The latest EU SME Barometer presented shows an unprecedented drop in the Business Climate for SMEs caused by the COVID-19 crisis. This is mainly due to very negative results for the past semester, but also the expectations from the second semester are subdued. As a consequence, the SME Climate Index fell by 18.8, reaching 54.6 points, which is the lowest level ever registered.
However, there are also significant differences with regard to the economic impact of the crisis. After several years of convergence between North and South, the current crisis again increased the gap to 15.8 points.
The strictness of lockdowns, the strengths of the healthcare system and the fiscal power to react all play significant roles in explaining differences in economic downturn between different countries.
Last week the SMEunited Economic & Fiscal Policy Director Gerhard Huemer presented the latest EU SME Barometer provided by the SMEunited Study Unit.
Presenting the Autumn edition of the EU SME Barometer, Economic Policy Director Gerhard Huemer stated, “Our latest SME Barometer shows that SMEs have been heavily impacted by the crisis and especially the lockdowns have had dramatic impacts on the service sector”. For the future, the publication conducted by the Study Unit of SMEunited provides some hope, because the figures for the current semester are improving in all categories. However, Mr Huemer lowered expectations by saying “the situation for autumn is far from going back to normal and there are the first signs that a second wave may stop the rebound during the next month.” In any case, SMEs do not expect a real recovery in the short run.
Mr Huemer underlined also that “the construction sector experienced less of a fall during the last period compared to the others, benefiting from renovation work and increasing demand for more comfortable private housing.” On the other hand, the personal services industry, including hospitality, small retailers and the cosmetic sector, suffered more from the crisis and reported the worst figures.
To overcome the crisis and restart the economy, Gerhard Huemer recommends inter alia that an increase of growth potential and resilience of the economy should be at the focus of recovery programmes, a continuation with COVID support measures where needed and justified and support innovation and the transition to a digital and greener economy.