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

Published in Bank of England Working Paper, 2021

Recommended citation: Hurley, J., Karmakar, S., Markoska, E., Walczak, E., Walker, D. (2021). Impacts of the Covid-19 crisis: evidence from 2 million UK SMEs. Bank of England Staff Working Paper No. 924.

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.

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BibTeX citation:

  author={Hurley, James and Karmakar, Sudipto and Markoska, Elena and Walczak, Eryk and Walker, Danny},
  journal={Bank of England Working Paper},