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SMEs and high inflation

Over 2022, small and medium sized enterprises (SMEs) have faced historically high inflation, resulting from the COVID-19 pandemic, the Russian war against Ukraine and certain measures implemented by the Member States. The main goal of this study is to understand the effect of the sustained high levels of inflation on SMEs’ performance, including their ability to invest as well as their profitability, turnover, access to labour, competitiveness, adoption of green and digital solutions, late payments, bankruptcies, participation in public procurements, etc. The project will assess the effect of inflation in fourteen industrial ecosystems, and draft SME-specific policy recommendations outlining both short-term relief measures and measures to cushion the long-term effects of inflation.

The project will rely on both quantitative and qualitative methods. For the quantitative analyses, we will employ publicly available data (e.g. Eurostat, Eurobarometer), as well as micro-level survey data (e.g. ECB SAFE, EIB Investment Survey), data from private sources (e.g. Orbis), and big data collection (e.g. Technote) to perform four main tasks:

  • stock-taking of existing key indicators capturing both inflation and its effects on SMEs’ performance across the EU;
  • multilevel regression analyses to estimate the effect of high inflation on SMEs in fourteen industrial ecosystems;
  • simulations of future scenarios of how inflation will impact SMEs in the short term (e.g. next two years);
  • the development of an interactive Tableau dashboard summarising the evolution of inflation by country and by industrial ecosystem.

The project team will also use qualitative methods to analyse five case studies covering the following ecosystems: construction, agri-food, energy-intensive, electronics, and textiles. For each, we will conduct a literature review, interview key stakeholders, and integrate the ecosystem-specific results of the statistical analyses to provide a holistic view of the impacts of inflation on the selected ecosystems.