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A modern policy for SMEs

The new Community policy on small and medium-sized enterprises (SMEs) creates a more coherent, pragmatic and horizontal framework for these enterprises. It aims to unlock the vast untapped potential of SMEs to create growth and employment within the European Union. SMEs will become more competitive, due to the promotion of entrepreneurship, improved access to internal and external markets, simplified Community legislation, improvement of their growth potential and an effective partnership with SME stakeholders.

ACT

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 10 November 2005, entitled "Implementing the Community Lisbon programme - Modern SME policy for growth and employment" [COM (2005) 551 final - Not published in thOfficial Journal].

SUMMARY

Small and medium-sized enterprises (SMEs) make a major contribution to growth and job creation in the European Union (EU). This is why the new policy on small and medium-sized enterprises (SMEs) creates a more coherent, pragmatic and horizontal framework for these enterprises. Promoting entrepreneurship and developing an environment favourable to SMEs will allow them to become more competitive.

SMEs are very diverse, and consequently have different needs. Some of them are start-ups, while others are rapidly growing "gazelles". Some are active in vast markets, others in local or regional markets. If by definition all SMEs have fewer than 250 employees, some are micro-enterprises, others are family SMEs. In order to unlock the growth potential of SMEs as a whole, policies and action to support them need to reflect this diversity.

The success of this new policy will depend on the effective involvement of all SME stakeholders, national, regional and European, public and private.

Specific action is proposed in five key areas:

  • Promoting entrepreneurship and skills. Promoting entrepreneurship, reducing the burden of risk linked to setting up and running a business, eliminating the negative effects linked to business failure, and providing support for the successful transfer of businesses are all elements that contribute to a better exploitation of Europe's entrepreneurial potential. Special attention will be paid to promoting entrepreneurial skills, reducing the skills gaps and providing support to particular categories of entrepreneurs (women, young people, old people, and people from ethnic minorities).
  • Improving SMEs' access to markets. Better access to tenders on the public market, greater participation in the standardisation process, increased awareness of intellectual property rights, and support for inter-enterprise cooperation, particularly in border regions, will help SMEs to take full advantage of the opportunities provided by the internal market. SME access to international markets will also be facilitated.
  • Cutting red tape. It is vital to simplify the regulatory and administrative constraints weighing on SMEs. The principle of giving priority to small enterprises ("Think Small First") will be integrated across all EU policies. The interests of SMEs will systematically be taken into consideration when assessing the impact of Community legislation and when preparing forthcoming legislation. Derogations for SMEs can be developed for this purpose. Special attention will be given to the rules concerning state aid, SME involvement in Community programmes, value-added tax (VAT) and, at national level, direct taxation.
  • Improving SMEs' growth potential. Improving SMEs' access to finance, research, innovation and information and communication technologies (ICT) will contribute directly to unlocking their potential for growth. Financial support, initially provided at Community level by the Multiannual Programme for Enterprises and Entrepreneurship (2001-2006), has now been increased by the Competitiveness and Innovation Framework Programme (CIP) (2007-2013). It is also vital to strengthen SMEs' capacities for research and innovation, as continued innovation is essential for the sustainable development of SMEs. SME involvement in the 7th Research Framework Programme will thus be facilitated.
  • Strengthening dialogue and consultation with SME stakeholders. Enterprises, in particular SMEs, and the European Institutions suffer from a lack of information exchange. More systematic cooperation and consultation with stakeholders is an essential guideline of the new SME policy. When policies are being developed, SMEs will be consulted by the Commission's SME Envoy or the "SME Panel", a new quick-and-easy mechanism for consultation via the Enterprise Europe Network. In addition, as from the end of 2005, "European Enterprise Awards" will reward measures that have proved to be effective in promoting entrepreneurship and thus contributed to the exchange of best practices. The Community business support networks will, for their part, continue to play an essential role in spreading information on the EU to businesses, particularly SMEs.

Background

SMEs make up a large part of Europe's economy and industry. The EU's 23 million SMEs account for 99 % of all businesses and contribute up to 80 % of employment in some industrial sectors, such as textiles. European SMEs are thus an essential source of growth, employment, entrepreneurial skills, innovation and economic and social cohesion. It is therefore essential to unlock the potential of SMEs and improve the environment they operate in by promoting entrepreneurship.

Last updated: 21.12.2007

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