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Impacts of the Covid-19 crisis: evidence from 2 million UK SMEs

James Hurley (), Sudipto Karmakar, Elena Markoska (), Eryk Walczak and Danny Walker ()
Additional contact information
James Hurley: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Elena Markoska: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Danny Walker: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH

No 924, Bank of England working papers from Bank of England

Abstract: We introduce a novel data set to analyze the impact of the Covid-19 crisis on SME cash flows. The crisis led to a sharp drop in economic activity in the UK, which hit SMEs harder than larger businesses. The data set comprises monthly information on all 2 million SMEs that have current accounts or debt with nine major banking groups, with roughly 5 billion data points in total. We document a few basic facts on UK SME cash flows during Covid-19. (1) The virus and the public health interventions coincided with a 30 percentage point reduction in turnover growth for the average SME. (2) There was significant heterogeneity in the turnover shock across SMEs, with the biggest reductions for younger SMEs in consumer-facing sectors in Scotland and London. (3) Cash flows were broadly flat on average and there was much less heterogeneity across SMEs. (4) SMEs with average turnover growth in 2020 were most likely to use the main government-guaranteed loan scheme for SMEs, as well as those in the hospitality sector in more affluent areas of the country. Our analysis provides a framework to monitor SMEs as the sector recovers from the pandemic.

Keywords: Covid-19 pandemic; small and medium-sized enterprises; SMEs; government support schemes (search for similar items in EconPapers)
JEL-codes: D22 E65 G30 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2021-06-11
New Economics Papers: this item is included in nep-ent and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0924

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