New York: While Europe is grappling with the fears of a relapse of the Coronavirus pandemic, a global advisory company has warned that thousands of companies, in Europe, may be forced to wind up. This warning is given by the McKinsey company, in its report published, after surveying more than 2,000 small and medium European companies. The report expresses a fear that 10% of the small and medium companies may go bankrupt in the next six months. As employment in Europe is also majorly dependent on the SME sector, the possibility of a massive increase in unemployment is also being predicted.
8.1 million people have been infected with Coronavirus in Europe, and nearly 250,000 people have died. The pandemic is playing havoc in the European countries, the United Kingdom, France, Germany, Italy and Spain. The economic effects of the pandemic also are becoming apparent, and most of the leading groups and institutions have predicted that Europe will be hit by a severe recession. At the beginning of the month, senior officials from Germany, the leading European country, warned that the European economy would receive a strong jolt.
In the last few days, the influence of the Coronavirus pandemic is reportedly increasing in Europe and the countries have indicated of a second lockdown. Against this background, the McKinsey warning is an inkling of an impending crisis. McKinsey conducted a survey of more than 2,200 small and medium companies in the leading European countries. 55% of them expressed fears that they will be forced to wind up their businesses. During the period from February to August, more than 85,000 small and medium industries have closed down in Spain alone.
Nearly 90 million workers are dependent on the SME sector in Europe for employment. Taking this into account, if 50% of the companies go bankrupt, the comparable number of jobs can be lost. This could lead to aggravation of the unemployment issue in Europe. Analysts claim the this could have serious economic, social and political effects in Europe.
A few months ago, a recovery plan of 750 billion Euros was announced to bail Europe out of the economic crisis. This announcement of the European Union is considered to be the biggest financial package announced in the history of Europe. The plan announced by the European Union is named the New Generation EU, and under this, 500 billion Euros would be in the form of a grant in aid and 250 billion Euros will be in the form of loans. Moreover, individual countries have announced various concession and subsidy plans on the local level. Most of the businesses functioning at the moment are surviving on this support. The report points out that the daunting question faced by the companies, however, is what to do when they end. The international monetary fund also has warned that the funding and concession support, given to the industry, should not be withdrawn in the near future.