Finnegan's Take

When words like “subprime” and “credit crunch” entered the public lexicon in 2007, commentators said it would pass within a few months. Once banks published their annual reports, they said, we’d know who had toxic assets on their balance sheets and confidence would return to the markets.

That was two years ago.

Now, as the credit crunch drags on, the impact on companies and workers deepens by the day and the prospect of an early economic recovery in Europe is not looking too promising – despite China’s stunning results this week.

The picture across Europe is mixed, with SMEs in some countries (the UK and Hungary) offering a somewhat more optimistic picture than others (Bulgaria, Italy, Ireland).

According to BusinessEurope, the situation is generally getting worse instead of better. Larger firms are increasingly turning to bank loans as a source of finance and banks are favouring established companies over newer ones. The trouble is that SMEs are most vulnerable to cash shortages and will vanish much more quickly than larger corporations.

With small firms hurting most, even big business is worried about the little guys. It is from dynamic start-ups that future innovations will spring. Wipe out the SMEs, wipe out an engine of growth.

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