Half of European Union enterprises saw turnover decline last year, an annual investment survey by the European Investment Bank has shown, as the Covid-19 crisis ripped through the European economy, shutting businesses for months and severely curtailing activity.
However, decisive action by the European Union and its member governments helped to keep many businesses afloat and limited the rise in unemployment.
The strong response, which effectively made up for lost sales at many businesses, has also been instrumental in sparing investment from cuts.
Ensuring that investment is maintained will be crucial to Europe’s transition to a greener and more digital economy.
About 49% of EU firms suffered a drop in sales due to the pandemic, compared with 21% that were able to increase sales.
Firms that were less productive before the crisis felt a bigger impact, while digital firms proved more resilient.
Sales fell more for small firms (down at least 25%) than for medium-sized and large firms.
Looking ahead, the economic landscape has changed, and European firms need to change with it.
The good news is that the pandemic encouraged many businesses to speed up their digital transformation, while others are waking up to the reality of climate change.
And while the shock weighed on firms’ investment plans in the short term, government support appeared to soften the impact.
The number of firms carrying out investment in the last year declined to 79% from 86% in 2019.
Faced with lower sales, 23% of firms pulled back on their investment plans, while only 3% planned to invest more, according to the EIB.