ABOUT SME EUROPE

The purpose of “SME Europe” (Small and Medium Entrepreneurs of Europe) is to shape EU policies in a more SME friendly way. SMEs are the backbone of the European economy as it is especially them that create sustainable jobs, growth and prosperity. SME Europe closely cooperates with national business organisations and European policy makers within the EPP political family, with a particular focus on the European Parliament. As a pro-active organisation within the political networks of Christian-Democrats and Conservatives, SME Europe wants to bring a new spirit and a fresh entrepreneurial wind into the political debate. The interests of SMEs are best served when market mechanisms can freely make an impact.

Who’s Who

Dr. Horst Heitz, Executive Director

1. Bendt Bendtsen, President, MEP (Denmark)
2. Iuliu Winkler, First Vice President (Germany)
3. Michal Boni, Vice President, MEP (Poland)
4. Elisabetta Gardini, Vice President, MEP (Italy)
5. Ivana Paunova, Vice President,  MEP (Bulgaria)
6. Ivan Stefanec, Vice President, MEP (Slovakia)
7. Angelika Winzig, Vice President & Treasurer, Member Nationalrat (Austria)
8. Pablo Zalba Bidegain, Vice President, MEP (Spain)

Co-Opted Board Members

1. Annie Schreijer-Pierik, MEP (Netherlands)
2. Tom Vandenkendelaere, MEP (Belgium)
3. Claudia Monterio De Aguiar, MEP (Portugal)
4. Svetoslav Hristov Malinov, MEP (Bulgaria)

Honorary Presidents

1. Dr. Paul Rübig, SME Global Chairman, MEP (Austria)
2. Dr. Ingo Friedrich, President of the European Economic Senate, Honorary MEP (Germany)
3. Dr. Christoph Leitl, President of the Austrian Federal Economic Chamber (Austria)
4. Jacques Santer, Former President of the European Commission (Luxembourg)
5. Nadezhda Neynsky, Former MEP, : Bulgarian Ambassador to Turkey (Bulgaria)

Honorary Members

1. Antonio Tajani, MEP, Vice President of the European Parliament, Former Commissioner of the European Commission (Italy)
2. Johannes Hahn, European Commissioner (Austria)
3. Elzbieta Bienkowska, European Commissioner (Poland)

Senate

1. Mechthilde Wittman MDL, Member of the Bavarian Parliament (Germany)
2. Markus Ferber, MEP (Germany)
3. Martin Kastler, Head of Hanns Seidel-Stiftung for Czech Republic, Slovakia and Hungary, Former MEP (Germany)
4. Thomas Mann, MEP (Germany)
5. Davor Ivo Stier, MEP (Croatia)
6. Peter Jahr, MEP (Germany)
7. Jean-Paul Gauzès, Former MEP France)
8. Mario Mauro, Former MEP, Former Minister of Defense of Italy, Member of the Senate of Italy (Italy)
9. Salvador Sedo I Alabart, Former MEP and Former Member of the Spanish Senate (Spain)
10. Christos Folias, Former MEP (Greece)
11. Henri Malossse, Former President of the European Economic and Social Committee (France)

Working Groups

1. SME Visegrad
2. SME Balkans
3. SME Agriculture
4. SME Social
5. SME Finance
6. SME Regions
7. SME Seniors & Long Life Learning
8. SME Start-Ups
9. Family Business
10. Microbusinesses and Digital Agenda
11. Energy
12. SME Telecom
13. Administrative Simplification
14. SME Trade
15. Digital Agenda
16. SME Defence
17. SME Future
18. SME Tourism

Partners

1. SME Circle SMEs bring growth and jobs. 99% of businesses in Europe are SMEs. That equates to over 20 million SMEs. While the SME structure in Germany, Austria, Northern Italy and the Netherlands is strong, the SME sector in other Member States needs support even more. With 44 MEPs from 20 Member States of the European Union, the SME Circle was therefore established in September 2014 the SME Circle of the Group of the European People’s Party in the European Parliament. As Chairman of the SME Circle, Dr. Markus Pieper MEP has set himself the goal to simplify the bureaucracy jungle in Europe, so that the SMEs can be competitive and forward-looking. Internal meetings are held monthly. There the SME Circle would like to cooperate more with the Commission and are planning on selected topics events with Commissioners. The Vice-Chairman of the SME Circle are: Bendt Bendtsen (DK), Paul Rübig (AUT), Antonio Tajani (IT), Pilar del Castillo (ES) and Michal Boni (PL).
2. SME Global is a think tank and a network of politicians, who are members of the International Democrat Union. It provides an institutional framework for small and medium sized enterprises (SMEs) at the international level. It was founded in 2003 by its current president, European Parliament member Dr. Paul Rübig. Other key members are former Prime Minister of Australia John Howard, former US Congressman Don Manzullo and former Slovak Finance Minister Ivan Miklos.

EXECUTIVE SUMMARY (European Commission Annual Report 2016) 

SMEs form the backbone of the EU28 economy. In 2015, just under 23 million SMEs generated €3.9 trillion in value added and employed 90 million people. They accounted in 2015 for two thirds of EU28 employment and slightly less than three fifths of EU28 value added in the non-financial business sector. The vast majority of SMEs are micro enterprises with less than 10 employees , such very small firms account for almost 93% of all enterprises in the non–financial business sector. EU28 SMEs finally appear to have escaped from the fallout of the economic and financial crisis of late 2008 and 2009.

Indeed, following a number of years of poor economic performance, EU28 SMEs experienced in 2015 good growth in value added for the second year in a row (3.8% in 2014 and 5.7% in 2015). For the first time since the recession, SME employment grew in 2014 (1.1%). In 2015, SME employment increased by 1.5%. As a result of robust growth over the past two years, the level of value added generated by EU28 SMEs in 2015 in the non-financial business sector was almost 9% higher than in 2008. In sharp contrast, EU28 SME employment was still about 2% below its 2008 level. SMEs had a good year in 2015 in almost all Member States. In 2015, SME value added increased in all but two Member States and SME employment increased in 27 of the 28 Member States. Obviously, the magnitude of the actual growth in value added and employment varied across Member States with some countries showing weaker growth than others. But the change is in the right direction in almost all Member States. Of note is the fact that the recent EU28 SME employment growth is, on average, entirely due to the growing number of SMEs as the average number of staff employed by a SME has remained stable in 2014 and 2015 after falling markedly from 2008 to 2013. The improved performance of EU28 SMEs reflects better macro-economic conditions in 2015, especially increases in domestic demand in the EU. The latter is particularly important for SMEs as most SMEs operate in sectors which have a low export-intensity, and when they export, SMEs do so mostly to other EU28 Member States. Moreover, in contrast to large enterprises, these exporting SMEs have rebalanced their exports to extra-EU markets to much lesser extent. A detailed examination of the employment performance of EU28 SMEs in 2014 and 2015 reveals a great deal of diversity across sectors: a few small sectors (such as ‘advertising and market research’, ‘legal and accounting services’, ‘office administration and support and other business services’, ‘services to buildings and landscaping’, and ‘employment activities’) each show growth of more than 5% in employment. But, each of these sectors account for at most 3% of total EU28 employment in 2015; in contrast, a number of larger sectors such as, for example, ‘retail trade’, ‘wholesale trade’ and ‘construction’ which together account for 30% of total EU28 SME employment, recorded employment growth of about 2.0% or less in 2015. The population of SMEs, particular micro SMEs, changes constantly, with many new businesses being born every year and many ceasing to operate. In particular young and small firms show high mortality rates. The 2014-2015 SME Annual Report found that in recent years young SMEs created jobs (on a net basis), and the EU needs more young firms to create jobs. There are now no major differences between the EU and the USA as regards new firm creation. Start-ups are key contributors to the innovation and growth dynamics of the EU economy. However, many young enterprises fail in their early years and barriers to starting afresh dampen the potential gains that a strong start-up culture could yield. Public policies supporting more start-up dynamism through second chance will go some way towards improving the environment for start-ups and strengthening the overall employment creation performance of SMEs. Often a business cessation is involuntary and results from creditor action to recover partially or fully debts owed to them. Bankruptcy procedures and similar involuntary business cessation procedures provide the legal framework for winding down such failing businesses. The characteristics of the bankruptcy regimes vary considerably in terms of how punitive the regime is for honest entrepreneurs whose business failed and went bankrupt. A common finding from the academic literature is that a more punitive bankruptcy regime is likely to: deter potential entrepreneurs from starting a business because they do not want to face the consequences of the potential risk of bankruptcy; and, prevent honest entrepreneurs whose business failed from starting a new business again. As a result, economies with more punitive bankruptcy regimes forego the value added and employment which would have been created by the businesses which would have been created by entrepreneurs actually deterred or prevented from doing so. The results of the statistical analysis presented in the report shows that, in particular, the length of the discharge period has a negative and important impact on the level of entrepreneurship and the creation of new businesses. The lower level of entrepreneurship and business creation in turn holds back economy-wide output growth and employment creation. For example, if all the Member States where the discharge period exceeds three years reduced it to three years, in the long run, the level of EU28 GDP (at constant prices) could be about 1.0% higher each year. The degree of uncertainty surrounding this estimate is high and the figure should be more viewed as an illustration of the likely effect of reducing the discharge period than a precise forecast. Nevertheless, it highlights the fact that the opportunity cost, in terms of foregone output and employment, of punitive bankruptcy regimes is far from insignificant.

The SBA second chance principle recognises the economic and social cost of bankruptcies, and aims to: on one hand, prevent bankruptcies by taking in time the measures required to prevent a business falling into a situation where cessation, voluntarily or involuntarily, is unavoidable; and on the other hand, ensure that honest entrepreneurs whose business went bankrupt do not face unsurmountable obstacles in starting a new business. Unfortunately, this year’s SBA review shows, among other, that: 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. Therefore, the clear policy message emanating from both the analysis in the present report and the parallel assessment of the implementation of the SBA second chance principle is very clear: policy action is required urgently by Member States who have not yet taken action to implement fully all the SBA second chance principles. The fiscal cost is nil or very small and the benefits in terms of output and employment are likely to be important.