The impact of the COVID-19 pandemic on the economy has been unprecedented. The Economic and Social Research Institute (ESRI) in Ireland, has recently published a report, “SME Financial Distress and the Macroeconomic Recovery”, which looks at the economic impact of the pandemic on SMEs. The report has a particular focus on identifying characteristics of businesses that may be at risk over the medium term.
The publication highlights that without the support which was provided to SMEs during the pandemic, such as the Employment Wage Subsidy Scheme and the Covid Restrictions Support Scheme, the “distress rate” could have been almost 72% higher. Further to this, the number of businesses suffering losses could have been around one-third higher, with a projected impact of up to 20% of businesses in distress by 2024. Despite these projections, it is anticipated that many businesses will continue to struggle and be unable to adapt to the many social and economic impacts caused by the COVID19 pandemic.
While there are concerns about failure indicators rising when support schemes are fully wound down, it has been reported by business services company, CrifVision-net, that the number of company start-ups was 25,700. This indicates a positive sign of financial health for the economy. To ensure a positive economic recovery and survival, it is critical that SMEs continue to receive support from local and national agencies based on their role as “the backbone of the economy”.
So where can the SECure project fit into this? The key aim of the SECure Erasmus+ project is to provide additional support to SMEs through (1) the development of a comprehensive Learning Framework, which will empower SMEs and entrepreneurs with the knowledge, skills and competencies required to identify and cope with emerging business crisis and (2) through the development of a crisis indicator toolkit, to allow SMEs to analyse their business performance and identify early warning indicators of business crisis.
For more information on the SECure project please go to the following link https://www.smecrisistoolkit.eu/news/ to subscribe to the Newsletter and follow SECure on social media for regular updates.
For a more in-depth look at the ESRI report, please go to the following link: https://www.esri.ie/system/files/publications/WP718.pdf