European SMEs Struggling with COVID-19... "1 in 2 Fear Bankruptcy Within a Year"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Due to the impact of the novel coronavirus infection (COVID-19), a bleak forecast has emerged that more than half of small and medium-sized enterprises (SMEs) in Europe could go bankrupt within a year.

On the 22nd, consulting firm McKinsey announced that, based on a survey of over 2,200 SMEs across five European countries, 55% of the responding companies said they could close within a year if their current sales situation, hit by COVID-19, does not recover.

In particular, about 10% of the respondents said they could go bankrupt within six months if the current situation continues. In Italy and France, where the COVID-19 spread was severe, more than 20% of respondents gave the same answer. McKinsey explained that an increase in SME bankruptcies would significantly increase the burden on the financial sector, raise unemployment rates, and potentially paralyze investment.

This survey was conducted in August, before the resurgence of COVID-19, targeting over 2,200 SMEs in five countries: France, Germany, Italy, Spain, and the United Kingdom. In Europe, more than two-thirds of the total workforce is employed by SMEs, which generate more than half of the economic added value.