| 11.6°C Dublin

Irish SMEs could rack up €15bn shortfall

 

Close

Warning: The ESRI’s Senior Research Officer, Conor O’Toole

Warning: The ESRI’s Senior Research Officer, Conor O’Toole

Warning: The ESRI’s Senior Research Officer, Conor O’Toole

Ireland's SMEs lost between €6bn and €10bn in revenue from March to June this year, according to research published this morning by the Economic and Social Research Institute (ESRI).

The think-tank warned that the figure for the entire year could hit as much as €15bn, leaving many of the businesses struggling to survive the fallout of the Covid-19 pandemic.

About 20pc of micro firms and half of all small and medium-sized businesses racked up the shortfall as the country went into lockdown and a significant number of people started working from home.

While many small firms had some cash resources accumulated before the pandemic, they are likely to have been using that buffer to bridge at least part of the revenue gap, according to the ESRI.

However, it still wouldn't be sufficient to cover the shortfall, the research suggests.

The ESRI paper reckons that even allowing for the use of existing resources to cover the revenue shortfall between March and June, SMEs still accumulated between €2.2bn and €4.3bn of a shortfall in the period.

The research was undertaken as part of a joint programme of work between the Department of Finance and the ESRI.

The SME sector makes up the vast majority of firms operating here and it employs over a million people, accounting for 68.4pc of total employment.

The research reckons that, depending on how the pandemic plays out for the remainder of the year, that total revenue losses for Ireland's SMEs could amount to between €8bn and €15bn for 2020.

Even allowing for the use of existing internal resources to shore up businesses, SMEs could find themselves with between €4bn and €8bn of uncovered losses for the year, according to the ESRI.

"While many firms had access to their own cash savings to help survive the period, these buffers are likely to deplete leaving many firms struggling to survive," said ESRI's Conor O'Toole.

Irish Independent