SME recovery continues… ANNUAL REPORT ON EUROPEAN SMEs

sme-report

Have you had a chance to read the Annual report on European SMEs 2015/2016 yet? We recommend that you do!

Have a read of our quick report summary below:

The main themes of the report can be summarised as follows: employment and growth, performance and population and the second chance principle.

Employment and Growth

SMEs are a vital part of the EU28 economy, in 2015 they employed 90 million people (an employment increase of 1.5%), accounting for two thirds of EU28 employment. Many of these SMEs are micro enterprises, with less than 10 employees, which form around 93% of all enterprises in the non–financial business sector. SMEs have also continued to grow, showing steady growth in value added both in 2014 (3.8%) and 2015 (5.7%). Growth varied across Member States but was generally positive.

Figure 1:  SME employment and value added growth in 2014 and 2015, EU28

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Performance and Population

Overall EU28 SMEs have performed better than previously, indicating better macro-economic conditions in 2015. However there are differing trends across small (e.g. legal and accounting services, advertising and marketing research) and large sectors (e.g. retail trade, construction). Smaller sectors experienced over 5% growth in employment, contrasting with only 2% growth or less in the larger sectors.

Figure 2:  EU SME value added annual growth by Member State, 2015  

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The second chance principle

The SME population is in constant fluctuation, as many new businesses are born and others cease to operate every year. New firm creation in the EU has caught up with USA rates, however the strengthening of second chance public policies to encourage startup dynamism after failure, would certainly counteract the barriers faced by those starting afresh for the second time. This would also ensure that potential entrepreneurs are not deterred by the prospects of bankruptcy or that existing entrepreneurs are not disheartened from trying again. This is where the SBA second chance principle could be every effective, not only for improving the environment and procedure for those businesses that do fail, but also by putting in place mechanisms to avoid businesses falling into such situations.

However, the latest SBA reviews highlight some areas for improvement:

  • in only slightly more than half of Member States can the discharge from bankruptcy be achieved in 3 years or less;
  • half of EU Member States treat re-starters on an equal footing with new start-ups; and,
  • all the other SBA second chance policy measures are implemented in less than half of Member States. Moreover, the SBA second chance principle is the one showing the least progress since 2008.

Progress has been made but more can be done, especially on the SBA second chance principle, so that SMEs can continue to recover and thrive, in turn strengthening the EU28 economy.

Figure 3: Forecast growth of SME value added and employment from 2015 to 2017 in Member States  

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Read the full report here.

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