Anne Sander MEP
“The diversity of SMEs means that they don’t all have the same funding needs and multiple solutions need to be put in place”
Commentary by Anne Sander MEP, Member, Economic and Monetary Affairs Committee, European Parliament
The diversity of the EU economy is one of its strengths. Comprised of big international companies that lead their sectors, there are also mid-caps and small and medium-sized enterprises (SMEs) that create growth and jobs. These companies are not always on the radar of EU institutions and even if they are, sometimes we are not ambitious enough in making EU rules adequate for them.
As Christine Lagarde said, when she was Minister for the Economy in France, “we have to think small first”. Since the launch of the Capital Markets Union (CMU) initiative, we have not been focusing much on SMEs. Despite some provisions which specifically target SMEs, such as the SME Supporting Factor in the Banking Package, we have not given much consideration to SMEs in the area of financial regulation.
This initiative of the Commission towards the SME growth market is supposed to ease the access to financial markets for these types of companies, in order to raise capital. It is
a valuable first step. Not all SMEs will be willing to go public, but those that do should be encouraged. We have a duty to help them by adapting the rules.
The diversity of SMEs means that they don’t all have the same funding needs and therefore multiple solutions need to be put in place. Fast-growing tech startups do not have the same needs as mid-caps or SMEs evolving in traditional sectors. It is an ecosystem that we have to develop and strengthen. This ecosystem is composed of banks and business angels, but also venture capital funds and investors in financial markets. Therefore, in order to be able to diversify the sources of funding and help these companies to remain and grow in Europe, it is crucial to offer them multiple forms of funding.
In addition to these financing opportunities, it is also the role of stock markets to chaperone SMEs when they want to access financial markets, as often they don’t have the knowledge to overcome and understand the steps and obstacles ahead. If this initiative on SME growth market is a starting point, I would encourage the Commission to have a comprehensive approach towards SMEs by also looking at the investor side, for whom it is often too expensive to finance SMEs.
Finally, I would say that in the context of Brexit, the EU has to devote particular attention to the CMU initiative, which is even more important given that the UK is set to depart in 2019. We have to make our capital markets stronger and more resilient. This requires developing appropriate frameworks, adequate supervisory bodies and a positive narrative from policy makers to encourage these companies to take risks, grow and perform to their full potential in Europe.