SMEs in Ireland were hit with a revenue shortfall of between €6bn and €10bn during the main Covid-19 lockdown period, which could rise to €15bn by the end of 2020, according to new research.

In a paper published by the ESRI today, researchers that around two in five micro-sized businesses and one in two small and medium-sized firms faced a revenue shortfall (where revenue fell below expenditure on a monthly basis) in the main Covid-19 lockdown period from March to June 2020.

The ESRI research suggests that businesses had some cash resources built up prior to the pandemic that was likely used to bridge part of the gap, but this would not be sufficient to cover all losses. Even after their own resources were used, between €2.2bn and €4.3bn of a shortfall was accumulated over these three months.

The research was undertaken as part of a joint programme of work between the Department of Finance and the Economic and Social Research Institute. It assesses the financial resilience of Irish SMEs and explores the extent to which they have faced revenue shortfalls since the onset of the Covid-19 pandemic.

The research also examines how these SME revenue shortfalls might evolve over the full course of the year to the end of 2020 depending on the broader economic environment.

In Association with

Looking forward to the end of 2020, scenario estimates for the total revenue shortfall for SMEs could amount to between €8bn and €15bn, depending on the epidemiological situation. Factoring in internal resources to cover some of this shortfall for businesses, the ESRI research calculates that between €4bn and €8bn in uncovered losses will still hit businesses.

“This research gives a picture of the extent to which SMEs have been impacted by the pandemic,” said Martina Lawless, an author of the report and a research professor at the ESRI.

“While the estimates for total accumulated losses estimates are extremely substantial, the results also show that these could have been much higher if there had not also been significant reductions in firm expenditure supported by the wage subsidy scheme and deferrals of other payments.”