Impact of COVID-19 on the European digital industry
As a sector, the digital industry is resilient. A large majority of respondent’s employees (82%) pivoted to working from home relatively easily. Nevertheless, it is distressing to see that three-quarters of digital companies forecast negative financial impact and as much as one-third are expecting layoffs. Thousands of Europeans are losing good quality, well-paying jobs in the digital sector.
The results from the survey also underline to which extend the Coronavirus pandemic has disrupted global supply chains. Although deliveries from China have been the most disrupted it is perhaps surprising that deliveries from Europe are disrupted almost as much as with external trading partners.
Extent to which deliveries from different regions have been disrupted by COVID-19:
of all employees can work from home
What does the digital industry believe the impact of COVID-19 will be
The digital sector welcomes the measures taken so far to deal with this unprecedented crisis, such as increased flexibility on state aid rules at the EU level and employee salary support at the national level. But our survey shows that as much as many as half of the respondents believe that their government is not yet doing quite enough to support companies in need.
Another interesting statics is that business leaders believe that the European economy may not be as well equipped as the global economy to deal with the Coronavirus crisis. Indeed, whereas 55% of respondents ‘totally agreed’ that the Coronvirus will lead to a global recession, as many 73% of DIGITALEUROPE’s corporate members ‘totally agreed’ that it will lead to a recession in Europe (see note below graph).
Which are the most effective measures according to the digital industry?
At the national level, the needs of digital companies are not unlike other sectors in need of short-term liquidity. The most requested measure remains the assistance from governments to pay a share of their employee’s salaries, with as much 19% of respondents listing as ‘necessary to avoid bankruptcy’.
Postponing tax payments comes as a close second with over two-third of companies considering necessary to avoid bankruptcy, major cuts or layoffs.
When it comes to the EU level, this survey supports the recommendations we published last week. The responses highlight that digitalisation must be at the heart of the EU recovery and reinvention as lockdowns ease. Indeed, respondents believe that the best way to help the economy recover would be through a stimulus package aimed at the digital transformation of large pan of the economy.