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SMEs need more EU support to compete on global markets  

New EU strategy for small businesses should be backed by extra funding, capacity-building programmes, and a wider partnership with local government.​

Small businesses need broader and longer-term action from the European Union to help them scale up their operations, gain access to public tenders, and benefit more from the single market, the European Committee of the Regions argues in a set of recommendations intended to feed into a strategy planned by the incoming president of the European Commission.

The proposals from the EU's assembly for local and regional politicians, which were adopted on 8 October, include an adjustment in the definition of a small and medium-sized business, eased access to larger EU funding, and a pro-business model of partnership that pays greater attention to the local and regional dimension.

The opinion – entitled " Contribution from regions and cities towards a new EU policy framework for SMEs " – expands on a resolution adopted in June 2019, in which the CoR called for the new Commission, which should come into office in November, to "increase SME capacity to innovate, operate across borders and adapt to new economic models" and to strengthen "the SME dimension in EU policy-making". The recommendations were drafted by Tadeusz Truskolaski (PL/EA), a mayor of the Polish city of Białystok and former economist who has written two previous opinions on the EU's support for small business.

Mr Truskolaski said: "The EU's decade-old Small Business Act was a breakthrough and the outgoing Commission has made some important contributions, including making it easier for SMEs to access public money markets and by ensuring there is a strong regional and local dimension to the Enterprise Europe Network . But we need to fill the remaining gaps and respond to new developments, including growing expectations about the role of small business in the transition to a socially and environmentally sustainable economy. Overall, the single market is a success story for the EU, but we are a long way from a single market that truly works for SMEs. I am therefore very glad that Commission President-elect Ursula von der Leyen has proposed a new SME strategy, including a greater focus on SME digitisation."

He continued: "At the moment, we are seeing an economic polarisation of EU regions, because larger businesses – many of them concentrated in national economic centres – are growing faster than small businesses. So, strengthening SME policies will help the European economy to become more socially fair and inclusive. Local and regional authorities, SMEs and their associations should have a more active role in shaping and coordinating EU policies. This reflects the need, in our view, to prioritise local and regional thinking, with a national and international focus coming at a later stage. Overall, we should support small businesses to scale up and innovate from the moment they enter the local market to when they join the global market."

The CoR's opinion calls for the increase in the level of funding of the EU Single Market Programme . "EU investment in small businesses – and, more generally, in completing the single market – pays big financial and social dividends for regions across the EU," said Mr Truskolaski, "and small businesses are also crucial players in the emergence of the circular economy in Europe." He added that, in his region of eastern Poland, there are clusters of competitive and innovative businesses active in medical-equipment production, textiles and software that have benefited from the EU's help.

As well as calling for a bigger budget for the development of the single market, the CoR argues that the EU's structural and investment funds should be tailored to support SMEs and micro-entrepreneurship across a variety of programmes. It urges the European Commission to streamline ways for SMEs to access EU funds and to develop programmes that would help build up capacity to support a business-friendly environment.

The CoR also argues for a revision of the definition of 'SMEs' currently in use at EU level, to benefit medium-sized enterprises (companies employing up to 500 people). It argues that medium-sized enterprises are "structurally very comparable" to SMEs (companies with fewer than 250 employees) "and yet do not get preferential treatment over large enterprises".

Noting that small businesses in the EU are wary about trading across borders and about applying for public-service contracts, the opinion suggests that assigning bonus points to companies of local and regional origin could encourage more bids by small businesses. On 9 October, the CoR devoted a separate opinion to public procurement. That opinion, by Thomas Habermann (DE/EPP), was based on feedback from a network of 36 EU regions , from Alejento in Portugal to Mazovia in Poland.

In the new European Commission, responsibility for SME policy is currently expected to rest with three people: Margrethe Vestager, Executive Vice-President for 'Europe Fit for Digital Age' and Commissioner for Competition; Valdas Dombrovskis, Executive Vice-President for 'An Economy that Works for People' and Commissioner for Financial Services; and Sylvie Goulard, Commissioner for the Internal Market.

Contact:

Andrew Gardner
Tel. +32 473 843 981
andrew.gardner@cor.europa.eu