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In line with the economic slowdown, companies preemptively reduced payment delays in 2018, except for Mediterranean countries

SMEs in Europe lack an estimated 400bn of bank-financing

Small and Medium Enterprises (SMEs) represent more than 99% of all European non-financial corporates and depend on banks for 70% of their external financing. Besides generating close to 60% of total Gross Value Added, they employ over 90 million people. Euler Hermes’ new study focuses on SMEs as critical actors in the European economy; it estimates the bank financing gap for SMEs in the Eurozone as a whole and in six main countries: Germany, France, Italy, Spain, the Netherlands and Belgium.

Open Data Portal at Euler Hermes - Jennifer Baert interview

At Euler Hermes, data is key! The more data we have on companies, the more credit we can give to our policy holders. It is clear to us that if we want to stay relevant in our credit risk assessments but also to better serve our customers, we need to use more than traditional data.

The collateral damage of too-low growth and tightening financial conditions

In 2018, global insolvencies confirmed their upward trend which started in 2017 after seven consecutive years of sizable declines. Indeed, our Global Insolvency Index which covers 43 countries totaling 83% of global GDP is to post a +10% y/y increase for 2018. All in all we expect 20 countries of our sample to see in 2018 more insolvencies than in 2017.

Could the next global crisis come from the construction sector?

After ten years of growth (2008-2018), we have reached the peak in the global construction growth cycle: 2018 will be the turning point according to Euler Hermes’ unique proprietary data on millions of companies across 70 countries.

Global trade in 2019: And the winners are…

In the US, the fiscal stimulus of the Trump administration and a rise in wages associated with the strength of the dollar will keep both domestic demand and imports in-check.

Trade war? Not really (or not yet)

The G20 summit opens tomorrow in Buenos Aires amid concerns over US protectionism. Nevertheless, global trade of goods and services remained relatively resilient this year.  In 2019, trade momentum is set to soften to +3.6% (from +3.8% in 2018) in line with softening of global growth, because of tighter financing conditions and those uncertainties around trade  Beyond a hypothetic rising protectionism, businesses should prepare for higher cost of trade, trade diversion, and rising political risk

German SMEs and mid-caps have a higher average credit risk than Italian

Euler Hermes Rating’s latest study finds that SMEs and mid-caps in Italy have a lower average 2-year default rate (2.05%) than their German (2.59%), French (3.05%) or even Spanish (3.67%) counterparts. However, the financial profile leader is Germany’s Mittelstand (i.e.SMEs and mid-caps). At 32.4%, the German firms have the highest percentage of investment-grade financial profiles (from BBB to AA and higher) of the four countries studied.

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