With the recovery beating expectations and market conditions easing, European firms expect to increase investment again. Financial support for firms during the lockdowns was crucial in keeping the economy afloat: more than half (56%) of EU firms have received some form of financial support in response to COVID-19.
Moreover, despite difficult circumstances, four out of five firms across the European Union (82%) believe that their investment activities over the last three years have been in line with their needs, similar to the share reported by US firms. These are some of the main findings of the new edition of the European Investment Bank’s Investment Survey that was published today.
The sixth edition of the EIB Investment Survey provides unique firm-level information about investment decisions and investment finance across the European Union and the United States. It covers investment activities in climate action and digitalisation and investigates the impact of the COVID-19 pandemic and the related policy response. The EIB Group, EU institutions and Member States use the survey as a tool to identify needs and understand constraints holding investment back.
“The pandemic called for a quick and bold response. And governments and the European Union gave it,” said EIB Vice-President Ricard Felix
“In the outbreak itself, the EIB Group was among the first EU institutions to respond. We quickly started to channel emergency financing to companies all over Europe that needed it. Our latest EU-wide business survey confirms that this support was crucial in helping companies make it through the lockdowns. It helped to safeguard the investment capacity we urgently need to accelerate the green and digital transformation.”
“The European and national policy support targeted the resilience of firms, ensuring they had access to credit and allowing employees to retain their jobs. Targeted financial incentives remain very relevant as a way to promote and accelerate transformative investment with regard to climate and digitalisation,” said EIB Chief Economist Debbie Revoltella.
“The pandemic-induced push for digitalisation, for example, is less about adopting advanced digital technologies, and more about firms starting their ‘digitalisation journey’ — implementing remote working or online sales. That is why policy support is needed, in particular for digital skills and training, to further drive this digital momentum and ensure Europe’s competitiveness in the long term.”
The COVID-19 pandemic has severely affected businesses. When asked about the impact of COVID-19 on sales or turnover, around half of all EU firms (49%) reported that their sales have declined compared to the beginning of 2020, before COVID-19 hit the economy.
The survey data shows that 56% of EU firms received some kind of financial support in the form of guaranteed credit, support for social security contributions or delayed payments. 35% of European smaller companies in manufacturing and services say that they would have faced an existential threat without the support they received.
The data also shows that public support was successfully directed towards firms that were more in need, being skewed towards firms facing a greater loss of revenue. Where firms received some kind of policy support, the link between lost revenue and downgraded investment plans was significantly weaker — firms that received support were more likely to preserve their investment programmes.
Fewer EU firms (57%) report having taken at least one short-term action, such as developing new products, digitalising or shortening their supply chain as a result of COVID-19 compared to the United States, where the share is 74%.
43% of EU businesses have already made climate-related investment, while the share of firms planning climate-related investment has now risen from 41% to 47%. In the United States, only 28% of firms have already invested and only 40% are planning climate-related investment.
The survey data also shows that climate change is being progressively perceived as a reality, as around three-fifths (58%) of firms in the European Union report that weather events are currently having an impact on their business.