EU calls for a Next Generation EU strategy for SMEs

COVID-19 has been a tsunami for SMEs. The EU’s proposed new SME strategy, which predates the crisis, fails to cope with the huge challenges that have since jumped to the fore, says the European Economic and Social Committee (EESC) in a recently adopted opinion.

COVID-19 has dealt a very serious blow to SMEs across Europe, many of which risk being swept out of business in its wake.

How can the new EU strategy for SMEs, which was put forward before the pandemic and has not been overhauled since, help the sector cope with the aftermath, asks the EESC in an opinion on the European Commission’s draft strategy adopted at its September plenary.

“What we really need at this point in time is a sort of ‘Next Generation EU strategy’ for SMEs, putting together all there is for SMEs under the huge umbrella of loans and grants from the Recovery plan for Europe to mitigate the negative effects of the lockdown, social distancing and health security measures and help businesses recover quickly”, says opinion rapporteur Milena Angelova.

SME organisations to cover the last mile

SME organisations ought to have a pivotal role in the successful implementation of the strategy, as they can ensure that the needs of all different groups of SMEs are met and can shape any follow-up measures that may be needed.

Instead, the strategy mainly relies on existing national SME envoys, a new EU SME envoy and the Enterprise Europe Network.

But the EESC points out that the network of national SME envoys, which represent Member States’ authorities in charge of SME policy, is not fully operational in all Member States. It also stresses that, as SME envoys come from the administration, they need to stay in constant contact with SME organisations and listen attentively to their advice, if they are to play a useful role. Continue reading “EU calls for a Next Generation EU strategy for SMEs”

Commission and European Investment Fund unlock €8 billion in finance for 100,000 small and medium-sized businesses

The European Commission has unlocked €1 billion from the European Fund for Strategic Investments (EFSI) that will serve as a guarantee to the European Investment Fund (EIF), part of the European Investment Bank Group. This will allow the EIF to issue special guarantees to incentivise banks and other lenders to provide liquidity to at least 100,000 European SMEs and small mid-cap companies hit by the economic impact of the coronavirus pandemic, for an estimated available financing of €8 billion. Today’s announcement fulfils the commitment in the Commission Communication of 13 March to bring immediate relief to hard-hit SMEs, with money able to flow already in April. It is part of the package of measures announced by the EIB Group on 16 March designed to rapidly mobilise support for Europe’s SMEs and mid-caps.

One of the immediate economic consequences of the coronavirus pandemic is the sudden lack of liquidity affecting small and medium-sized businesses. These companies are typically the most affected in a crisis, and it is essential to support them with adequate liquidity so they can survive the crisis. However, in a situation of liquidity crunch banks are not incentivised to lend SMEs money due to the sudden increase in perceived risk. That is why EU guarantees supporting these loans are necessary. As of today, the EIF is offering to the market dedicated EFSI-backed guarantees to contain the impact of the pandemic on small and medium sized enterprises and small mid-cap companies. Continue reading “Commission and European Investment Fund unlock €8 billion in finance for 100,000 small and medium-sized businesses”

An SME Strategy for a sustainable and digital Europe

Europe’s 25 million small and medium enterprises (SMEs) are the backbone of the EU economy. They employ around 100 million people, account for more than half of Europe’s GDP and play a key role in adding value in every sector of the economy. SMEs bring innovative solutions to challenges like climate change, resource efficiency and social cohesion and help spread this innovation throughout Europe’s regions. They are therefore central to the EU’s twin transitions to a sustainable and digital economy. They are essential to Europe’s competitiveness and prosperity, economic and technological sovereignty, and resilience to external shocks. As such, they are a core part of the achievement of the EU’s industrial strategy.

SMEs are deeply woven into Europe’s economic and social fabric. They provide two out of three jobs, bring training opportunities across regions and sectors, including for low-skilled workers, and support society’s welfare, including in remote and rural areas. Every European citizen knows someone who is an entrepreneur or works for one. The daily challenges of European SMEs to comply with rules and access information, markets and finance are thus challenges for the whole of Europe.

SMEs are very diverse in terms of business models, size, age, and entrepreneurs’ profiles, and draw on a diverse talent pool of women and men. They range from liberal professions and microenterprises in the services sector to middle-range industrial companies, from traditional crafts to high-tech start-ups. This strategy recognises their different needs, helping companies not just to grow and scale up, but also to be competitive, resilient, and sustainable. It therefore sets out an ambitious, comprehensive and cross-cutting approach, based on horizontal measures helping all kinds of SMEs as well as actions targeting specific needs.

The strategy puts forward actions based on the following three pillars:

·Capacity-building and support for the transition to sustainability and digitalisation;

·Reducing regulatory burden and improving market access; and

·Improving access to financing.

The objective is to unleash the power of Europe’s SMEs of all kinds to lead the twin transitions. It aims to considerably increase the number of SMEs engaging in sustainable business practices as well as the number of SMEs employing digital technologies. Ultimately, the goal is that Europe becomes the most attractive place to start a small business, make it grow and scale up in the single market.

To bring results, the strategy must be driven jointly by EU-level actions and strong commitment by Member States. The active involvement of the SME community and companies themselves will be key. The Strategy will therefore be underpinned by a robust partnership for delivery between the EU and Member States, including regional and local authorities. Entrepreneurs should also seize the opportunity of EU investment programmes to make their business more digital and sustainable, as well as to grow in the single market and beyond.

Continue reading “An SME Strategy for a sustainable and digital Europe”