The EU will be more competitive by supporting small and medium-sized enterprises

During its February plenary session, the European Economic and Social Committee (EESC) took a firm stance in favour of creating a better business environment for Europe’s SMEs: EU legislation must “think small first” and cut superfluous red tape.

Competitiveness must be a priority for Europe and so the Union must focus on small and medium-sized enterprises (SMEs), supporting them by means of strategies and specific measures.

The EESC’s opinion adopted during this plenary session throws its support behind the SME relief package proposed by the European Commission but stresses that measures must be both tangible and proportionate.

The SME relief package is an attempt to put SMEs at the heart of European legislation, strategies, discussions and actions in support of competitiveness, said rapporteur Alena Mastantuono. European Commission president Ursula von der Leyen’s newfound focus on SMEs is a good start to the end of the current mandate. SME welfare is now finally on the agenda, and it is there to stay.

Currently, SMEs are the most important component of European industry and economy. There are 24 million European SMEs in the EU, and they represent 99% of all businesses and provide two-thirds of jobs in the EU private sector. However, SMEs face major uncertainties, supply constraints, labour shortages and unfair competition.

The EESC believes that the priority must be ensuring easier access to finance, whether through grants, loans or other financial instruments. Tailored assistance must be available, and there must be a clear set of measures to encourage SMEs to be responsible when accessing EU funding.

More should be done to simplify and reduce the VAT burden on cross-border activities and to remove other long-term barriers. Businesses still face a considerable burden due to fragmentation across the single market and different national rules on goods and services.

Last but not least, upholding health and safety at work is crucial. The measures enabling European businesses to access finance and create favourable conditions must go hand in hand with others intended to make it easier to abide by legislation on health, safety and environmental protection. This is important as it will help avoid accidents at work and work-related health damage.

The creation of a favourable business environment must not come at the cost of social and human rights, said co-rapporteur Angelo Pagliara. SMEs should be encouraged to conduct their business responsibly by means of specific conditionalities governing access to public procurement, funds and incentives.

Background

The European Commission adopted the SME relief package in September 2023. It comprises 19 proposals, including a regulation on late payments and a directive on tax simplification for SMEs.

The SME relief package is intended to provide relief in the short term, but also to boost SME competitiveness and resilience in the long term, fostering a fair and SME-friendly business environment.

The main set of measures addresses access to finance and a skilled workforce, and the support needed by SMEs throughout their business lifecycle.