SMEs Struggled in 2013 despite Signs of Recovery

Written by | Wednesday, October 8th, 2014

Latest data reveal that in 2013 small and mid-sized businesses in most EU member states struggled despite the general sentiment that economic recovery was on its way. According to the annual SMEs Performance Review and country-specific SBA factsheets, there was an economic recovery but it was uneven and not following a robust trajectory. Many SMEs managed to increase their value even to their pre-2008-crisis levels, but their ability to employ was still below that threshold as it was down by almost 2 million employees, which is 2.16 percent below the 2008 level.

Moreover, year-to-year progress on SMEs’ activity demonstrates that more action is needed, the study adds. Although the value added continued to increase by 1.1 percent, there is still a slowdown compared to previous years. In 2012, SMEs grew by 1.5 percent and in 2011 by 4.2 percent annually. In addition to staggering growth rates in the value added, SMEs’ workforce went down by 0.9 percent and 0.5 percent respectively which was helped also by sluggish economic growth and the risk of deflation in the eurozone. To that end, EU Commissioner for Industry and Entrepreneurship, Ferdinando Nelli Feroci, commented that the ongoing difficulties facing SMEs underlined the need for the EU and member states to go on with their struggle to improve the general business environment and especially the conditions for SMEs, which are often described as the backbone of the European economy. The biggest obstacle to accelerated growth of SMEs still remains limited access to finance.

The recovery in the growth of SMEs’ value added is mostly driven by micro-firms and mid-sized firms as small firms still face difficulties to achieve the pre-crisis level. When it comes to employment, both small and mid-sized companies employ less people than prior to 2008, but the group of micro companies have logged the highest relative decline (- 4.2 percent). In 2013, the study reveals, the most affected SMEs were those in construction and manufacturing sectors. In contrast, most SMEs in business services, communications, IT, and real estate sectors were among the most dynamic ones surpassing their respective pre-2008 levels.

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