Members' Research Service By / May 30, 2016

Barriers to SME growth in Europe

Written by Marcin Szczepański, Small and medium-sized enterprises (SMEs), which represent 99% of all businesses in the EU, play a…

© eyegelb / Fotolia

Written by Marcin Szczepański,

Flag of Europe in a stack of coins
© eyegelb / Fotolia

Small and medium-sized enterprises (SMEs), which represent 99% of all businesses in the EU, play a pivotal role in its economy. Nevertheless, in comparison to larger firms, they often face significant obstacles – internal, administrative and financial – which affect them disproportionately.

SMEs have been affected negatively by the economic crisis, which is manifested in a reduction in the sector’s employment figures. The financial and sovereign debt crises have also had a negative impact on the financing of SMEs, especially in the hardest-hit countries. Perhaps unsurprisingly, important differences exist in access to finance both within the euro area and between the ‘old’ (EU-15) and ‘new’ (EU-13) Member States. Concerning the recovery from the crises, the picture also remains mixed.

Administrative and regulatory obstacles are often highlighted by SMEs as being a significant burden on their growth. It is substantially more costly for smaller firms to comply with regulations and few Member States actively support SMEs when it comes to tax provisions, or take their specific characteristics into account when drafting legislation. The European Parliament has been a long-standing advocate of an environment for SMEs that is conducive to growth.

Read the complete briefing on ‘Barriers to SME growth in Europe‘.

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