Zombie vaccine

One of the lessons of the pandemic that businesses could learn from communicating with the government when discussing support is the need for composure when assessing business sentiment. In the spring of 2020, excessive pessimism not only did not lead to the desired flooding of money, but, on the contrary, limited state support with strict requirements for the victims, so that later they had to be mitigated. However, by the summer of 2021, the business had not acquired immunity from panic.

Business Ombudsman Boris Titov, following the pandemic, prepared a report to the President on the state of small and medium-sized businesses. It follows from it that the state of small business is deteriorating, and small companies went through the crisis year of 2020 even better than the first quarter of 2021. The conclusions are based on Sberbank data on receipts to the settlement accounts of SMEs, the number of individuals receiving wages and the dynamics of the wage fund (payroll) – the calculated SME growth index for 2020 was 4 points yoy (stagnation), but by January-March 2020 year in the first quarter of 2021, the index fell to minus 30 points.

The office of the business ombudsman admits that in 2020 the indicators were contradictory: due to the expansion of concessional lending, receipts to companies’ accounts jumped, with the curtailment of salary lending programs, the volume of payroll decreased, and the pre-New Year’s revenue grew sharply. Nothing indicates the catastrophic state of the surviving SMEs in January-March 2021, but intonationally the report describes it as “even worse than at the height of the pandemic.”

In part, this is probably the result of the stratification of companies into viable and “zombies” that cannot exist without government support and worsen the general business climate in the sector. We wrote about the need to prepare for such a stratification and move from massive assistance to everyone to targeted support for promising companies back in the fall (see Kommersant on October 12, 2020).

Boris Titov’s business support package mainly consists of measures specifically aimed at survivors – this is the usual tax package (simplified taxation system, softening the conditions of the general taxation system, property tax incentives), and a reduction in lending rates, and incentives for small non-resource production through the creation of industrial parks with preferential terms, and the idea of ​​redistributing taxes from business to municipal budgets, which was discussed even before the pandemic, focused on a closer linking of business initiatives to the development of specific territories. Probably, some of these ideas are quite debatable, especially if we do not state at the same time that small business is dying: panic can still stifle reasonable requests for help, depriving the sector of post-coronavirus support.