Research Paper

COVID-19, business support and SME productivity in the UK

ERC Research Paper No 94

Associated Themes
  • Business Growth
  • COVID-19
  • Management and Leadership

In this paper we draw on arguments related to behavioural additionality to consider how UK COVID-19 emergency public support measures – Furlough funding and loan guarantees –
during the pandemic have influenced firms’ future investment intentions and employee wellbeing. Both provide an early indication of potential effects on future productivity. The potential
linkages and mechanisms are suggested using Logic Models. Survey data from the SME Finance Monitor for 2020Q3 and 2020Q4 and the Health and Well-being Survey 2021 provide
data and we estimate probit models, instrumenting for different combinations of policy instruments (Furlough/loan, loan only, Furlough-only). Overall, we find widespread positive
short-term impacts of the government support schemes on investment planning and smaller impacts on employee well-being.