Nearly 50% of the small and medium sized enterprises (SMEs), which provide jobs for two-thirds of European workers, fear for their survival in the coming 12 months, says a survey report released by management consultancy McKinsey last week. A survey was conducted in the month of August before the second wave of corona in European Nations. The survey results appears to be the warnings multiply of an impending wave of business insolvencies and as the International Monetary Fund (IMF) and others urge the region’s governments to boost state support to help companies owing the coronavirus pandemic.
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Across five countries more than 2200 companies including France, Germany, Italy, Spain and Britain the hotspot nations in the Europe found 55% expected to shut down by September next year if their revenues remained at current levels. The survey says one in 10 SME will file bankruptcy within six months. The shutdown of the increase will increase the Jobless count, and this will become the substantial burden on the financial sector.
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A voting survey involving Economists has predicted that the euro area economy would grow by just 5.5 percent next year, after a fall of approximately 8 percent this year. It warns even a small recovery will enhance the virus spread. SME with 250 or less than that employee count employ more than 90 million people in Europe. The smaller count makes more vulnerable to financial crunch. For instance, in Spain 83% of the 85000 business that collapsed from February possess employs less than 5. To prevent the collapse, companies need policies now need to go beyond liquidity support and ensure that insolvent but viable firms can remain in business.