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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. Following a comprehensive literature review on inflation, the study explored the effect of the sustained high levels of inflation on SMEs’ performance in a variety of areas: late payments, solvency and bankruptcy rates, the twin digital and green transition, investment, turnover, access to labour, participation in public procurement, and profitability. The effect of inflation on these performance indicators was estimated in fourteen industrial ecosystems using regression modelling, and future impacts of inflation were simulated for the 2023-2024 period under different scenarios (baseline, with worsened economic outlook, and with a further energy crisis). The impact on SMEs operating in different industrial ecosystems was also explored through cases studies in agri-food, construction, electronics, energy-intensive industries, and textiles. 


Building on the evidence from the quantitative and qualitative analyses, the team drafted a series of general and SME-specific policy recommendations to address the causes of inflation, and outlining both short-term relief measures and measures to cushion the long-term effects of inflation, as well as measures to use only under exceptional circumstances and measures to avoid.


The project relied on both quantitative and qualitative methods. For the quantitative analyses, the team employed 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;
  • 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 also employed qualitative methods to analyse five case studies covering the following ecosystems: construction, agri-food, energy-intensive, electronics, and textiles. For each, the analyses involved a triangulation of desk research, interviews with key stakeholders, and ecosystem-specific results of the statistical analyses to provide a holistic view of the impacts of inflation on the selected ecosystems.