Support small enterprises first and foremost and everything else follows

On 15 September, EU Commission President Von der Leyen will hold her yearly State of the Union speech at the European Parliament. The address will then be followed by a plenary debate on the political situation of the European Union. EPP Group spokespersons on Small and Medium-Sized Enterprises, MEP Henna Virkkunen and MEP Jens Gieseke, lay out the expectations of the people from the EU Commission.

Growth in Europe literally depends on the 23 million Small and Medium-sized Enterprises (SMEs). They represent a staggering 99.8 percent of all European companies. SMEs have been hit very hard by the pandemic, and yet they play a fundamental role in the recovery.

Entrepreneurs, family businesses and other micro-enterprises are not equipped to face this crisis alone. The EU economic recovery package will go a long way in supporting SMEs to emerge stronger. However, it is essential that the EU governments now implement this package swiftly. It is not only a question of survival for many SMEs across the continent but it is also a question of fostering entrepreneurial spirit and innovation in the post COVID-19 era.

It is critical that the EU Commission protects SMEs. We have long called for an immediate appointment of a full-time SME representative within its ranks, commonly known as an SME Envoy. The appointment in and of itself, however, is not enough. The SME Envoy must also be placed in the cabinet of the President of the EU Commission and equipped with appropriate horizontal competencies to make sure that it can exercise a meaningful role in the legislative process.

The EU Commission has to guarantee that SMEs are protected from the creation of additional regulatory burdens. The first step to achieve this is the concrete implementation of the “one in, one out” principle. SMEs need legislation that encourages them to grow, and the EU Commission should ensure that their growth is not hindered by unnecessary regulation. We need a long-term, proactive commitment from all stakeholders involved, to effectively relieve SMEs from the many existing regulatory burdens.

A Social Market Economy that works for the people...

A free functioning market, coupled with robust social and environmental standards, forms the backbone of the EU’s economic growth. With the ever-increasing digitalisation and constant innovations, the EU Commission must ensure that economic growth is not hindered by outdated legislation or over-regulation. As such, the EU Commission must be proactive in ensuring a level playing field for all actors, old and new, in order to keep markets open and guarantee fair competition, especially in the digital sector.

With the climate crisis, the role of circular economy is bound to increase significantly in the coming weeks and years ahead. The EU has to understand and acknowledge its potential to be a pioneer in this area and be in a position to pave the way towards a global circular economy.

Tear down the gates and let the capital flow freely...

While the free movement of capital is one the four fundamental freedoms of the Single Market etched in the EU Treaties, there are still obstacles that restrict the free flow of capital. Despite the EU Commission’s best efforts, Europe’s capital markets remain fragmented and the Single Market for capital is still incomplete.

The benefits of a fully functioning Single Market for capital would be enormous. Companies and especially small businesses would have broader access to capital that they could use to invest, hire and expand, while investors and savers could enjoy more opportunities. For the EU Commission, the objective for the coming years should be that of finalising the Capital Markets Union initiative, which was established in 2014. While some progress on the Capital Markets Union has been made, it has thus far been agonisingly slow. The EU Commission has its work cut out for it, if it wants the financial markets to enjoy the full benefits of the Single Market as well.

Free the Economic & Monetary Union from its shackles and let it reach its full potential...

The Single Market and the euro currency have been a source of prosperity and stability for Europe for many decades. However, there are still significant hindrances that affect the movement of goods, capital, services, and people. The Single Market is not yet complete, and the EU Commission must aim to remove barriers that are preventing the Single Market from reaching its full potential.

Some of these hurdles include states imposing bureaucratic hurdles on individuals, who are seeking employment in other countries. Other hurdles include outdated legislation that hinder the digital economy, inoperability of energy and communications networks and missing links in cross-border transport infrastructure. As Europe’s economies are starting to rebound from the COVID-19 pandemic, bringing down barriers and ensuring the functioning of the Single Market is essential for Europe’s future growth.