Small is beautiful – and vital to our economy
Paul Tang MEP
“This report puts SMEs in the spotlight. Their size may be small or medium, but their impact is definitely not”
Commentary by Paul Tang MEP, Member, Economic & Monetary Affairs Committee, European Parliament, S&D
SMEs in the spotlight: that is what we need in Europe. The start-ups and family businesses of today are tomorrow’s growth and job providers. Innovative, smart and viable, they are the backbone of our economy. I therefore wholeheartedly support this first edition of 1000 Companies to Inspire Europe – all the women and men working in the SME sector can be very proud of their role in our economy.
This report vividly illustrates the diversity of the SME sector. From small coffee stores and clothing web shops run by only a small team of employees, to tech firms and breweries, SMEs are everywhere. This is Europe at its best.
On this continent there are many ways to pursue grand or just simple ideas, to work together to realise ambition, to inspire others and to make success, but also to fail without falling into poverty.
Notwithstanding the differences, SMEs face a common challenge: how to turn a start-up into a grown-up. Lack of financing restricts some SMEs from fulfilling their potential. Capital is so greatly needed to invest in ideas, in jobs and in innovation.
First, we have to tackle the fragmentation of the financial markets in Europe. We have to stimulate and provide alternative facilities of credit, as for example crowd funding and venture capital. By realising the Capital Markets Union and the banking union we can ensure a stable and harmonised financial sector. Next, Member States should exploit the European Fund for Strategic Investments (EFSI) to the maximum to support SMEs. Actively involving SMEs in EU co-funded public private partnerships is also welcome.
Besides this, capital for SMEs is relatively costly, because creditability assessment is a complex and time-consuming process. Standardisation often leads to the classification of an SME in a higher risk scale than is necessary. Investors and SMEs both miss opportunities this way. It would be valuable if a European budget could be set aside for the development of a European system of national rating agencies for SMEs. This provides investors and others with more insight into risks, so loans can be granted more easily and faster. Moreover, a rating system makes SMEs independent from banks, giving them the opportunity to attract funding in different ways.
But we can do even more. SMEs’ interests should be properly reflected in EU policies. For example, SMEs are more and more internationally active. Their opinions and interests should be at the centre of negotiations for trade agreements. And in public procurement we should make it possible to split tenders in small sub contracts, so SMEs have more chance to get the bid. All in all, the European Union can play a major role in helping millions of SMEs to thrive. This report is a big help in putting SMEs in the spotlight. Because their size may be small or medium, but their impact is definitely not.