As chief executive of Europe’s largest car rental group, Caroline Parot is well placed to assess the levels of support that governments are providing for businesses struggling to recover from the coronavirus pandemic.
“At Europcar, we lost most of our customers, both leisure and business travellers,” she says from its Paris headquarters. “Getting back up to speed is very slow. For us, the lifting of the lockdown doesn’t mean the crisis is over – it’s going to last for two or three years.”
Europcar has just over a quarter of the European car rental market, with operations in the UK, France, Germany, Italy and Spain. The group normally buys 400,000 new cars a year, but has cancelled all orders. France is ploughing €8bn (£7.1 bn) into a rescue plan for its car industry, but Renault is cutting 15,000 jobs worldwide.
Europcar has benefitted from job retention schemes in the UK and France, with both governments paying most of of the wages of millions of furloughed workers.
Britain was slower to offer state aid, Parot says: “These measures were introduced later in the UK and for a shorter period.”
Another difference has been the availability and extent of government-backed business loans. “In France, Germany and Spain, the governments guaranteed debts, but in the UK this was done later and in a more limited way. Companies had to make do with their banks.”
Parot is surprised that Britain has lagged behind. “This struck us because we we had always thought of the UK as a pro-business country. France was particularly favourable from the beginning of the crisis, and so were Germany, Italy and Spain. The UK didn’t react in the same way.”
Europcar’s UK subsidiary has applied for government-backed loans, but Parot says none have yet been granted. “It’s a very slow process.”
Government support and the availability of low-interest loans are crucial for the future of French companies, according to the Medef, the employers’ federation that is the equivalent of the CBI.
Charles Znaty, head of the Medef’s Paris regional branch, which represents almost a third of French businesses, says: “During the lockdown companies were supported by the job retention and furloughing scheme, but things are going to get more difficult in the coming months. The state has helped with cash flow problems, but now there’s going to be a shortfall.”
Most French firms have reopened but Znaty says few tourists are coming to France and many are continuing to work from home. “This has a lasting impact on businesses like restaurants, taxis and hotels.”
France has spent €500bn on bailouts for companies and wages for furloughed workers, President Emmanuel Macron said at the weekend. The UK’s job retention scheme has now cost almost £20bn, according to the think tank Centre for Cities.
Znaty adds: “Business leaders are looking for reassurance that the job retention scheme will continue at a high enough level until business gets up to speed, until September. They want the government to guarantee low-interest loans and offer tax incentives to permit investment, not just in large companies but in SMEs and even for small businesses like bakeries.”
In the UK, a City taskforce warns that up to £36bn of government-backed business loans could turn toxic by next year as companies struggle to replay growing debts.
French companies face similar problems, but Znaty suggests that tax cuts could help mobilise private money for investment. “Enormous funds available in banks and insurance companies could be invested in companies. The state could guarantee these investments so private investors would know that they couldn’t lose, say, more than 20pc of their capital,” he says.
“Fifty million tourists come to Paris each year, but this year they won’t come – and neither will business travellers.”
This is a huge problem for France, where tourism and travel accounts for more than 7pc of GDP.
French tourism minister Jean-Baptiste Lemoyne says four in five restaurants have reopened, but 13pc will not do so until September because they cannot make a profit without foreign tourists.
“Sixty per cent of budget hotels are now open, but only a fifth of luxury hotels that depend on foreign visitors have reopened. International travellers from far off countries are not likely to come in large numbers this summer. More French people will holiday in France, which will compensate partially for the lack of foreign tourists, but not entirely,” he says.
Business for Nathalie Cros-Coitton, the head of a Paris-based model agency, came to a virtual halt during the lockdown. Her company, Woman Management, organised online fashion shows, with models photographing and filming themselves.
A fifth of the agency’s 650 models are based in Britain and she says the quarantine has stopped her from bringing them to France for fashion shows. “We’re now recruiting more in France but we like our British models. Our message to the government is, ‘please, lift the quarantine’.”