Connect with us

International

Italian SME are facing a dire crisis in the next years

Published

on

In 2022, Italian SMEs experienced a positive trend with few closures and a rising turnover of 6.1%, largely driven by small enterprises. However, the landscape has taken a downturn in 2023, according to CERVED, as reported by ItaliaOggi.

The notable decline in new company setups, down by 2.3% year-on-year, is a cause for concern. This includes a significant contraction in simplified SRL, the Italian simplest Ltd society (7.9%), and the construction sector (8%). A noteworthy shift is the increase in the number of companies going out of business, up by 33.3%. Bankruptcies have risen by 25.2%, and liquidations in bonis have seen a substantial 36% increase, especially in the manufacturing sector, which witnessed a 50.6% surge in bankruptcies and a 55.4% rise in liquidations.

Payment terms have also witnessed a severe deterioration, with serious delays (more than two months after the agreed deadline) reaching 3.2% and non-payments increasing from 9% in June 2022 to 10% in June 2023. However, there are remedial capacities, with 24% considered very good and 52% good.

The challenging international framework, characterized by inflation, soaring energy and raw material costs, and a crisis in international markets, has created an unfavorable environment for economic activity. CERVED anticipates a stabilization of these factors, but recovery will take time, leaving the risk profile high for the foreseeable future.

According to the Cerved Group Score Forward Looking, even with an assumed return of interest rates to lower levels in 2024 (not certain), safe SMEs are expected to fall to 37.3% from the current 41%. Conversely, risky SMEs are predicted to rise to 8% from 7.1%. In a pessimistic scenario, the share of SMEs at risk could reach 8.5%, with a fifth of companies in the vulnerability zone and a further reduction of those considered safe.

Concerning financial debts, the base scenario suggests an increase from 7.6% to 9.9%, while the worst-case scenario could see it rise to 10.3%, particularly impacting the construction sector.

Sales are projected to slow down, with real SME turnovers experiencing a decline from +6.1% in 2021-22 to +2.2% in 2023, +1.5% in 2024, and +1.8% in 2025. The decline in revenue streams will affect reliability, leading to a growth in bad payers and worsening payment habits.

Cerved’s analysis of survival rates during the pandemic crisis reveals that certain characteristics contribute to a higher chance of success. Family-controlled companies, those with an external CEO, innovative start-ups, and those led by under-35s or female leadership show higher rooting percentages.

The function of public procurement, especially by public administration, plays a crucial role in the survival of small and medium-sized companies, underscoring the importance of this factor in the decisions of the Ministry of Economy and Finance (MEF).

The near future appears challenging for Italian SMEs, with significant social repercussions if not addressed appropriately. The awareness and actions of the MEF become pivotal in navigating this difficult period.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2023 Scenari Economici - P.IVA: 02570830063