Growth prospects for SMEs are encouraging Published on: 26/11/2013, Last update: 04/11/2014
Antonio Tajani, responsible for industry and entrepreneurship said: “Our initiatives to help SME's to make it through difficult times have paid off. After five years of sluggish development I am glad to see that SMEs are about to grow again. They are also starting to recruit more staff. Moreover, our indicators make it clear, that SMEs can grow further in 2014. SMEs are the lifeblood of our economy as they are now dragging us out of the most severe crisis of EU economy in the past 50 years."
The European Commission published the 2012/2013 Annual Report on European SMEs. 2013 is expected to be the first year since 2008 with a combined increase in aggregated employment and value-added of EU’s SMEs.
These promising projections are backed up by other positive signals. Over the last three years, an increasing number of Member States have seen their small business sectors returning to an expansion of employment and value-added, or at least a petering out of the decline.
Remarkable resilience of SMEs
Viewed against the unparalleled depth and complexity of the crisis, such a turn-around would be remarkable testimony to the resilience of the EU SMEs. In 2012 alone SMEs suffered a loss of jobs in the order of 610,000 jobs or a 0.7% decrease compared to 2011. Moreover, SMEs’ contribution to GDP declined by 1.3% from €3.44 trillion in 2011 to €3.39 trillion in 2012. A further consequence of the crisis was that the distribution of losses in employment and value added was very unevenly distributed among the Member States.
About half of the 27 EU Member States created new employment in 2012, adding roughly 0.5 million net jobs to the employment stock in their respective sectors. The losses of jobs in SMEs are heavily concentrated in the more vulnerable Member States still affected by the sovereign debt crisis. However, even in their case the decline has slowed down significantly, indicating that the small businesses are bottoming out.
European SMEs were significantly more resilient than large enterprises at the beginning of the crisis, i.e. in the period 2008-2011. However, as the crisis wore on SMEs were slower to recover than larger firms. The difference in performance of SMEs and large enterprises over the entire period of the crisis reflects the weakness in domestic demand, which is a key market driver for SMEs, while large enterprises benefited from a better export performance.
Forecast 2014 – better performance expected
However, as domestic demand is expected to recover to some extent in 2013 and 2014, SMEs are forecast to perform somewhat similar to large enterprises over these two years.
Important role of SMEs in economy
The 20,4 million European SMEs play an important role in the European economy. They are mostly micro-enterprises and employed approximately 86.8 million people in 2012. This represents 66.5% of all European jobs for that year. Micro-enterprises provide just under a third of that total employment figure. The SME sector as a whole delivered 57.6% of the gross value added generated by the private, non-financial economy in Europe during 2012.
Improvements in SMEs’ performance
The improvements in SMEs’ performance are underpinned by an impressive number of policy measures by the EU and the Member States since 2008. These policy developments, taken under the umbrella of the Small Business
Act (SBA) for Europe have been instrumental in mitigating the effects of the
crisis and in creating a pro-SME policy momentum across the European Union. In 2010-2012 only, the EU’s Member States implemented a total of almost 2,000 policy measures to support SMEs, i.e. an average ofsome 650 measures per year, and more than 70 measures per country. The progress of Member States in implementing the SBA agenda over the last 12 months are detailed in the SBA country fact sheets which the European Commission also launched today. Measures promoting entrepreneurship as well as responsive administration were at the forefront of Member States´ drive to improve the business climate. Measures to facilitate a re-start for “second chance” entrepreneurs that had failed with their business before accounted for the least number of measures among the 10 SBA areas.