SMEs & the Recovery: Embodying the ‘Think Small First’ principle

The COVID-19 pandemic has brought momentum for a SME-centred EU policy approach. We must ensure that this drive is here to stay, argues Martina Dlabajová.
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By Martina Dlabajová

Martina Dlabajová (CZ, RE) is co-chair of Parliament’s Intergroup on Small and Medium-Sized Enterprises

11 Jun 2021

Following several tough rounds of negotiation between the three EU Institutions, agreement on a COVID-19 certificate was finally achieved late last month. SMEs, many of whose operations are based on cross-border movement can welcome the deal as another genuine milestone in Europe’s path to recovery.

In the first five months of 2021, the EU’s co-legislators have approved several sectorial programmes under the 2021-27 Multiannual Financial Framework which, coupled with the NextGenerationEU, will constitute the most formidable stimulus package ever financed in Europe, totalling €1.8tn.

It is no wonder that a newly infused optimism has permeated our economy, and according to Eurostat, at the end of March, positive economic sentiment in the EU had surpassed December 2020 levels.

“Resuming business might not bring the required income at sufficient pace to escape an indebtedness trap, where the recovery effort just simply risks deferring potential bankruptcies or aggressive purchases”

Member State’s National Recovery Plans will need to operate in synergy with the higher ambition of making this recovery a historical economic and societal towards a greener, digital and more resilient Europe. It’s worth repeating that SMEs are the backbone of our economy: our success as Europeans should not ignore the fact that we need to make SMEs the core focus of this exercise.

European and national policymakers therefore have both the responsibility of ensuring that each measure does not hamper competition between SMEs and bigger companies and, at the same time, tackle the structural deficiencies that pre-dated the COVID-19 pandemic.

As an MEP, I believe that there are promising signs that the ‘Think Small First’ principle at EU level is finally being embodied in the way we look at the overarching design of our ambitions. Over recent months, numerous initiatives have progressed this way; now it’s time to implement them.

First of all, the issue of liquidity. Both the European Commission and EU Member States set up rapid relief measures to help SMEs survive the crisis. It was an excellent response from the EU, focused on supporting SMEs directly or assisting Member States to helping them, as quickly as possible.

What is further needed is cooperation between the Commission and Member States to closely monitor market trends to ensure the end to the relief instruments is seamless. Resuming business might not bring the required income at sufficient pace to escape an indebtedness trap, where the recovery effort just simply risks deferring potential bankruptcies or aggressive purchases.

Secondly, turning the innovation drive kicked off by the pandemic into a solid, permanent SME-friendly innovation framework. We witnessed an incredible response from small innovators replying to the multiple Horizon 2020 calls that were launched last year. Many small manufacturers invested rapidly converting their production to meet the new surging demands for goods, displaying true entrepreneurship.

I am glad that, under the current Horizon Europe framework, the newly shaped European Innovation Council (EIC) budget has earmarked 70 percent for SMEs. What is essential is that SME representation be included in the process, to ensure that information truly reaches those SMEs unfamiliar with EU project participation. 

Furthermore, national authorities should ensure that innovation strategies combining multiple sources of funding and different rules are framed in the simplest way possible for SMEs, starting with SME-friendly digital portals.

Third, a solid SME strategy needs to ensure a smooth transition between recovery and long-term activities. This is why we need to provide strong SME inclusiveness in all policy actions guiding the digital and green transformation.

I am pleased that the European Industrial Strategy, updated by the Commission in May, takes this need into account and recognises that - in any sector - regulation and financial support need to take account of the SME perspective.

“A solid SME strategy needs to ensure a smooth transition between recovery and long-term activities. This is why we need to provide strong SME inclusiveness in all policy actions guiding the digital and green transformation”

Three elements are particularly relevant. First, the importance of tailored advice, such as the European Digital Innovation Hubs in the digital realm, and the European Enterprise Network Sustainability advisors in the environmental one.

Second, the necessity of enforcing fair competition in the ecommerce market to the benefit of small sellers and third, the promotion of access to major industrial initiatives in Europe, such as European Alliances and Important Projects of Common European interest (IPCEIs) and abroad, with SME-chapters to be negotiated within trade agreements.

If this pandemic has brought momentum for a SME-centred policy approach, then we need to make sure that this drive is here to stay. I am glad that what started as my amendment on a yearly plenary debate on the State of the SME Union, is now a reality on our plenary Agenda for next June and hopefully for all future years. 

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