How can simplification work for SMEs and Europe’s competitiveness?

Small and medium-sized enterprises (SMEs) represent more than 99% of EU businesses and are fundamental to Europe’s employment, innovation and regional development. Yet they face growing regulatory complexity, rising compliance costs and fragmented implementation of EU rules across Member States. 

The EESC Opinion "SMEs and simplification: how the simplification agenda can deliver for SMEs", requested by the Irish Presidency of the Council of the EU, comes at a crucial moment. The EU has already placed competitiveness and simplification high on its political agenda, but what businesses expect is delivery and turning political commitments into tangible improvements in companies’ day-to-day operations. The next phase of simplification should therefore evolve into a comprehensive EU strategy for SME competitiveness, addressing not only regulatory burdens but also the wider conditions SMEs need to invest, innovate and grow.

For the EESC Employers' Group one of the key priorities is stronger application of the “Think Small First” principle throughout the entire legislative cycle. SME and competitiveness checks should be systematic and should take into account the cumulative impact of EU legislation. A specific requirement may appear manageable if singled out, but the combined effect of multiple reporting and compliance obligations can place a disproportionate burden on smaller companies with limited administrative resources.

We therefore strongly support the objective of reducing administrative burdens for SMEs by at least 35%. This target should be accompanied by measurable indicators, annual monitoring and transparent reporting. But simplification should also be preventive. The principle of “simplicity by design” should be embedded in EU policymaking so that unnecessary complexity is avoided from the outset. Rules should be clear, proportionate, predictable and workable in practice, while effective implementation of existing legislation should take precedence, wherever possible, over introducing additional requirements.

In this context, digitalisation offers major opportunities. SMEs should not have to submit the same information repeatedly to different authorities. Interoperable digital public services and full implementation of the once-only principle can significantly reduce compliance costs. AI-based tools can further help companies identify applicable obligations, reporting deadlines and available support. Modern, efficient and business-friendly public administrations are an essential part of successful simplification.

Beyond simplification

However, SME competitiveness goes well beyond regulatory compliance. Easier access to finance, innovation and skills are equally important. SMEs need better access to venture and growth capital and EU funding programmes, while late payments must be addressed as a persistent threat to their liquidity. Simplified access to vocational education, apprenticeships, reskilling and lifelong learning, including digital, AI and cybersecurity skills, is also essential if European companies are to innovate and grow.

The Single Market must remain at the heart of this agenda. Divergent implementation and administrative practices across Member States continue to create unnecessary barriers to cross-border business. Simplification should therefore contribute to a more integrated Single Market in which companies can operate and scale up more easily.

The international dimension

At the same time, we give particular importance to the international dimension of SME competitiveness. Trade agreements, EU economic diplomacy and export support instruments should make it easier for SMEs to access third-country markets and participate in international value chains. But openness must go hand in hand with a level playing field. European companies competing according to high EU standards need fair conditions of competition vis-à-vis third-country operators. Simplified customs procedures, digital trade documentation, better regulatory guidance and stronger export support can help more European SMEs seize opportunities beyond the Single Market.

Ultimately, the success of the simplification agenda should be measured by its impact on businesses: does it give SMEs more time and resources to invest, innovate, grow and compete? Making this happen would turn simplification from a political commitment into a genuine driver of European competitiveness.

By Kinga Grafa, EESC Employers’ Group member and member of the Study Group for Opinion INT/1130 SMEs & Simplification: How the simplification agenda can deliver for SMEs.