Futureproof our small businesses which have suffered from COVID

“We expect much more from the European Commission when it comes to small European enterprises. Let’s not forget that Small and Medium-Sized Enterprises (SMEs) represent 99 percent of all businesses in the EU and it is they who have borne the brunt of the pandemic. We want to see the concrete implementation of the ‘one-in, one-out’ principle applied to upcoming EU rules, including to the Non-Financial Reporting Directive”, said MEPs Jens Gieseke and Henna Virkkunen, co-Chairs of the SME Circle of the Group of the European People’s Party (EPP) in the European Parliament.

Today, the European Parliament will discuss the state of SMEs across the continent. This debate will become a yearly health check on SMEs. MEPs will discuss this key topic after a presentation by the European Commission on its work done over the past year and the plans ahead. This State of the SMEs Union debate has come to life for the first time now, due to the EPP Group’s insistence over the past year. The Non-Financial Reporting Directive lays down the rules on disclosure of non-financial and diversity information by enterprises.

The 'one-in, one-out' principle means that “newly-introduced burdens on businesses are offset by relieving the same businesses of equivalent administrative costs at EU level in the same policy area. However, the Commission's real actions show a different face. Instead of elevating SMEs from red tape, the Commission plans to expand the reporting bureaucracy for SMEs by means of the Corporate Sustainability Reporting Directive, for example. From 2024 onwards, instead of 11,000 enterprises, almost 50,000 enterprises in Europe will have to report on their sustainability activities along the lines of financial reporting standards. This is not only significantly more bureaucracy for companies that have never heard of it before, but also a high cost factor that cannot be shouldered by companies that are still reeling from the pandemic", Virkkunen and Gieseke pointed out.

“In 2019, the new European Commission committed itself to better legislation, reducing bureaucracy and improving conditions for our SMEs. Unfortunately, little has happened since then. In December 2020, the European Parliament endorsed the call for binding targets to reduce administrative burdens in the EU and asked the Commission to present an impact assessment by June 2021. We expect the Commission to deliver on this request this month”, warned Virkkunen and Gieseke.

SMEs have been severely hit by the pandemic and the European Commission is not giving them the attention they deserve.

“The Commission should do its part to help us foster an entrepreneurial environment where our businesses can thrive and create jobs. We want to see a better application of the binding SME test, a stronger role for the Regulatory Scrutiny Board with a majority of independent experts also, among others, representing SMEs”, demanded the MEPs.

On 5 May 2021, the European Commission nominated Vazil Hudák as the EU SME Envoy. “The nomination comes a year and a half late and worse still, comes devoid of any meaningful details”, said Virkkunen and Gieseke. Just two days after the Commission’s announcement of this nomination, news reports surfaced in the media that Mr Hudák was also appointed by the Prime Minister of Georgia as his new special advisor for foreign investments.

“We think that the 25 million SMEs across the length and breadth of Europe deserve to know whether Mr Hudák will be solely focused on their needs or not. Can the Commission confirm that Mr Hudák does not have any other job or any other contractual obligations with other governments and authorities?”, Virkkunen and Gieseke questioned.

The SME Circle is made up of EPP Group Members of the European Parliament whose primary interest is to staunchly support Europe's SMEs.