Home » Business » Half of Europe’s small and medium-sized enterprises can go bankrupt within a year, according to a study

Half of Europe’s small and medium-sized enterprises can go bankrupt within a year, according to a study

Small and medium – sized enterprises are European the bloodstream of the economy, but half of them may not survive in the next 12 months, according to a study by McKinsey.

Content will continue after the ad

Advertising

Half of Europe’s small and medium-sized enterprises can go bankrupt within a year

SMEs in Europe account for about two thirds of the total number of employees and more than half of the total value of the economy. A study carried out in August shows that more than 2,200 SMEs in five European countries – France, Germany, Italy, Spain and the United Kingdom – feel threatened by the Covid-19 crisis.

70% of respondents said that their income had decreased due to the pandemic. One in five companies is worried that they will not be able to make their loan payments and will have to lay off workers, while 28% are worried that they will have to cancel development projects.

More than half of the companies believe that they may not survive for the next 12 months, despite the fact that 20% of these companies have already used various forms of state aid to reduce the financial burden, such as tax deferrals or various types of downtime benefits.

Some SMEs remain optimistic that the economic situation will soon improve, but 80% rate the economy as weak or extremely weak.

The worst affected are accommodation and food service providers, companies in the arts, entertainment and leisure sectors.

11% of companies expect to file for bankruptcy in the next six months, most of them companies with 50-249 employees and the largest share of pessimists was in Italy and France, where 21% plan to file for bankruptcy. In terms of sectors, the logistics sector is the most pessimistic (22%), and agricultural, accommodation, catering, retail and wholesale companies are slightly less pessimistic (13-15% of companies are planning to go bankrupt).

The study considers three scenarios. If incomes remained at current levels, 55% of SMEs could close down by September 2021. If the situation worsens and incomes fall by 10-30%, 77% of SMEs could go out of business by 2021. On the other hand, if the situation improves and incomes increase by 10-30%, 39% of SMEs could also go bankrupt within a year.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.