The SME Performance Review  is one of the main tools the European Commission uses to monitor and assess countries' progress in implementing the Small Business Act (SBA) on a yearly basis.

The annual report on SMEs, published in November 2016, showed a robust growth over the past two years.  SMEs had a good year in 2015 in almost all Member States: SME value added increased in all but two Member States while SME employment increased in 27 of the 28 Member States.

Zoom in on the details

  • EU28 SMEs experienced a good growth of 5.7% in value added for the second year in a row (compared to 3.8% in 2014).
  • Employment increased by 1.5% in 2015 after 2014 showed a growth for the first time since the recession.
  • The growth varies between Member States and across business sectors. In particular some smaller sectors showed growth rates in employment of more than 5% while larger sectors like "retail trade" and "construction" recorded growth of only 2% or less. But generally the direction in almost all Member States is pointing up.

Room for improvement

The Annual Report reveals that there are no major differences anymore between the USA and the EU with regards to creation of new firms. This is important because start-ups are key contributors to innovation and employment creation. However, the SBA second chance principle is the one showing least progress since 2008; many young enterprises fail in their early years with the EU Member States having several barriers in place limiting possibilities of a second chance for entrepreneurs, which weakens the start-up dynamism. The study demonstrates that especially economies with a more punitive bankruptcy regime miss out on growth potential stemming from a second chance. Member States and European regions have to take more action to implement this SBA principle in order to fully exploit the potential in terms of output and job creation.

Image credit: Image by Gerd Altmann from Pixabay