A new Euler Hermes report shows that business insolvencies could rise because governments will withdraw the support measures that helped businesses stay afloat during Covid-19.

Euler Hermes released a Wednesday report that stated business insolvencies worldwide are likely to rise by 15% in 2022. This projected rise follows two years of declining insolvencies: Insolvencies fell 12% in 2020, and are expected to drop another 6% by 2021.

Even with the expected increase in 2022, overall insolvencies will likely remain 4% lower than in 2019 — before Covid spread globally, said Euler Hermes.

Maxime Lemerle of Euler Hermes’ sector and insolvency research said, “Looking at insolvency level, governments succeeded in helping businesses face the crisis. Massive state intervention prevented one in two insolvencies Western Europe, and one in three US in 2020.”

“Their extension insolvencies will remain at a low level by 2021. However, what happens next is dependent on the actions of governments in the coming months.” he said.

The pandemic erupted in response to increased government spending on health, household and business support. There are many support measures, including tax reductions and deferrals as well as state loans and guarantees as well as cash transfer.

To keep the money flowing to the economy, central bank policies were relaxed.

As the world economy recovers after the Covid slump, some governments are easing back on support measures. However, central banks and other financial institutions have increased interest rates to help.