EU SME week: Strengthening SMEs for Europe’s recovery

Europe’s economy will only successfully manage future shocks if its SMEs are resilient and fit for the future, argues Othmar Karas
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By Othmar Karas

Othmar Karas (AT, EPP) is a European Parliament Vice-President and member of Parliament’s bureau

23 Nov 2021

Small- and medium-sized enterprises are at the heart of Europe’s economy and our answers to the pandemic and beyond. They represent around 99 percent of all EU companies and provide two thirds of all jobs and account for more than half of Europe’s GDP. Ahead of this year’s European SME Week and SME Assembly in Slovenia, on 15-17 November, it is worth looking back on what has been achieved and what still needs to be done. 

The COVID-19 pandemic has shown that we can manage even the most difficult challenges if the political will is there for working together. SMEs showed their ingenuity and their strong will, reacting with courage and rationality.

One in five SMEs started trading in new goods, such as hand sanitisers, masks and air filters or adapted their services. Based on the success stories of the past, we must uphold this spirit when creating better regulatory frameworks to continue to support Europe’s SMEs during challenging times. 

“We must align skills with changing labour market needs by fostering training programmes and enhancing continuous learning. It is evident that any one-size-fits-all programme is unlikely to work”

Having founded the non-partisan SME-Intergroup in the European Parliament in 2004, a better regulatory environment for SMEs in Europe will always be a matter close to my heart. As a member of Parliament’s bureau, committees on economic affairs and on industry, as well as being vice-Chair of the subcommittee on tax matters and Chair of the long-established dialogue platform, European Parliamentary Financial Services Forum, I will continue to ensure that SME-related issues are properly heard. 

Since the outbreak of the pandemic, we have come a long way and have shown that we can act quickly when we act together. In the European Union, we adopted the biggest EU ‘investment package’ of all time – the ‘NextGenerationEU’ recovery plan and the long-term EU budget, together worth more than €2 trillion. We have also agreed the first joint bond issuance of around €800bn and have complemented the EU investment programmes with the first rule of law conditionality mechanism.

We have set ourselves ambitious climate targets as part of the ‘Green Deal’. And, in view of their implementation, the European Commission has proposed the comprehensive ‘Fit-for-55’ package and strengthened its sustainable finance and industrial strategies. 

At the same time, we reacted immediately to help SMEs cope with the crisis. All available EU funding was made available, state aid rules were loosened, the use of guarantee facilities was stepped up and the innovative €100bn SURE instrument was realised to help workers keep their income and businesses to stay afloat.

Targeted amendments to the EU financial market rules were swiftly adopted to mobilise €450bn in additional lending – by bringing forward the date of application of the stronger ‘SME Supporting Factor’ with preferential treatment for business loans. Also, the Enterprise Europe Network and the SME Envoys network have been extremely active, exchanging information and best practices across Member States. 

Clearly, the European economy as a whole will only successfully manage future shocks if SMEs are resilient and fit for the future. Therefore, the EU needs a skills revolution to ensure people can thrive in the green and digital transitions. We must align skills with changing labour market needs by fostering training programmes and enhancing continuous learning.

It is evident that any one-size-fits-all programme is unlikely to work. Therefore, our priority must be to help our economy identify the necessary abilities and encourage the most adequate training supply to cope with the new digital and green skills needs. 

The COVID crisis has heightened the importance of, and served as an accelerator for, digitalisation. It is impressive how firms have moved operations online and implemented smart working solutions. However, many SMEs were not ready for this sudden switch, and not all businesses have the capacity to undertake the digital transformation alone.

Hence, we need to push ahead with digitalisation, complete the Digital Single Market and work on promoting Europe’s digital transformation.

“Looking ahead, implementing the European Union’s SME strategy remains an important goal. We must complete our Single Market and reduce barriers, to better regulate, cut red tape and improve access to finance”

As a key prerequisite for securing growth and jobs in Europe, digital literacy remains a top priority. With the NextGenerationEU recovery instrument, we are put SMEs at the centre and helping business to go online. This is our unique opportunity to start a real Digital Decade for Europe. 

Looking ahead, implementing the European Union’s SME strategy remains an important goal. We must complete our Single Market and reduce barriers, to better regulate, cut red tape and improve access to finance. SMEs will be pivotal to reaching our sustainability goals, so we must make sure that European businesses keep innovating and continue to successfully develop new technologies that give the EU a competitive edge worldwide.

While we must pursue and achieve our common objectives, we must not overburden companies and businesses. The unique nature of SMEs must always be taken into account - be that in the EU taxonomy for facilitating sustainable investment, corporate sustainability reporting or due diligence rules for supply chains. 

One thing is clear; in our community of laws and values, the EU Treaties act as the glue and the European Court of Justice is the last instance. Without this common foundation, there is neither European democracy nor diversity nor protection against authoritarian traits, corruption and abuse. We must continue to uphold our common foundation of rule of law and values - to the benefit of all citizens, SMEs and ultimately our common successful future.

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