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Daily Insurance Industry News
Friday 27th of April 2018
April 20, 2009

German SMEs may be offered state credit insurance

by David Masters

Story link: German SMEs may be offered state credit insurance

The German government is considering plans to offer credit insurance cover to small and medium sized businesses (SMEs) in the country.

According to a report in the Wall Street Journal, the scheme would involve giving temporary credit protection to SMEs that would otherwise struggle to secure loans to pay suppliers.

SMEs in Germany’s steel, construction, manufacturing and food sectors would be eligible for the cover.

Currently, SMEs in these sectors rely on credit protection of around €300 billion per year to remain solvent.

The German government is afraid that if these companies are not protected, there could be a ‘cascade’ of companies entering administration.

Private insurance firms have said they will not oppose the German government entering their market, as long as the scheme has a time limit and doesn’t lead to ‘distortions of competition’.

Germany’s plans follow the French government’s €5 billion of guarantees to France-based companies.

A decision on the proposed scheme is expected in the next few weeks.

 

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