Unleashing SME potential

SMEs, including start-ups and scale-ups, form the backbone of the EU economy and the Single Market, accounting for 52% of GDP and 64% of private sector employment. 

Both the Letta Report “Much more than a market” and the Draghi Report “EU competitiveness – looking ahead” emphasise the need to make it easier for SMEs to operate in the Single Market. Based on a survey of 2,087 SME exporters, this report identifies initiatives that these SMEs say are a priority to create a more sustainable and accessible Single Market, allowing them to unlock their full potential.

Overall, the SMEs participating in the survey call for European policymakers to ensure that the implementation of new reform initiatives reduces operational costs and risks for SMEs, particularly by fighting inflation, alleviating labour/skills shortages and preventing supply chain disruptions. 

SMEs also call for less bureaucracy and lower regulatory burdens.

This report lists 14 initiatives based on the Letta and Draghi reports which address the problems that SMEs have identified as top priorities:

1. Cut compliance costs for SMEs – Ensure a more systematic, consistent and integrated use of the Better Regulation Toolbox.
2. Unify to simplify – Streamline employment law, tax law and market law for a more SME-friendly business environment.
3. Reduce tax fragmentation – Unify regulations for cross-border investments, tax base of enterprises, excise taxes on energy products, value-added tax (VAT) and VAT relief on donations.
4. Improve and simplify Single Market integration – Use mechanisms and tools to reduce and avoid new fragmentations, including a 28th regulatory regime, national Single Market offices and the Single Digital Gateway.
5. Enhance European consumer protection – Strengthen the Consumer Protection Cooperation (CPC) Network or establish an EU-level independent consumer ombudsman.
6. Optimise the European Digital Product Passport – Design for a circular economy and compliance facilitation.
7. Ease SME access to public procurement – Make public procurement more effective and increase competition, particularly by implementing the recommendations of the European Court of Auditors.
8. Foster a circular economy – Enhance financial support, harmonise criteria, improve access to recycled materials and leverage digital tools.
9. Bridge SMEs and digital platforms – Enhance SMEs’ collaboration with digital platforms, particularly for advertisement, e-commerce and resale.
10. Ease cross-border payments in the Single Market – Develop a digital infrastructure for efficient, secure and cost-effective cross-border payments in the Single Market.
11. Advance AI governance in the EU – Develop and disseminate best practices, guidelines and regulatory compliance standards for AI development and deployment.
12. Optimise cross-border data flows in the Single Market – Harmonise regulations, particularly interoperability and data protection regulations, and strengthen the digital infrastructure for seamless data mobility.
13. Mobilise capital for the green transition – Develop frameworks and raise capital, including for an EU-wide guarantee scheme targeting green projects.
14. Channel savings into the real economy – Combine national tax incentives with the European Long-Term Investment Fund (ELTIF) framework.

In an era of increasing geopolitical tensions, re-evaluation of global value chains and a global economy heading towards recession, the Single Market is key to securing growth, competitiveness and resilience of the EU economy.

See all the Implement Consulting Group studies commissioned by Amazon