The strange case of the money in the account (increased by 56 billion in one year) and the few investments –

The strange case of the money in the account (increased by 56 billion in one year) and the few investments

Antonio Patuelli
Antonio Patuelli

Lto increase the savings parked by companies on bank current accounts in thehorribilis 2020 (+56.6 billion in one year) a topic whose discussion remained confined to insiders. Perhaps because it smacks of contradiction with respect to a narrative that interprets the pandemic crisis of 2020 and its repercussions on the economy with stereotyped categories. Instead, within that phenomenon there are many reasons to investigate concerning the functioning of businesses, the relationship between business choices and policy governmental and perhaps also sociological considerations (the slippage of the concepts of protection and risk). First of all it must be said that it is not an Italian phenomenon, far from it. As the president of ABI, Antonio Patuelli explains, the ECB data tells us that in November 2020 on an annual basis in France the deposits of companies had risen by 25.9%, in Germany + 14.7%, in the Eurozone + 18.2% and in Italy +19.2%. It is interesting to underline that in all these cases, companies tend to increase savings faster than families, who also expanded their current accounts in 2020: in France + 9.7%, in Germany + 5.6%, in the Eurozone +7, 7% and in Italy +6.4 per cent. The only one caveat which must be kept in mind by evaluating flows and speed that it is stock of historically higher household savings and therefore everything must be weighed in a relative key. In absolute terms, however, in Italy from November ’19 to November ’20 the increase in state bank deposits of 128 billion, of which 56.6 from businesses and the rest from households.

More debt, better conditions

In parallel with the increase in deposits, the indebtedness of companies has grown, which replaced the mortgages taken out in the pre-Covid era with new loans guaranteed by the state. The total financing intermediated by the central state fund of 129.5 billion and another 20.8 billion were granted by Sace. Analyzing the ABI data on the rates applied, it can be seen that on average it has gone from 2.48% in December ’19 to 2.28% a year later, essentially the average of Italian companies may have earned in this work twenty basis points replacement. That in the case of companies with rating best may have risen to 30-40. By renegotiating the loans, companies have enjoyed another advantage: the possibility of obtaining them in an amount greater than 25% of the amount, thanks to the pro-liquidity government measures.

Marco Gay
Marco Gay

The impact of the pandemic crisis was very different between sector and sector, but overall I would define that of companies as protective behavior – explains Marco Gay, president of Confindustria Piemonte -. Faced with a demand crisis that has reduced added value by 15%, they have seen fit to equip themselves with additional resources and the loans have served to cope with the slowdown in cash flow. Gay recognizes how the guarantee system has worked, but there are still loans that will have to be repaid, in normal conditions a company gets into debt to invest, certainly not to secure working capital or finance stocks as unfortunately is happening now. The president of Confindustria Piemonte excludes that arbitrage on corporate finance is combined with improper use of the layoffs. For molof our associates was the first time they had to resort to social safety nets and they understood its complexity. If there have been clever ones, they are outside our membership perimeter and they are not companies that we want to represent.

The thrust on the new falls

Therefore, companies have stocked up, they have given life to a sort of asset turnaround game between new debt, financing of routine and an increase in deposits which is combined on the side of more strictly entrepreneurial choices with a two-stage strategy, or a postponement of investments (reported, according to Eurostat, at -10% in 2020 and expected at + 6% in 2021). Even in kings

In fact, only the projects that have already reached the decision-making stage have been completed: in Emilia-Romagna in aeronautics, in packaging and in logistics, in Veneto, increases in production capacity are reported by a number of companies equal to the fingers of one hand, some groups have invested inecommerce and some operations of reorganization of the offer through mergers have however gone ahead.

But what cooled the motivations and the climate of confidence of the companies was first of all the second wave of the virus and in sequence the postponement of the main trade fairs and the impossibility for exporting companies to let their managers travel. The impracticability of face-to-face negotiations also had its weight, as the entrepreneurs from Treviso point out (Draghi also said that it is difficult to take investment risks based on a conversation on Zoom), and in any case compromised the launch of the second half above.

The wait for Transition 4.0

To get out of petty phenomenology, an indication of trend more robust comes from the UCIMU survey: orders for machine tools and robots in the fourth quarter of 2020 fell on the domestic market by 28% year on year. The absolute index, which in the fourth quarter of 1919 was 172, has now fallen to 123. The feeling that the companies that need to renew their machinery and complete the digitization programs have placed themselves in a waiting position and await the launch of the Next Generation Eu, which should include the ambitious Patuanelli plan known as Transition 4.0 (value: 24 billion). After all, the first drafts circulated in November already gave indications of improvement measures both in terms of hyper-depreciation rates and lengthening of the delivery times of the machines and the rumors have contributed to determining a postponement of orders.

Thus completing the feeling of being in front of a country in on the spot awaiting the overcoming of the pandemic, the launch of European programs, the choices of large groups such as Stellantis. But waiting, it can be argued, is not a free meal at all, for two reasons:
a) In any case, we borrow at more than 2%, to then deposit excess liquidity remunerated at zero and the waiting therefore has a tangible cost;
b) If Italian and European companies invest late, their competitive position versus Asia certainly does not improve.
In summary: are companies stopped in the pits with a full tank of fuel today a winning recipe for tomorrow?

Something more

According to a sample survey released by Confindustria Piemonte, 20% of companies have investment programs of a certain commitment in the drawer even if it is equally true that only 9.6% have orders over 6 months. Moreover, the coexistence of companies and sectors in serious difficulty (certainly the textile-clothing) with others that are just waiting for the vaccine to resume traveling and growing is a characteristic element of the 2021 manufacturing scenario, a scenario in which the same statistical averages are valid. much less than yesterday.

And phenomena such as the increase in bank deposits held by companies end up surprising less than one might think. In the 2008-2015 crisis, metaphors such as turtles and hares were used to designate slow and fast companies, in today’s lexicon we use the term zombie to identify the companies most at risk, but the substance does not change and makes us intuit a new cycle of polarization. What I would tend to exclude is that the increase in bank deposits corresponds to a decline in entrepreneurial motivation – argues Gay -. Far from it. So having to make a suggestion in terms of policy I wouldn’t stop at the Recovery Fund, but would pair it with one choc tax. Tax exemption measures for investments in risk capital and capitalization that serve to strengthen companies and prepare a cycle of dimensional growth.

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