Coronavirus disease COVID-19 is sweeping through the world. It causes enormous human suffering but is also bringing global and local economy to a standstill. In the time of crisis, public sector is stepping up to keep the economy going. All across the Nordics, municipalities are coming up with innovative ways to help local business through the crisis.
As the corona virus spreads across Europe, governments are banning social gatherings and introducing curfews. Many companies are severely hit by these restrictions on people’s movement and consumption. Especially the tourism and hospitality sector is hard hit and have been for a while, however, the crisis affects more or less all sectors as the economic flow and mobility have become decimated overnight.
On the national level the Nordic countries have all introduced support schemes and emergency relief packages ranging from loan guarantees to substantial subsidies. New instruments are introduced daily. However, there are also activities on the municipal level to support the local business ecosystems and keep companies alive. In Oxford Research we have shared knowledge across our Nordic offices in order to learn in what ways the municipalities approach the current crisis.
In Finland the business organization for small and medium sized enterprises Suomen Yrittäjät and the Association of Finnish Local and Regional Authorities have made a joint declaration with recommendations for the Finnish municipalities on what they could do to help struggling local businesses.
The first recommendation is to establish a close dialogue between the municipality and the business community including the leading personnel in both communities. Here the purpose is to assess how the crisis affects the companies and how the city council can support and advice the companies. It is important that no company is left alone during the crisis.
Another recommendation is to extend the credit time for companies as well as letting the municipal pay invoices right away. Contracts between companies and municipalities should be reassessed and fairness considered, when looking at the performance specifications. Another idea mentioned in the declaration is to target limited tender processes towards companies in severe crisis or to split bigger tenders in smaller parts to support as many companies as possible. Despite the uncertainty of the near future, municipalities are urged not to slow down their normal purchases of goods and services.
Christmas presents are already bought
In Sweden we can also find examples of how various municipalities are working in order to increase the company’s liquidity and stimulate business activity despite the new regulations. Prolonging payments for invoices are also widely used by the Swedish municipalities. Additionally, demands for permits and regulations of open-air business activities have been lifted.
In Lund, the municipality has removed parking fees for two months in order to stimulate business in central Lund. In Jönköping, the municipality is allowing restaurants and cafes to open outdoor cafes immediately without the usual fee. There are also examples of municipalities facilitating surplus staff from restaurants and cafes to come and work in municipal activities and operations. An innovative example is Trelleborg municipality, who are purchasing and giving out Christmas gift cards from local entrepreneurs to its employees. This will stimulate business activities locally.
From branding to counselling
In Denmark municipalities are also engaged with supporting local business and easing liquidity. As in the other countries, several municipals are speeding up their payments of completed projects as well as ordering new maintenance work.
The Government in Denmark has suspended the law which places an upper limit on the volume of construction work which can be ordered by the municipalities per year. This means that municipalities can now bring forward construction work, which were initially planned for 2021 and beyond, and thereby stimulate business activities.
The three municipalities Vordingborg, Guldborgsund and Lolland have raised 400.000 DKK, which will be spent on providing 80 local companies individual economic counselling. In Aalborg the local business support unit “Business Aalborg” are helping companies establishing webshops in order to find new sales channels. In other places the business department or tourist marketing officers have shifted from outward branding activities to the dissemination and communication of state support schemes.
Communication, liquidity and temporary transition
Across the Nordic countries, municipalities are deeply involved in helping local companies through the corona crisis. Dialogue, dissemination and access to information seems to be key, while speeding up payments and sustaining local business through new orders and tender processes are also widely in use.
The exact procedures vary, as some municipalities have established new communication protocols while others are increasing their meeting activities. Bridging the gap between the state support schemes and the local companies is key at the current moment. To help challenges to liquidity and stimulate business activities, payments are prolonged for companies while the municipalities are paying their bills upfront and even months in advance. Another approach is supporting companies in transforming their business into the digital sphere or in establishing open-air business.
Evidently, municipalities are proactive in their approach to the crisis and trying to keep things as normal as possible. However, among municipalities there is also a rising concern for how the economic crisis will impact municipal economies and how long municipals can withstand a positive economic strategy.