Bankruptcy Wave Threatens as Pandemic Debt Must be Paid

Approximately 13,500 limited companies are jointly liable for 30 billion kronor in deferred taxes from the pandemic. Now they will have to pay. Many probably realize that they will not get out of the hole they are in, but will be forced to apply for bankruptcy, says Karl Stjerna at the credit information company Syna.

» Published: November 10 2024

Bankruptcy Wave Threatens as Pandemic Debt Must be Paid
Photo: Jessica Gow/TT

The opportunity to defer payment of employer contributions and VAT was introduced to facilitate companies that saw their revenues go up in smoke due to the pandemic. Now the debt must be repaid.

When the opportunity for deferment was introduced, there was a belief that the economy would take off again after the pandemic, but that did not happen. Instead, inflation, electricity crisis, and Russia's war in Ukraine came. Many companies still have difficulty paying their debts, says Karl Stjerna, CEO of the credit information company Syna.

According to Stjerna, almost all indebted companies have repayment plans. More than a quarter have not started repayment and will make their first payment in March next year.

Bankruptcy Risk

The trend, according to a report from the Tax Agency, is that the proportion of companies paying their deferments is decreasing over time, and the proportion of companies where debts are transferred to the Enforcement Authority for collection is increasing.

The number of bankruptcies has varied during the year, but during the first ten months, a total of 8,213 companies went bankrupt. This is 29 percent more than the corresponding period last year. Many of the bankrupt companies had been granted deferment of tax, according to figures from Syna. Of the companies that went bankrupt until September, 27 percent had been granted such deferment.

According to Nikolay Angelov, quantitative analyst at Svenskt Näringsliv, many of the companies that were granted temporary tax deferment already had a higher bankruptcy risk before the pandemic.

The system of tax deferment was implemented in such a way that it became attractive to companies that, regardless of the pandemic, were in a fairly difficult financial situation and may not have survived in a normal economy, he says.

Chain Effects

He believes that the measure was justified when it was introduced, but that the opportunity for deferred payment should not have been extended in the way that has happened. Now, a lot is at stake.

Besides the state missing out on billions in tax debts, this can have other macroeconomic consequences. If suppliers to companies do not receive their payments, chain effects will arise, says Nikolay Angelov.

Maria Stensson/TT

Facts: Industries with the largest pandemic debt

TT

Wholesale and retail trade and repair of motor vehicles and motorcycles: SEK 7.3 billion

Manufacturing: SEK 4.6 billion

Hotels and restaurants: SEK 3.5 billion

Construction: SEK 3.2 billion

Source: Syna

Tags

TTT
By TTThis article has been altered and translated by Sweden Herald

More news

Trump Extends TikTok Sale Deadline
1 MIN READ

Trump Extends TikTok Sale Deadline by 75 Days

Nintendo Delays Switch 2 Pre-Orders
1 MIN READ

Nintendo Delays Switch 2 Pre-Orders in US Over Tariff Concerns

Klarna Delays US Stock Listing
1 MIN READ

Klarna Delays US Stock Listing Citing Market Uncertainty

US Stock Market Tumbles as
2 MIN READ

US Stock Market Tumbles as Tariff Tensions Escalate

Trump Pressures Fed to Cut
2 MIN READ

Trump Pressures Fed to Cut Rates as Powell Stands Firm on Inflation

US Job Growth Surpasses Expectations
1 MIN READ

US Job Growth Surpasses Expectations with 228,000 New Positions

Busch Urges Swedish Firms to
2 MIN READ

Busch Urges Swedish Firms to Stay Local Amid US Trade Uncertainty

Minister Warns of Global Trade
1 MIN READ

Minister Warns of Global Trade Impact as China Hits Back at US Tariffs

China Hits Back with 34%
2 MIN READ

China Hits Back with 34% Tariffs on US Goods, Files WTO Complaint

Ica Bank Cuts Mortgage Rate
1 MIN READ

Ica Bank Cuts Mortgage Rate to 3.68 Percent

Zuckerberg's Wealth Drops by 177
1 MIN READ

Zuckerberg's Wealth Drops by 177 Billion Kronor in Stock Market Slide

Sweden's New Trade Deal Boosts
1 MIN READ

Sweden's New Trade Deal Boosts Pay and Cuts Working Hours

Police Warn of Crime Surge
1 MIN READ

Police Warn of Crime Surge Risk Following Northvolt Bankruptcy

Cristina Stenbeck Returns as Kinnevik
1 MIN READ

Cristina Stenbeck Returns as Kinnevik Chairman After 7 Years

China's Tariffs Shake Stockholm Stock
2 MIN READ

China's Tariffs Shake Stockholm Stock Exchange, Expert Warns of Escalation

Stock Market Sees Largest Single-Day
1 MIN READ

Stock Market Sees Largest Single-Day Drop Since 2020 Pandemic

Sweden's Inflation Falls More Than
2 MIN READ

Sweden's Inflation Falls More Than Expected, Offering Economic Relief

Transport Unions and Employers Seal
1 MIN READ

Transport Unions and Employers Seal New Wage Agreement

Stockholm Stock Exchange Drops 4.2
2 MIN READ

Stockholm Stock Exchange Drops 4.2 Percent Amid Global Market Slump

EU Tariffs on US Goods
3 MIN READ

EU Tariffs on US Goods Could Raise Prices for Swedish Shoppers

Asian Markets Slide Following US
1 MIN READ

Asian Markets Slide Following US Tariff Announcement

IMF Warns US Tariffs Threaten
1 MIN READ

IMF Warns US Tariffs Threaten Global Economic Growth

Trump Signals Openness to Tariff
1 MIN READ

Trump Signals Openness to Tariff Negotiations for Economic Boost

EU Prepares Trade Countermeasures as
3 MIN READ

EU Prepares Trade Countermeasures as US Tariffs Loom

WTO Warns Trump's Tariffs Could
1 MIN READ

WTO Warns Trump's Tariffs Could Cut Global Trade by 1 Percent

Canada Imposes 25-Percent Tariffs on
1 MIN READ

Canada Imposes 25-Percent Tariffs on US Cars in Trade Dispute

Macron Urges EU Firms to
1 MIN READ

Macron Urges EU Firms to Rethink US Investments Over Tariffs

Volvo's Shift to Electric Cars
2 MIN READ

Volvo's Shift to Electric Cars Faces Scrutiny as Diesel Demand Persists

Stellantis Halts Canada and Mexico
1 MIN READ

Stellantis Halts Canada and Mexico Production Over US Tariffs

Fitch Downgrades China's Credit Rating
1 MIN READ

Fitch Downgrades China's Credit Rating Citing Economic Concerns

Wind Farm Cable Approval Granted
2 MIN READ

Wind Farm Cable Approval Granted but Vattenfall Faces Cost Hurdle

US Stock Market Tumbles as
3 MIN READ

US Stock Market Tumbles as Tariffs Hit Tech Giants

US Tariffs Pose Global Economic
2 MIN READ

US Tariffs Pose Global Economic Challenge, Says Swedish Central Bank Chief

Ikano Bank Faces Police Report
1 MIN READ

Ikano Bank Faces Police Report in Denmark Over Misleading Marketing

EU Trade Chief Sefcovic to
1 MIN READ

EU Trade Chief Sefcovic to Discuss US Tariffs on Friday

Volvo Cars Boosts US Production
3 MIN READ

Volvo Cars Boosts US Production in Response to Trump's Tariffs

US Imposes Tariffs on Remote
1 MIN READ

US Imposes Tariffs on Remote Penguin Islands in Australian Territory

Saab Secures Major Order for
1 MIN READ

Saab Secures Major Order for Combat Vehicle Systems from BAE Systems

Trump Tariffs Threaten to Hike
1 MIN READ

Trump Tariffs Threaten to Hike Coffee Prices in the US

Trump's New Tariffs Spark Global
2 MIN READ

Trump's New Tariffs Spark Global Criticism and Economic Concerns