Public finances carried households and businesses through the COVID-19 crisis

Abstract

A large number of firms fell into distress due to the COVID-19 pandemic and many households have been significantly affected by furloughs and lay-offs. However, the non-financial corporations sector improved its overall profitability in 2020, and the household sector as a whole accrued savings. At the same time, the general government deficit widened. Although these developments were influenced by the substantial rise in general government subsidies, social benefits and other support in 2020, this alone would not account for the other sectors’ strengthening their financial position. The positive developments in the household and non-financial corporations sectors nevertheless hide large differences within the sectors themselves.