is the author of a number of publications in the fields of International Economics and Monetary Policy. While collaborating with Bruegel, the focus of his research will be on European and global macroeconomic issues, including governance questions.

  • Julia Anderson

    Julia worked at Bruegel as a Research Analyst.

    Prior to joining Bruegel, Julia worked as a competition policy consultant for two years—producing economic analyses in the context of EU mergers and antitrust investigations (Compass Lexecon).

    Julia also has experience teaching economics (NYU), editing academic journals (Journal of Wine Economics), and working in urban development (Vivid Economics). She has trained at a variety of institutions, including research organisations (Max Planck Institute) and government bodies (NY State Attorney General and US Treasury).

    Julia holds master’s degrees in economics (NYU) and in philosophy (LSE), and a bachelors’ degree in economics (NYU). She is fluent in French.

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