European SMEs 2013/2014 – A Partial and Fragile Recovery

Many of the businesses active in the real estate sector are SMEs, making them an important barometer of sentiment in the sector. The European Commission has published its annual report on European SMEs 2013/2014, confirming a partial and fragile recovery. SMEs still struggled in 2013, in spite of signs of positive economic recovery, with economic conditions remaining challenging in most Member States. These are the conclusions of the annual SMEs Performance Review and country-specific SBA factsheets developed on the basis of a wide range of success indicators published by the European Commission. The review analyses the progress made by European countries in implementing the Small Business Act (SBA). The SBA aims to create a level playing field for SMEs throughout the EU and improve the administrative and legal environment to allow enterprises to unleash their potential to create jobs and growth.

In 2013 the numbers of SMEs and their value added stood above pre-crisis levels of 2008, but SMEs’ employment was still some way below that mark as it was down by 1.9 million employees, 2.16% below the 2008 level. 

The recovery in value added is for the most part driven by medium enterprises and micro-firms, with small firms lagging behind pre-crisis levels. SMEs in construction and manufacturing suffered most from the crisis, with a cumulative value added decline from 2008 to 2013 of -22% and -2.9% respectively. However business services, as well as information and communication and real estate sectors, proved most dynamic in surpassing their respective pre-crisis levels by the highest margins of 7%, 9% and 15% respectively. 

There are also differences between Member States, with Germany, Austria, Sweden, Belgium, Malta, Luxembourg, United Kingdom and France seeing SME employment and value added recovering fully and even surpassing 2008 levels, although only German SMEs posted an employment level higher by 10% or more in 2013 than in 2008. A different group of ten countries, including Greece, Spain, Portugal, Croatia, Cyprus, Ireland, Romania, Slovenia, Latvia and Hungary, saw a level of value added generated in 2013 by SMEs of 10% (or more) below 2008. 

Depressed demand for the goods and services SME produce is the key factor explianing why SME performance has not yet recovered to pre-recession levels in a number of Member States. Other key challenges influencing the performance of SMEs are found to be the difficulties in accessing finance, finding customers, doing business, high costs of production and labour as well as the lack of skilled staff. 

The outlook for 2014/2015 is cautiously optimistic, with value added generated by SMEs in the EU expected to rise, expanding by 2.8% in 2014 and 3.4% in 2015. SME emplyment is also expected to grow 0.1% in 2014 and 0.7% in 2015. Across the EU 28 last year, some 21.6 million SMEs in the non-financial business sector employed 88.8 million people and generated €3,666 trillion in value added. 

Further information about the SME performance review is available at