Over 50% of European SMEs May Close Operations in a Year: Survey
A recent survey by McKinsey reveals that more than 50% of small and medium sized businesses across Europe worry about whether they will remain in operation in the next year due to the hardships caused by the coronavirus pandemic. 55% of these companies that provide employment to two thirds of European workers anticipate that they will have to close down by September 2021 if revenues remained at current levels.
According to the survey, 10% of small and medium sized companies could file for bankruptcy within the next six months. Meanwhile, nearly 30% of SMEs across Europe are concerned that they will have to postpone plans for growing their business.
What’s even more worrying about the survey is that it was conducted in August, before the recent surge in cases across several parts of Europe that have prompted governments to reimpose restrictions. The IMF has already cautioned that many businesses could declare insolvency soon, and that governments need to offer more stimulus support to protect business operations through the pandemic.
The IMF observes, “Policymakers need to do whatever it takes to contain the pandemic and its economic damage, and not withdraw support prematurely to avoid repeating the mistake of the global financial crisis. For companies, policies now need to go beyond liquidity support and ensure that insolvent but viable firms can remain in business.”
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