CMA - Competition and Markets Authority
CMA - Competition and Markets Authority
09/18/2024 | Press release | Distributed by Public on 09/18/2024 03:04
How do firms cope with economic shocks in real time
Research and analysis
How do firms cope with economic shocks in real time?
This paper links together high-frequency firm-level data to understand how UK firms have responded to the recent energy price shock.
From:Competition and Markets AuthorityPublished18 September 2024
Get emails about this page
Documents
How do firms cope with economic shocks in real time?
PDF, 6.44 MB, 124 pages
This file may not be suitable for users of assistive technology.
Request an accessible format.
If you use assistive technology (such as a screen reader) and need a version of this document in a more accessible format, please email [email protected]. Please tell us what format you need. It will help us if you say what assistive technology you use.
Details
Policymakers often need to respond to unexpected shocks in real time, but economic data and analysis are produced with a long lag. In this paper, we show how existing UK microdata sources can be linked to enable granular analysis across many key outcomes in near-real time.
We use the recent energy price shock as a test case, and provide detailed new evidence on how firms have adapted to the increase in energy prices. On average firms pass on some of the price increase to customers, build up cash reserves and increase their debt, but do not yet see redundancies or bankruptcies. Small firms are more likely to increase their stock levels, while large firms invest in capital.
To enable policymakers to understand the different ways businesses react to the shock, we separately estimate the impact on small industry cells, and look at similarities across all outcomes to identify six common response profiles.
Updates to this page
Published 18 September 2024
Sign up for emails or print this page
Get emails about this page
Print this page