Navigation path

Left navigation

Additional tools

Other available languages: none

European Commission

MEMO

Brussels, 3 October 2014

Performance of SMEs in 2013: a fragile and incomplete recovery

Every year the European Commission analyses how much progress European countries made in implementing the Small Business Act (SBA)1. This memo describes the results of the assessments which were published today in the country-specific SBA factsheets2. The SBA factsheets are developed on the basis of a wide range of success indicators and national policy developments, grouped according to the SBA's ten policy dimensions:

  • (1) Entrepreneurship,

  • (2) Second chance,

  • (3) Think small first,

  • (4) Responsive administration,

  • (5) State aid and public procurement,

  • (6) Access to finance,

  • (7) Single market,

  • (8) Skills and innovations,

  • (9) Environment, and

  • (10) Internationalization.

The SBA factsheets also include trend charts in the SME sector for each country (also included in this memo). It is important to note that these figures represent estimates for 2012-2015, based on 2008-2011 figures from the Structural Business Statistics Database (Eurostat).

The SBA factsheets cover the 28 EU Member States, as well as Albania, the Former Yugoslav Republic of Macedonia, Iceland, Israel, Liechtenstein, Norway, Montenegro, Serbia and Turkey.

Read the full SBA factsheets

Country highlights3

AUSTRIA

  • State of the SMEs: In 2013, there were more than 307 000 SMEs in Austria’s private business sector, employing 1.8 million workers and producing about 103 billion EUR in value added to the economy4. They represent 99.7% of all businesses and account for 61.2% of the economic value-added and 67.7% of employment in the private non-financial sector.

  • Recovery from the crisis: Austria´s SME sector has kept on growing throughout the crisis. After a small dip in 2009, the number of firms expanded by an additional 19 000 to more than 307 000 in 2013. The newly-created firms (together with established businesses) created almost 90 000 additional jobs, a net increase of more than 5 % over the years 2009-2013. Simultaneously, value added grew by more than 17 %. The steady expansion spread across all sectors, with services at the forefront.

  • Business environment: Austria features one of the most competitive Small Business Act (SBA) profiles in the EU. In 2013, it outperformed the EU average on second chance, single market, access to finance, skills and innovation, environment and internationalisation. At the same time, the results for many indicators do show improvements over the past six years. Responsive administration is the only category in which Austria is below the EU average. However, even within this domain the problems are confined to only a few, very specific issues, many of which are in the process of being addressed. A lack of skilled personnel in some industries, especially IT personnel, is an increasing problem for many SMEs. Given that federal elections took place in 2013, there has been only slight progress in launching new measures over the reference period.

BELGIUM

  • State of the SMEs: In 2013, there were more than 520 000 SMEs in Belgium’s private business sector, employing some 1.77 million workers and producing about 115 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 61.4% of the economic value-added and 69.3% of employment in the private non-financial sector.

  • Recovery from the crisis: In 2013, the Belgian economy continued to recover from the 2008 economic crisis and has now slightly surpassed its pre-crisis level of real GDP. In line with this resurgence, recent estimated data show a significant increase in the number of SMEs and in their employment and added value. However the labour market situation is unlikely to improve in the immediate future. This is because businesses will restore their level of productivity before recruiting new staff. As a result, the unemployment rate has reached 8.5 % — higher than it was during the 2008–09 period — and is expected to continue to increase in 2014.

  • Business environment: While skills and innovation remain the strength of Belgian SMEs, more targeted measures are needed in other areas. Even though public authorities have taken many measures since the SBA came into force, entrepreneurship and internationalisation can be improved even more with coordinated, coherent actions with a wider impact. As was the case almost everywhere else in Europe, it was harder for Belgian SMEs than for larger businesses to get loans and Belgian stakeholders consider production and labour costs, the regulatory burden and the costs of international trade to be the main problems.

BULGARIA

  • State of the SMEs: In 2013, there were more than 300 000 SMEs in Bulgaria’s private business sector, employing some 1.4 million workers and producing about 11 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 61.4% of the economic value-added and 75.9% of employment in the private non-financial sector.

  • Recovery from the crisis: The 2008-09 crisis has hit Bulgaria’s SME sector hard, resulting in a decline in value added of 10 % between 2008 and 2009. Despite an external demand-driven recovery in subsequent years, in 2013 SMEs’ value added was still 4 percentage points below its pre-crisis level, while the value added of large firms was 8 percentage points higher. From 2008 to 2013, employment fell in both SMEs and large companies, although to a greater degree in the latter group: SMEs lost about 8 % of their workforce while large firms lost about 16 %. These diverging trends can be explained by the fact that the economic crisis has put strong pressure on firms to improve productivity and to diversify their markets, but SMEs were slower to adapt than larger firms.

  • Business environment: In 2013, Bulgaria’s SBA profile can be described as ‘catching up’: most areas score below or close to the EU average but have progressed in recent years. Bulgaria improved most in making its administration more responsive to the needs of SMEs, easing access to finance, and implementing the “think small first” principle. Moreover, commercial law was amended to provide a consistent legal framework for tackling arrears in payment and pursing debtors, while the government took urgent action to pay the public administration’s debts to the private sector. At the same time, there was a lack of consistent policy action on improving skills and innovation, and on simplifying the insolvency framework.

CROATIA

  • State of the SMEs: In 2013, there were more than 145 000 SMEs in Croatia’s private business sector, employing some 676 000 workers and producing about 10 billion EUR in value added to the economy. They represent 99.7% of all businesses and account for 54.1% of the economic value-added as well as 67.9% of employment in the private non-financial sector.

  • Recovery from the crisis: Croatia’s overall economic situation in 2013 remained fragile. SMEs’ value added decreased further for the fifth year in a row, partly as a result of deterioration in trade conditions and of weak internal demand. From 2008 to 2013, employment also fell in both SMEs and large companies, although to a greater degree in the latter group: SMEs lost about 15 % of their workforce while large firms lost about 19 %. The expectations for the future are of a modest growth in 2014, driven by exports and investments by the public sector.

  • Business environment: Croatia’s 2013 SBA profile shows mixed results, with most areas trailing the EU-average. Cumbersome framework conditions for entrepreneurial activity and the lack of stability and predictability of the legislative framework make it difficult to do business in Croatia. Administrative procedures need to be simplified further and administrative and judicial weaknesses need to be tackled. On the positive side, Croatia’s SME development strategy for the period 2013–20 has been adopted and it reflects well the priorities of the Small Business Act. More progress is expected in the future, as its implementation advances.

CYPRUS

  • State of the SMEs: In 2012, there were more than 40 000 SMEs in Cyprus’s private business sector, employing some 170 000 workers and producing about 6 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 76.2% of the economic value-added and 81.2% of employment in the private non-financial sector.

  • Recovery from the crisis: The SMEs in Cyprus suffered through two successive financial crises which led to a drastic decrease in the volume of business. In 2013, employment in SMEs and their added value decreased by -7% and -9% respectively, bringing overall losses in employment and added value between 2010 and 2013 to -13 % and -14 % respectively. As a result, many local SMEs in the construction and retail sectors closed down or saw their volume of business drastically decrease. On top of job losses of 29 %, SMEs in construction continued to accumulate losses, amounting to an overall 59 % decline in added value between 2010 and 2013.

  • Business environment: In these difficult circumstances, the government focused on measures to help local SMEs survive and foster a competitive business environment. Some policies announced in previous years were further delayed to give way to higher priorities. As a result, most of the measures implemented in 2013 focused on helping SMEs access external financing, grants or bank guarantees. Improvements were made in the area of responsive administration and reducing red tape but no real progress was achieved in other problematic SBA areas, such as the environment, state aid and public procurement.

The CZECH REPUBLIC

  • State of the SMEs: In 2013, there were more than 1 000 000 SMEs in the Czech Republic’s private business sector, employing some 2.4 million workers and producing about 45 billion EUR in value added to the economy. They represent 99.9% of all businesses and account for 54.1% of the economic value-added and 68.8% of employment in the private non-financial sector.

  • Recovery from the crisis: The Czech SMEs suffered severely from the economic crisis in 2008-09. The subsequent recovery was week, and in 2012 the Czech economy was back into recession. In 2013, SMEs’ value added was 11% below pre-crisis level. Nevertheless, SMEs’ employment showed a significant degree of stability and resilience, as the managers of small businesses were more reluctant to fire people than those of larger firms. Thus, in 2013 the number of people employed by SMEs stood 2% below 2008 figures, while that of large companies was much more volatile, at 7% below 2008 levels.

  • Business environment: Overall, the Czech Republic’s SBA profile combines some strong points and weaknesses. Recent Czech SME policy has been pragmatic and selective, with strong emphasis on developing skills and innovation and strengthening public procurement. The former is expected to boost the country’s long-term competitiveness, while the latter clearly targets facilitating the absorption of EU funds. Furthermore, new initiatives to improve access to finance were in preparation, responding to the most pressing needs businesses now have. However, there exist a number of SME policy areas where action is needed and where Czech performance trails the European average such as responsive administration and internationalisation.

DENMARK

  • State of the SMEs: In 2013, there were more than 212 000 SMEs in Denmark’s private business sector, employing some 1 045 000 workers and producing about 79 billion EUR in value added to the economy. They represent 99.7% of all businesses and account for 63.5% of the economic value-added and 65.5% of employment in the private non-financial sector.

  • Recovery from the crisis: The Danish SMEs were hit hard by the economic and financial crisis, losing 12% of their employees from 2008 to 2009. The subsequent recovery flattened in 2012, but economic growth returned in the last half of 2013. Although the recovery is still fragile, the growth in value added is expected to strengthen, driven by a rise in domestic demand and exports (mainly to Germany). At the same time, employment is still sluggish and both large and small businesses currently employ about 10 % fewer employees than they did in 2008. This is partly the result of a shift in the strategies of companies after the crisis, when they focused more on reducing costs, increasing productivity and outsourcing secondary activities. This resulted in a disconnect between the trend in turnover (growth) and the trend in employment (stagnation).

  • Business environment: Denmark has a very positive SBA profile and continues to offer a friendly business environment, coupled with a well-functioning and transparent institutional system and a public administration responsive to the needs of SMEs. The country’s particular strengths are a sophisticated business sector that is highly innovative and competitive on international markets.

ESTONIA

  • State of the SMEs: In 2013, there were more than 60 000 SMEs in Estonia’s private business sector, employing some 316 000 workers and producing about 7 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 74.4% of the economic value-added and 78.1% of employment in the private non-financial sector.

  • Recovery from the crisis: Estonia’s SMEs was hit particularly hard by the economic and financial crisis. Value added sharply in 2009, a contraction which was the result, on the one hand, of the deflation of the housing bubble and, on the other hand, of the virtual disappearance of export markets on which its economy was dependent. Nevertheless, Estonia was quick to recover and to strengthen its economy by making it more resistant to external shocks. SMEs’ value added grew between 2009 and 2013, regaining its pre-crisis level, due to a rapid rise in high value added exports by manufacturing firms. At the same time, the situation is less positive when looking at the recovery in employment, which, for SMEs, in 2013, was still 8 percentage points below its 2008 level. This should be seen in the context of the unsustainable employment growth that took place in the construction and retail trade sectors as a result of the credit bubble in the boom years preceding the crisis.

  • Business environment: Estonian SMEs benefit from a business-friendly environment and a strong and responsive administration, coupled with a sophisticated business culture and good framework conditions for innovation and internationalisation. At the same time, Estonia lags behind other EU countries in environment indicators and offers a less efficient insolvency framework. In addition, the generally recognised weaknesses of Estonian SMEs are their lack of qualified staff and engineers and their limited access to venture capital and other less traditional sources of financing.

FINLAND

  • State of the SMEs: In 2013, there were more than 222 000 SMEs in Finland’s private business sector, employing some 890 000 workers and producing about 51 billion EUR in value added to the economy. They represent 99.7% of all businesses and account for 59.4% of the economic value-added and 63.2% of employment in the private non-financial sector.

  • Recovery from the crisis: Finland’s SMEs have been slow to recover from the 2008 crisis, in particular in employment terms. While for value added, Finland´s SMEs have recovered well from the initial shock, and have even managed to expand their businesses to above pre-crisis levels, the SME employment still needs to return to 2008 levels. In 2013 the Finnish SMEs employed about 19 000 workers fewer than in 2008, (-2.1 %). Microenterprises were particularly hard hit and most struggled to bounce back from the initial shock. The job-less recovery of the Finnish SME sector is forecast to continue until 2015 at least. While value added is expected to grow in 2013-15 by 3.8 %, the number of SMEs is expected to fall by some 1 200 to less than 221 000 (-0.5 %). SME employment is forecast to decrease by around 10 000 to almost 880 000 (-1.2 %) with the bulk of losses shifting from microenterprises to small-sized businesses.

  • Business environment: Policy-wise, Finland´s SBA profile continues to be one of the strongest of all the EU-28 Member States. In seven SBA areas, the country is performing above the EU average. Finland performs in line with the EU average in two areas — state aid and public procurement, and environment. The country trails its EU peers in only one SBA policy area — single market. However, over the past six years, with the exception of responsive administration and skills and innovation, most SBA areas did not see any improvements. Progress in implementing the SBA has been moderate also in 2013. The areas that saw most progress in 2013 were access to finance and internationalisation. In terms of financing, a new ‘growth-financing programme’ was introduced to improve the availability of funding for growth companies. As regards future challenges, apart from the need to intervene in specific areas such as access to finance, public procurement and internationalisation, SME policies and actors need to be better coordinated across all policy. fields

FRANCE

  • State of the SMEs: In 2013, there were almost 2.6 million SMEs in France’s private business sector, employing some 9.5 million workers and producing about 534 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 58.7% of the economic value-added and 63% of employment in the private non-financial sector.

  • Recovery from the crisis: The SME sector in France was hit hard by the global recession in 2008-09 but experienced a quick recovery in 2010-11, followed by some ups and downs since then. Nevertheless, in 2013 the French economy seemed to have recovered to its pre-crisis level. SMEs in real estate, accommodation and food services performed particularly well, while those in the construction sector are trailing significantly behind.

  • Business environment: French SMEs continue to benefit from good framework conditions for trade, an administration that is becoming more responsive to the needs of small businesses, and good access to state aid and public procurement opportunities. Nevertheless, the country’s overall performance on the SBA grid continues to be hampered by below-average results when it comes to seizing the opportunities of the internal market and by a somewhat weaker culture of entrepreneurship.

GERMANY

  • State of the SMEs: In 2013, there were more than 2.2 million SMEs in Germany’s private business sector, employing some 16.7 million workers and producing about 792 billion EUR in value added to the economy. They represent 99.5% of all businesses and account for 54.4% of the economic value-added and 62.7% of employment in the private non-financial sector.

  • Recovery from the crisis: The performance of German SMEs since 2008 has been exceptional. Compared to most other Member States, they expanded throughout the crisis. Between 2009 and 2013 alone more than 160 000 additional SMEs were set up. During the same period, the number of jobs created in SMEs increased by more than 1.5 million to more than 16.7 million in 2013. Forecasts see this trend continuing until 2015 at least, thanks to a very favourable overall business environment.

  • Business environment: Germany features a very strong SBA profile, with the country well above the EU average in many of the main SBA areas relevant to the EU. Skills, innovation and the environment are its strongest areas. It outperforms its EU peers in access to finance, state aid and public procurement and second chance. If there is any weakness, it is entrepreneurship. The level of entrepreneurial activity remains relatively low and the number of new start-ups is falling. This is partly the flip side of the country’s overall economic success. Existing businesses can offer young, well qualified would-be entrepreneurs excellent employment conditions and career opportunities, making it risky and therefore less attractive to be self-employed. The low level of entrepreneurial and start-up activity is also a sign that Germany’s population is ageing faster than that of many other Member States. While the current economic and labour market situation seems to lessen the need to actively expand the entrepreneurial base, improving current conditions for start-ups is the key to ensuring that the situation remains positive in the long term.

GREECE

  • State of the SMEs: In 2013, there were more than 653 000 SMEs in Greece’s private business sector, employing some 1.75 million workers and producing about 34 billion EUR in value added to the economy. They represent 99.9% of all businesses and account for 72.1% of the economic value-added and 85.8% of employment in the private non-financial sector.

  • Recovery from the crisis: Greek SMEs have borne the brunt of the economic crisis in recent years. In the period 2008-2013, SME employment fell by 27 % or about 630 000 jobs. Almost one in four of the SMEs that existed in 2008 closed down, reducing the total volume of SME added value by a third of its 2008 levels. While the downward trend slowed down in 2013, it has not been fully reversed yet and is expected to continue throughout the years 2014 and 2015. Total SME employment is expected to fall by another 106 000, the number of SMEs may drop by another 40 000 and the forecasts are similar for the added value of SMEs. However, the combined effect of the impact of the reforms taking place and the recent more positive macroeconomic trends may result in a better situation than current forecasts suggest.

  • Business environment: Greece´s SBA policy profile remains weak. There is not a single area in which its performance is better than the EU average. It lags very much behind this average in three areas — second chance, access to finance and internationalisation. As was the case last year, there is the biggest gap between Greece and its EU counterparts in terms of access to finance. On a positive note, many indicators for the SME environment across the various SBA principle areas are improving. As a result, most areas improved between 2008 and 2013. Greece is in its sixth year of recession and the government has changed three times since 2009. In this fragile environment, it was very hard to implement policy.. Still, it has made a lot of progress in implementing the SBA since 2008. In 2013, this was especially the case in terms of access to finance, skills and innovation, the business environment, internationalisation and promoting entrepreneurship. For the future, efforts to improve access to finance, encourage innovation and skills acquisition and promote internationalisation must be redoubled. While responsive administration reforms are beginning to bear results, the dire state of public finances is negatively affecting SMEs.

HUNGARY

  • State of the SMEs: In 2013, there were more than 525 000 SMEs in Hungary’s private business sector, employing some 1.7 million workers and producing about 25 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 53.9% of the economic value-added and 70.8% of employment in the private non-financial sector.

  • Recovery from the crisis: At least until 2013, Hungary´s SME s sector did not manage to fully recover from the initial shock of the crisis in 2008. Since then, it has fluctuated at around 90 % of 2008 levels for all main aggregates: number of SMEs, employment and value added. The number of SMEs in the business economy dropped by 4 % between 2009 and 2013 with a net loss of more than 22 000 SMEs. On a net basis, SMEs shed some 32 500 jobs between 2009 and 2013, a decrease of 2 %, and gross value added shrank by as much as 6 % in the same period. Hungary´s SME sector is not expected to experience substantial growth for another two years. Value added is forecast to remain at 2013 levels until 2015, and expectations are that the number of SMEs will decrease by 1 %, and SME employment by almost 2 %, or more than 5 300 jobs. On the upside, micro firms are expected to fare better than small and medium-sized firms

  • Business environment: There has been little change in Hungary´s SBA profile as compared with last year. Problematic areas are entrepreneurship, second chance, skills and innovation, environment and internationalisation; for all of these, Hungary scores below the EU average. For single market, access to finance and responsive administration, Hungary performs in line with the average, and for state aid and public procurement, it even scores above it. While the overall profile as such has not improved much as compared with last year, the data suggests real progress over the past six years in about half of the SBA principle areas. Against this background, Hungary has made continuous efforts in recent years to improve its business environment. The areas that saw most policy activity and the greatest number of new measures over the period 2013-14 were entrepreneurship and responsive administration. The growth potential of the Hungarian economy is expected to improve, but only moderately. To a large extent, this is due to a business environment characterised by high administrative burdens, regulatory volatility, and limited competition in major non-tradable sectors.

IRELAND

  • State of the SMEs: In 2013, there were more than 144 000 SMEs in Ireland’s private business sector, employing some 762 000 workers and producing about 43 billion EUR in value added to the economy. They represent 99.7% of all businesses and account for 47.8% of the economic value-added and 70.1% of employment in the private non-financial sector.

  • Recovery from the crisis: The Irish economy has not yet recovered fully from the 2008-09 crisis, but since 2011 there have been positive signs of growth. SMEs’ high dependence on domestic demand has made them very vulnerable, and in 2008-13 they underperformed large enterprises. Thus, in 2008 and 2009, SME’s value added dropped by 12 % and 13 % respectively, followed by a recovery of 10 % from 2010 to 2013. By contrast, large firms’ value added contracted by only 2 % between 2008 and 2009, and grew by 4 % in 2009 and 10 % from 2010 to 2013. Given this background, the overall economic situation for Irish SMEs in 2013 is one of continued fragility accompanied by relatively modest growth and performance.

  • Business environment: Ireland has a very positive SBA profile, with all but one SBA principle scoring above the average. It offers a friendly business environment, supported by an efficient administration, responsive to the needs of businesses, and an innovative and entrepreneurial business culture. To further improve its SME profile, Ireland will need to expand access to finance for SMEs, further mainstream the ‘think small first’ principle into policy-making, and better support businesses in exporting within the single market and to third countries.

ITALY

  • State of the SMEs: In 2013, there were more than 3.7 million SMEs in Italy’s private business sector, employing some 11.5 million workers and producing about 459 billion EUR in value added to the economy. They represent 99.9% of all businesses and account for 69.5% of the economic value-added and 79.6% of employment in the private non-financial sector.

  • Recovery from the crisis: The Italian economy has experienced two consecutive recessions, characterised by a decline in exports between 2008 and 2009, and a decline in domestic demand from 2011 onwards, both of which hit SMEs harder than larger enterprises. The third quarter of 2013 marked a halt in the decline in GDP since the summer of 2011. Business confidence has improved. About one third of firms believe they have withstood the most difficult economic phase. Nevertheless, it remains to be seen if SME performance has improved. The difficult economic circumstances made it harder for them to obtain financing from banks, capital markets or other credit suppliers. As a result, the number of SMEs in the business economy fell by 5 % from 2008 to 2013. The value added SMEs generated also decreased sharply, by 15 %, between 2008 and 2009, followed by a protracted recovery ever since.

  • Business environment: In 2013 the Italian Government took action to foster entrepreneurship and improve access to finance, introducing new measures to reduce labour costs, support female and young entrepreneurship, ease cash flow constraints on SMEs by paying public administration debts, and allowing the payment of taxes to be rescheduled and paid by instalment. Despite this, Italy continues to have an SBA profile that is below the EU average. Its strengths are the good export performance of its small and medium-sized manufacturing enterprises, in particular the ones from the north-eastern regions which had effective export strategies. At the same time, Italy needs to catch up and improve its performance in many other areas, in particular improving SMEs’ access to finance, cutting down red tape, making it easier for smaller enterprises to participate in public procurement and reforming its insolvency framework.

LATVIA

  • State of the SMEs: In 2013, there were more than 87 000 SMEs in Latvia’s private business sector, employing some 457 000 workers and producing about 7 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 71.6% of the economic value-added and 78.5% of employment in the private non-financial sector.

  • Recovery from the crisis: The Latvian businesses were hard hit by the crisis, as observed by the falls in employment and value added recorded between 2008 and 2013, of 13 % and 6 % in SMEs, and of 16 % and 5 % respectively, in large enterprises. However, mirroring the developments in other Baltic states, Latvia’s SMEs started to grow again in post-crisis years at high growth rates. Their expansion continued in the first half of 2013, with a value added growth and employment growth of 6.8% and 4% respectively. This good economic performance is mainly due to growth in exports and domestic demand.

  • Business environment: Latvian SMEs continue to benefit from good framework conditions for trade, an administration that is very responsive to the needs of small businesses, and good access to state aid and public procurement opportunities. Moreover, Latvia’s SBA profile show improvement across the board and performance above the EU average in all areas except environment and skills and innovation. In the latter, it still trails significantly but recent policy efforts to improve the situation should show some positive effects in the future.

LITHUANIA

  • State of the SMEs: In 2013, there were more than 134 000 SMEs in Lithuania’s private business sector, employing some 654 000 workers and producing about 9 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 68.8% of the economic value-added and 76.5% of employment in the private non-financial sector.

  • Recovery from the crisis: The recent development of the Lithuanian SME sector can be summed up as follows. First, a near collapse between 2008 and 2009, with a year-on-year decline in the number of SMEs by 20 % (-28 000), the number of employees by 17 % (-125 000) and gross added value by 35 %. Then, between 2009 and 2013, a steady, though not a complete, recovery. The recovery is forecast to continue in 2014 and 2015. By 2015, the Lithuanian SME sector is expected to have passed the pre-crisis mark for the number of firms (+2 %). Between 2013 and 2015, it will increase by 8 000 SMEs to a total of more than 142 000. Added value, which recovered much better, is expected to through to 2015, when it will have topped the 2008 levels by 25 %. Employment will continue to recover more slowly. Still, by 2015 Lithuanian SMEs are expected to have created 48 000 new jobs in net terms, to reach a total of 701 000 (or 94 % of pre-crisis levels). Micro-firms will recover best.

  • Business environment: Lithuania continues to have a very good Small Business Act (SBA) profile, scoring above the EU average in entrepreneurship, responsive administration, state aid and public procurement, access to finance and the environment. Its performance was average in three areas. Its only weak spot is skills and innovation, in which it lags behind the EU average. During the economic crisis period of 2008–13, Lithuania managed to improve conditions in almost all policy areas. Since 2008, it has also made considerable progress in policy implementation in many areas the SBA covers. In particular, it is now easier for many types of SMEs to access finance. The country continued to make considerable progress in implementing the SBA in 2013 by putting in place policy measures addressing nine out of the 10 policy areas under the SBA, particularly in terms of responsive administration and the ‘think small first’ principle. With regard to future SBA implementation, the biggest problems for SMEs remain getting access to finance, improving the skills and innovation base and making it possible for business re-starters to get a second chance.

LUXEMBOURG

  • State of the SMEs: In 2013, there were more than 29 000 SMEs in Luxembourg’s private business sector, employing some 164 000 workers and producing about 14 billion EUR in value added to the economy. They represent 99.5% of all businesses and account for 67.9% of the economic value-added and 66.6% of employment in the private non-financial sector.

  • Recovery from the crisis: The overall economic situation for Luxembourg´s SMEs in 2013 was good. The mood was more upbeat than in the rest of Europe, thus breaking the trend of the last two years. In line with the recovery of the Luxembourg economy, recent estimated data show strong employment growth for SMEs and large enterprises (LEs) between 2008 and 2013. Employment in SMEs increased by 4.5 % and in LEs by 8 %. Furthermore, value added generated by SMEs increased by about 4 % during this period. However, value added generated by LEs decreased by more than 8 %. The difference in performance is largely explained by the significant fall in value added in the manufacturing sector which is dominated by large enterprises.

  • Business environment: Luxembourg’s overall business climate is SME-friendly and its SBA profile for 2013 is largely in line with the EU average, apart from some areas in which it clearly outperforms its EU peers. These areas are in particular access to finance, internationalisation, internal market and skills and innovation. Despite the change of government and the ensuing transition period of status-quo in implementing new policy, Luxembourg shows steady progress in its SBA profile. With only very few measures implemented in 2013, the newly announced SME action plan is eagerly awaited.

MALTA

  • State of the SMEs: In 2013, there were more than 30 000 SMEs in Malta’s private business sector, employing some 98 000 workers and producing about 2 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 73.2% of the economic value-added and 78% of employment in the private non-financial sector.

  • Recovery from the crisis: Malta´s economy has weathered the crisis of recent years fairly well, and so too did the Maltese SME sector. Over the period 2008-13, SMEs in the business economy grew continuously. The number of SMEs increased by 4 800 (or almost 20 %) to a total of 28 905 firms, and value added grew at a rate of 16.7 %. SME employment also expanded during 2008-13, but slightly less forcefully. Between 2008 and 2013, SMEs added almost 7 000 net jobs to reach a total of some 98 000, an increase of 7.7 % over the entire period. Preliminary estimations for 2015 indicate an increase of some 1500 new SMEs in Malta with a net employment increase of almost 4 000. Value added is also set to expand.

  • Business environment: The expansion of Malta´s SME sector took place against the backdrop of an SBA profile for the country that has not changed much over the past year. It is a mix of areas with some solid performances, led by the single market indicator where the country is scoring above the EU average. As 2013 was an election year, legislative activity slowed down significantly. In total, Malta implemented only five significant policy measures addressing 3 of the 10 SBA policy areas in 2013. The positive trends in SME employment and value added should not give rise to complacency. On the contrary, shortcomings in the various SBA areas, in particular ‘think small first’, skills and innovation, and internationalisation, should be tackled with swift action, for example by full implementation of all provisions of Malta’s Small Business Act of 2011.

NETHERLANDS

  • State of the SMEs: In 2013, there were more than 802 000 SMEs in Netherland’s private business sector, employing some 3.5 million workers and producing about 189 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 61.6% of the economic value-added and 67.3% of employment in the private non-financial sector.

  • Recovery from the crisis: The problems of the Dutch economy continued to be marked by stagnating aggregate demand due to a high level of private household indebtedness in combination with a still distressed housing market. These problems weighed on the domestic SME sector, as SMEs are more dependent on local demand than larger firms. SME employment has decreased since 2011 and slipped by another 23000 jobs in 2013. Although this loss was limited in absolute terms and represented more a stagnation in relative terms, it nonetheless shows that the Dutch SME sector finds it difficult to follow the emerging recovery in other Member States. On a positive note, despite a slight decline in 2013, the number of SMEs remained at a very high level. The outlook for 2014 and 2015 is positive pointing at a recovery in terms of job creation and value added after years of stagnation. However, the very modest nature of this recovery provides no reason for complacency in terms of SBA implementation

  • Business environment: The business environment on offer to Dutch SMEs is marked by particularly favourable conditions in entrepreneurship, second chance, responsive administration and single market. On the downside, state aid and public procurement and, in particular, access to finance are the two areas where the Netherlands trailed the EU average. Apart from the stagnating growth, access to finance remains the single most important challenge to Dutch SMEs and the government will have to continue addressing this challenge. Overall, the government was very active in 2013 in further improving the business environment. It implemented a substantial number of policy measures addressing 8 out of the 10 policy areas under the Small Business Act. The areas with the most significant progress in 2013 were responsive administration (creation and major reform of three key organisations) and state aid and public procurement (the new Procurement Act).

POLAND

  • State of the SMEs: In 2013, there were more than 1.47 million SMEs in Poland’s private business sector, employing some 5.6 million workers and producing about 94 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 50% of the economic value-added and 68.8% of employment in the private non-financial sector.

  • Recovery from the crisis: The overall economic situation of Polish SMEs was stable in 2013. The stagnation in all three key SME indicators mirrored the country’s macroeconomic performance: GDP rose by 1.6 %, while inflation, unemployment and the EUR/PLN exchange rate remained largely unchanged. SMEs in service sectors performed very well and managed to recoup 2008-09 loses, in particular the ones operating in retail trade, transportation and storage, and professional and administrative activities. At the same time, the economic value added of SMEs operating in manufacturing and wholesale trade remains below pre-crisis levels.

  • Business environment: Poland has been successful in offering better than average access to finance. Otherwise, the SBA profile shows performance in line with the EU average in most areas: entrepreneurship, responsive administration, state aid and public procurement and environment. Government action in 2013 was pragmatic, focusing new policy measures on ‘low investment—high return’ areas: responsive administration, including e-government services, and public procurement (particularly that geared to aiding the absorption of financing earmarked for Poland in the Multiannual Financial Framework). Key challenges include simplifying burdensome regulations (the ‘think small first’ principle is neither systematically implemented nor sufficiently well integrated into mainstream policy action) and fostering the development of skills and capacity to innovate. Furthermore, Poland needs to improve SMEs’ access to the single market and to non-EU markets.

PORTUGAL

  • State of the SMEs: In 2013, there were more than 774 000 SMEs in Portugal’s private business sector, employing some 2.26 million workers and producing about 44 billion EUR in value added to the economy. They represent 99.9% of all businesses and account for 66.5% of the economic value-added and 78.7% of employment in the private non-financial sector.

  • Recovery from the crisis: Between 2008 and 2013 Portuguese SMEs had to shed a total of more than 350,000 jobs, a reduction of 13.5% of the total SME workforce in 2008. Value-added, as well as the total number of SME also declined, although the latter to a lesser extent. The Portuguese economy has not yet recovered from the crisis but incipient signs of improvement over the last three quarters of 2013 suggest a brighter outlook. Projections point to a modest recovery of GDP growth in 2014 and 2015. Nevertheless, a number of structural constraints will continue to hold back the Portuguese economy’s growth potential in the near term. These are, in particular, the high indebtedness of the public and private sector, the active population’s relative lack of qualifications and long-term unemployment in some parts of the labour market.

  • Business environment: Portugal’s SBA profile remained in line with the EU average in 2013. By far the best performing SBA area was entrepreneurship, as the Portuguese economy is characterised by intense and high-quality entrepreneurial activity that is underpinned by a remarkably positive entrepreneurial culture. At the other end of the scale, the still limited access to finance and public procurement is a significant obstacle to small business growth. In 2013, the government introduced policy measures offering guarantees and risk capital to SMEs and took action on late payments, thereby helping to address the scarcity of finance in the economy.

ROMANIA

  • State of the SMEs: In 2013, there were more than 426 000 SMEs in Romania’s private business sector, employing some 2.7 million workers and producing about 26 billion EUR in value added to the economy. They represent 99.7% of all businesses and account for 49.4% of the economic value-added and 66.7% of employment in the private non-financial sector.

  • Recovery from the crisis: The economic crisis has taken its toll on the business sector. SMEs in particular were badly affected, losing 16% of their workforce 25% of their value added between 2008 and 2010. The post-crisis recovery set in late, with modest growth in 2011 and 2012. However, growth picked up in 2013, year which experienced the highest rate of economic growth in the last five years. In general, large enterprises appear to recover from the crisis much faster than SMEs. This is because Romanian SMEs are less competitive, less innovative and have a weaker technological base than their larger counterparts.

  • Business environment: Romania had a ‘catching up’ profile in 2013, with most areas scoring below average, but some progress in the past few years. Romania performs above average only in entrepreneurship, albeit by a large margin. The lack of innovation and a shortage of specialised skilled labour are the main obstacles to the business sector’s competitiveness. Poor administrative capacity continues to hamper the growth of business.

SLOVAKIA

  • State of the SMEs: In 2013, there were more than 391 000 SMEs in Slovakia’s private business sector, employing some 1 million workers and producing about 23 billion EUR in value added to the economy. They represent 99.9% of all businesses and account for 64.6% of the economic value-added and 72.2% of employment in the private non-financial sector.

  • Recovery from the crisis: The Slovakian economy was not spared from the economic crisis and suffered a 4.9% fall in real GDP between 2008 and 2009. Yet, recovery set in just a year later and thanks to growth of 3% in the following year, Slovakias economy managed to exceed its pre-crisis level in 2011. However, this upward trend is slowing, with economic growth down to 0.8% in 2013. The signs of recovery in GDP growth are also reflected in the increase in value added generated by SMEs and large firms between 2010 and 2013, with SMEs in transportation and storage sector performing particularly well.

  • Business environment: Overall, in 2103 Slovakia’s SBA profile was mixed, with comparative strengths in environment, access to finance and public procurement and weaknesses in internationalisation and second chance. The Government took actions to improve access to finance for SMEs and make the administration more responsive to the needs of businesses. At the same time, SMEs could benefit if the principle of ‘think small first’ were implemented more widely in decision-making, insolvency procedures were streamlined and contracts better enforced.

SLOVENIA

  • State of the SMEs: In 2013, there were more than 115 000 SMEs in Slovenia’s private business sector, employing some 405 000 workers and producing about 11 billion EUR in value added to the economy. They represent 99.8% of all businesses and account for 63% of the economic value-added and 72.7% of employment in the private non-financial sector.

  • Recovery from the crisis: The difficult overall economic situation since 2008 has had a negative impact on the development of the SME sector. While the number of SMEs actually grew by more than 8 000 to a total of 115 000 in 2013 (an increase of more than 8 %), SME employment and value added declined in the same period. SMEs shed some 41 000 jobs during the period bringing total SME employment down to less than 406 000 in 2013 (-9 %). The overall economic outlook for 2014 in Slovenia is better than for previous years. However, forecasts for Slovenia´s SME sector in the 2013-15 period are less optimistic. The number of SMEs is set to decline by almost 4 000 (-3.4 %), and SME employment by almost 16 000 (-3.9 %); only value added is expected to grow slightly (1.2 %), due mainly to micro- and small firms.

  • Business environment: Overall, Slovenia’s SBA performance is balanced in most of the SBA principle areas, and Slovenia´s score is in line with the EU average. Environment was the one area where the country stood out from the EU average, while there were two — responsive administration and access to finance — where Slovenia still lagged behind the EU. The most remarkable development is the drastic deterioration in conditions relating to access to finance in 2008-13. It should be noted that Slovenia was among the first EU countries to adopt a national strategy to implement the SBA. The strategy and action plans were very ambitious from the start, and have been reviewed by the government on a regular basis. Besides better coordination of SME policy and more systematic implementation of the ‘think small first’ principle, particularly the SME test, more efforts are required to help Slovenian SMEs improve their access to finance, a crucial problem for most of them.

SPAIN

  • State of the SMEs: In 2013, there were more than 2.25 million SMEs in Spain’s private business sector, employing some 7.6 million workers and producing about 282 billion EUR in value added to the economy. They represent 99.9% of all businesses and account for 64.2% of the economic value-added and 73.4% of employment in the private non-financial sector.

  • Recovery from the crisis: The Spanish economy is emerging from a deep and prolonged recession that has engulfed its economy since 2008. The incipient recovery was driven by a boom in exports, which grew by 5.2 % in 2013, reaching the record level of EUR 234 billion. The boost in export performance is partly due to the labour reforms that helped raise productivity and reduce unit labour costs, resulting in a positive effect on the competitiveness of firms. However, the recovery is still fragile and significantly more effort is needed to create jobs. SMEs value added and employment levels in 2013 were still way below their 2008 peak, and a full return to pre-recession levels is still not within sight.

  • Business environment: On the public policy side, Spain has made important progress in improving its insolvency framework, in internationalisation and in reducing red tape. In addition, various measures were implemented in 2013 with the aim of giving more flexibility and dynamism to the labour market, facilitating access to finance and promoting entrepreneurship culture. Despite these initiatives, the country’s performance across the SBA principles continues to be below the EU average. There is broad consensus on the need to continue supporting SMEs and the self-employed, and more policy initiatives are expected, particularly in areas such as access to finance, administrative simplification, research and development, competitiveness improvement and knowledge transfer.

SWEDEN

  • State of the SMEs: In 2013, there were more than 665 000 SMEs in Sweden’s private business sector, employing some 2 million workers and producing about 121 billion EUR in value added to the economy. They represent 99.9% of all businesses and account for 59% of the economic value-added and 65.8% of employment in the private non-financial sector.

  • Recovery from the crisis: The Swedish economy was hit hard by the crisis, and real GDP dropped by 5 % between 2008 and 2009. 2010 saw a swift recovery, but over the following two years, growth slowed again. In the second half of 2013, the trend was reversed as economic sentiment improved for the first time since 2011, due largely to the domestic stimulus in the form of tax decreases, which benefited households and generated increased consumption. Between 2009 and 2013 SMEs and large firms grew more or less at the same speed, and value added significantly surpassed pre-crisis levels in 2013.

  • Business environment: Sweden provides one of the most favourable business environments for SMEs, with particular strengths in access to finance, skills and innovation and internationalisation. In 2013, Sweden adopted or implemented 17 policy measures, addressing eight of the ten policy areas under the Small Business Act (SBA). Overall progress in implementing the SBA over the reference period has been moderate, partly because Sweden already had very good results in most SBA areas. Seven principles performed above the EU average in 2013.

UNITED KINGDOM

  • State of the SMEs: In 2013, there were more than 1.72 million SMEs in UK’s private business sector, employing some 9.5 million workers and producing about 531 billion EUR in value added to the economy. They represent 99.7% of all businesses and account for 51% of the economic value-added and 53.3% of employment in the private non-financial sector.

  • Recovery from the crisis: Since 2010, the UK´s SMEs have added some 700 000 new jobs, bringing total employment in the sector to almost 10 million in 2013, a 7% increase. The number of SMEs rose in the same period by some 130000 to approximately 1.8 million. This rebound was helped by a business environment which is among the most conducive for SMEs in the entire EU. The good business environment is expected to enhance the expansion of the UK SME sector in 2014 and 2015 as well, with all important indicators — the number of enterprises, employment and value-added — set to increase.

  • Business environment: In five of the SBA areas the United Kingdom ranked above the EU average. Second chance, responsive administration and internationalisation are particular strengths, but the UK also outperforms the EU in skills & innovation and environment. There are, however, also areas with room for improvement. UK SMEs tend to get less involved in the public procurement market, both within the UK and elsewhere in the EU. Recent government initiatives to make public tenders more accessible to SMEs are expected to change this. Increased efforts to help UK SMEs seize the opportunities of the single market and of non-EU markets also appear to be useful. Increasing exports by SMEs and other companies, especially in the manufacturing sector, has been declared a policy priority, but there has been relatively little follow-up by way of specific support measures. While access to finance is more difficult in many other EU Member States, there are many UK SMEs which find it hard to get financing, in particular when it comes to bank lending. Yet, access to finance has been central in national SBA policy in recent years.

1 :

Adopted in 2008 and revised in 2011, the SBA aims to create a level playing field for SMEs throughout the EU and improve the administrative and legal environment to allow these enterprises to unleash their full potential to create jobs and growth. The Small Business Act has a strong governance structure, with business organizations and member states governments at the frontline.

2 :

The information concerning the recent policy measures adopted by the Member States was compiled by a network of SME experts managed by CARSA Spain and was validated by government representatives of the Member States and the participating countries. The factsheets were prepared by the European Commission's Directorate-General for Enterprise and Industry, in conjunction with the Joint Research Centre.

3 :

The figures presented in the trend charts represent estimates for 2012-2015, based on 2008-2011 figures from the Structural Business Statistics Database (Eurostat). The estimates were produced by DIW Econ. The data cover the 'business economy' which includes industry, construction, trade, and services (NACE Rev. 2 Sections B to J, L, M and N). The data does not cover agriculture, forestry, or fishing businesses or the largely non-market services such as education and health.

4 :

The value-added of the SME sector is used as a proxy for measuring its contribution to gross domestic product (GDP). GDP adds together the value of output produced by each of the productive sectors in the economy, using the concept of value-added. The value-added is the increase in the value of a product at each successive stage of the production process. This approach avoids the problem of double-counting of the value of intermediate inputs.


Side Bar