Annual Report on European SMEs 2012/2013: A recovery on the horizon?

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Annual Report on European SMEs: A Recovery on the Horizon?2013 is likely to mark a turning point for the EU SMEs. 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 total employment in the EU SMEs is expected to increase by 0.3% and value-added by 1% as compared to 2011. Preliminary forecasts expect the positive developments further accelerating in 2014. These promising projections are backed up by other positive signals. Over the last three years, an increasing number of Member States have seen their small business sectors returning to an expansion of employment and value-added, or at least a petering out of the decline. If the macroeconomic conditions hold, this development would mark the end of the most challenging crisis the European SMEs have experienced in the recent history. Viewed against the unparalleled depth and complexity of the crisis, such a turn-around is a remarkable testimony to the resilience of the EU SMEs. While in 2008-2011 the SMEs resisted the crisis better than large enterprises, in 2012 SMEs suffered a loss of jobs in the order of 610,000 jobs or a 0.7% decrease compared to 2011. Moreover, SMEs’ contribution to GDP declined by 1.3% 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. European SMEs were significantly more resilient than large enterprises to the 2008 crisis, particularly in employment terms. However, after the crisis it has been more difficult also for them to recover. After 2009, large enterprises were leading the recovery in terms of output (gross value added), but as of 2012 they have surpassed SMEs – albeit only slightly - also in terms of employment. Thus, by 2012, large enterprises managed to regain almost 1.1 million of the 1.6 million jobs lost in 2009. The SMEs, which lost comparatively fewer jobs in preceding years, went through a rough patch in 2012. SMEs also trail behind large enterprises in terms of value added, since the latter have been faster to recover after 2009 and were somewhat less affected by the slowdown in 2012. Whilst large enterprises posted a decline in value added of €8.6 billion in 2012, medium-sized enterprises posted the highest loss in value added amounting to €17 billion, followed by micro-enterprises (€14 billion) and small-sized enterprises (€13.2 billion). The difference between the value added performance of SMEs and large enterprises over the period 2008 to 2012 reflects the weakness in domestic demand, which is a key market driver for SMEs, while large enterprises benefited from a better export performance. However, as domestic demand is 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 SMEs in the service sectors, characterised by lower barriers to entry, performed better than SMEs in the manufacturing sector. 2012 was characterised by a decline in employment and value added by manufacturing SMEs. The one exception to these negative trends was a marginal increase in the number of medium-low tech manufacturing SMEs. At the same time, the number of SMEs in the knowledge intensive service sectors (KIS) grew in all SME size classes between 2008 and 2012. During the same period, employment in KIS SMEs grew at comparable rates with large enterprises (circa 4%). Similarly, SMEs in the high-tech KIS sectors posted a substantial increase in value added between 2008 and 2012. The poor performance of SMEs in the manufacturing sector is explained by the sharp decline of investments in capital formation and innovation caused by difficult credit conditions and the weakness of domestic demand. Indeed, the services provided to large businesses and other organisations by SMEs were less affected by tight credit conditions and, consequently, SMEs in the services sector started recovering in 2009. However, in 2013 and 2014 SMEs in the manufacturing sector are expected to undergo a significant recovery in terms of employment and somewhat less so in value added. SMEs in the service sectors, independently of the knowledge content of the services provided, are forecast to post positive growth rates in employment and value-added.The improvements in SMEs’ performance are underpinned by an impressive 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 2,400 policy measures to support SMEs, i.e. an average of 800 measures per year, and almost 90 measures per country. Nevertheless, as evidenced by statistics, SMEs are still bearing the brunt of the crisis more than large enterprises. This calls for a move into top gear in SME policy making and to give a necessary boost to the green sprouts of recovery. Some of the essential ingredients required for SMEs to recover and prosper include harmonised policies, improved conditions to access finance, strong public demand for the goods and services produced by SMEs, an appropriate attention to labour market policies, a decrease in late payments, and simpler regulatory and administrative requirements. In fact, as evidenced in the third chapter of the report, countries characterised by a business friendly environment, a modern infrastructure, technologically advanced sectors and a highly skilled workforce are expected to recover much faster to pre-crisis levels.
Original languageEnglish
Place of PublicationBrussels
PublisherEuropean Commission, Directorate‐General for Enterprise and Industry
Commissioning bodyEuropean Comission DG Enterprise and Industry
Number of pages100
Publication statusPublished - Oct 2013

Publication series

NameSME Performance Review
PublisherEuropean Commission, DG Enterprise and Industry


  • SMEs performance review, Report on European SMEs


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