European Commission President José Manuel Barroso may have said that European SMEs had reason to be cautiously optimistic – but the message that came from the SME Assembly in Lithuania was clear: The time has come to move from the slogan “Think small first!” to “Act small first!”
European SMEs were significantly more resilient than large enterprises at the beginning of the crisis, i.e. in the period 2008-2011.
However, as the crisis wore on, SMEs were slower to recover than larger firms, suffering from the double whammy of weak domestic demand and their dependence on B2B contracts from the larger firms themselves.
But the signals emerging from the Commission’s 2012/2013 report were indeed optimistic. Total employment is expected to increase by 0.3 per cent and value-added by 1 per cent as compared to 2012.
And preliminary forecasts expect the positive developments to accelerate further in 2014.
After five years of an uncertain economic environment, 2013 is expected to be the first year since 2008 with a combined increase in aggregated employment and value-added of EU’s SMEs.
The Commission said the turn-around was remarkable testimony to the resilience of the EU SMEs. In 2012 alone SMEs suffered a loss of jobs in the order of 610,000 jobs or a 0.7 per cent decrease compared to 2011.
Moreover, SMEs’ contribution to GDP declined by 1.3 per cent from €3.44 trillion in 2011 to €3.39 trillion in 2012. A further consequence of the crisis was that the distribution of losses in employment and value added was very unevenly distributed among the member states.
About half of the 27 EU member states created new employment in 2012, adding roughly 0.5 million net jobs to the employment stock in their respective sectors.
The losses of jobs in SMEs are heavily concentrated in the more vulnerable member states still affected by the sovereign debt crisis. However, even in their case the decline has slowed down significantly, indicating that the small businesses are bottoming out.
In 2012, the number of SMEs returned to the levels of 2008 but there were still 389,000 fewer than in 2009.
Now, with domestic demand expected to recover to some extent in 2013 and 2014, SMEs are forecast to perform somewhat similar to large enterprises over these two years.
The improvements in SMEs’ performance are underpinned by a considerable number of policy measures by the EU and the member states since 2008.
These policy developments, taken under the umbrella of the Small Business Act (SBA) for Europe have been instrumental in mitigating the effects of the crisis and in creating a pro-SME policy momentum across the European Union.
In 2010-2012 only, the EU’s member states implemented a total of almost 2,000 policy measures to support SMEs, i.e. an average of some 650 measures per year, and more than 70 measures per country.