EUROPEAN COMMISSION 
Brussels, 30.11.2011 
SEC(2011) 1452 final 
  
COMMISSION STAFF WORKING PAPER 
IMPACT ASSESSMENT 
Accompanying the document 
Proposal for a regulation of the Eu ropean Parliament and the Council 
establishing a Programme for the Competitiveness of enterprises and small and 
medium-sized enterprises (2014 to 2020) 
{COM(2011) 834 final} 
{SEC(2011) 1453 final}  
 
EN   EN  TABLE OF CONTENTS  
1. Introduction................................................................................................................ .. 1 
2. Procedural issues and consulta tion of interested parties.............................................. 1 
2.1. Identification ............................................................................................................ .... 1 
2.2. Organisation and timing............................................................................................... 1 2.3. Consultation and expertise ........................................................................................... 2 
2.3.1. EIP evaluations ................................................................................................... 2 
2.3.2. EACI evaluation ................................................................................................. 2 2.3.3. External studies................................................................................................... 2 2.3.4. Public consultation.............................................................................................. 2 2.3.5. Survey on administrative costs ........................................................................... 3 
2.4. Scrutiny by the Commission Impact Assessment Board ............................................. 3 
3. Context ..................................................................................................................... .... 3 
4. Problem definition........................................................................................................ 6 4.1. The problems that require action.................................................................................. 7 4.2. Underlying drivers of the problem............................................................................. 10 4.3. Who is affected, in what wa ys and to what extent? ................................................... 13 
4.4. Foreseen evolution of the problem............................................................................. 14 4.5. EU right to act and added value ................................................................................. 17 5. Objectives.................................................................................................................. . 20 
5.1. General policy objectives........................................................................................... 20 5.2. Specific policy objectives .......................................................................................... 20 5.3. Operational policy objectives..................................................................................... 20 5.4. Consistency with other policies and objectives ......................................................... 24 6. Policy options............................................................................................................. 2 6 
7. Analysis of impacts.................................................................................................... 35 7.1. Impacts - Option 1...................................................................................................... 35  
7.2. Impacts - Option 2...................................................................................................... 38  
7.3. Impacts - Scenario 3a................................................................................................. 39 7.4. Impacts - Option 3b.................................................................................................... 42 7.5. Impacts – Option 3c ................................................................................................... 46 
 
EN   EN  8. Comparing the options ............................................................................................... 48 
8.1. Effectiveness ............................................................................................................. . 48 
8.2. Efficiency ................................................................................................................ ... 48 
8.2.1. Cost-effectiveness............................................................................................. 49 
8.2.2. Administrative Costs ........................................................................................ 50 8.2.3. Administrative costs for bene ficiaries: survey results...................................... 50 
8.3. Coherence................................................................................................................. .. 51 
8.4. Comparing the options accordi ng to the three dimensions ........................................ 52 
9. Monitoring and evaluation ......................................................................................... 54 9.1. Lessons learnt............................................................................................................ . 54 
9.2. The new monitoring and evaluation system............................................................... 55 9.3. Indicators................................................................................................................ .... 56 
 
 
EN 1  EN  1. INTRODUCTION  
The purpose of this Impact Asse ssment (IA) Report is to assess the expected impacts of an 
EU Competitiveness and SME programme, as  proposed by the Commission in its MFF 
Communication of 29 June 2011. 
This programme (hereinafter referred to as th e “new programme") is intended to build on the 
Entrepreneurship and Innovation Programme (EIP)1 (referred to as the “current programme”) 
which forms one of the three pillars of the Competitiveness and Innovation Framework 
Programme (CIP) under the current MFF.  
With small and medium-sized enterprises (SMEs)  as its main target, the CIP provides better 
access to finance, delivers business support se rvices in the regions and supports innovation 
activities (including eco-innovation) . It encourages a better ta ke-up and use of information 
and communication technologies (I CT) and helps to develop the information society. It also 
promotes the increased use of renewa ble energies and energy efficiency. 
The CIP has an overall budget of € 3,621 milli on and is divided into three operational 
programmes. Each programme has its specific  objectives, aimed at contributing to the 
competitiveness of enterprises and their innovative capacity in their own areas: 
• The Entrepreneurship and Innovation Progr amme (EIP, approximately €2100 million)  
• The Information Communication Technologi es Policy Support Programme (ICT-PSP, 
approximately €700 million)  
• The Intelligent Energy Europe Programme (IEE, approximately €700 million). 
In the preparations for the next multi-annual financial framework (MFF), it was decided that 
the activities currently under th e EIP and regarded as succe ssful would be continued under 
two new programmes:  innovation- related activities of the current EIP would be brought 
under Horizon 2020, the new framework programme  for research and innovation, whereas the 
competitiveness and growth related activities of the EIP would form a competitiveness and SME programme.  
2. P
ROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
2.1. Identification  
Lead DG: DG ENTR 
2.2. Organisation and timing 
Work on the present impact assessment started in May 2010. The following DGs were invited 
to join the interservice impact assessment st eering group (IASG): SG,  BUDG, LS,  AIDCO,  
C L I M A ,   E A C ,   E M P L ,   E N V ,   E C F I N ,   E N E R ,   I N F S O ,   M A R K T ,   M O V E ,   R E G I O ,   RELEX,  RTD,  TRADE. The group met five times and representatives of the above DGs 
were present in these meetings. 
                                                
 
1 A list of acronyms and a glossary on financial instruments can be found in Annexes 1 and 2, 
 respectively. 
 
EN 2  EN  2.3. Consultation and expertise 
2.3.1.  EIP evaluations2 
The Commission has conducted EIP interim and fi nal evaluations (completed April 2009 and 
April 2011) and an interim evaluation of the CI P (March 2010). These evaluations of the EIP 
and the CIP have shown that the objectives of  the programmes are relevant to and aligned 
with the strategic aims of EU policies. Despite a limited budget, progress has been visible, in 
particular concerning the most important actions that addre ss SMEs. Interviews and other 
evidence point to a clear European value-ad ded. (More detailed information about the 
findings and recommendations of the ev aluations is provided in Annex 3.) 
2.3.2.   EACI evaluation3 
Part of the EIP budget has been delegated to  the Executive Agency for Competitiveness and 
Innovation (EACI). An evaluation, finalised  in May 2011, concluded that EACI was 
performing well and was an efficient and effect ive delivery mechanism for the initiatives for 
which it has operational responsib ility. It confirmed that almost 100% of the budget had been 
executed. (A short summary is provided in Annex 4.) 
2.3.3.  External studies 
In July 2010, an external study was commissioned4 to support the preparation of this impact 
assessment report, based on a co mbination of desk researc h, extensive contacts with 
Commission services and interviews with stak eholders and experts.  The final report was 
accepted in June 2011. (The executive summary and main report are provided in Annex 5.)  
A separate study was carried out on tourism whic h provided an evaluation of current tourism-
related initiatives.5 The main conclusion of the study was th at, even if Europe is still world’s 
No 1 tourism destination, there remains room for improvement in the visibility of Europe as a 
tourist destination. The final report was accepte d in July 2011 and the executive summary is 
annexed to this report (in Annex 6).  
2.3.4.  Public consultation  
Public consultation on a possible successor to th e CIP was launched as part of the impact 
assessment process.
6 It was addressed to public and priv ate organisations or  individuals who 
wished to give their views, such as ente rprises, business organisations, research and 
innovation support providers and national, regional and public administrations. 
The public consultation process consisted of: 
                                                 
2 http://ec.europa.eu/cip/documents/implementation-reports/index_en.htm 
3 http://ec.europa.eu/cip/ files/docs/evaluation-of -eaci-may-2011_en.pdf 
4 Economisti Associati in collaboration with EIM Business & Policy Research, The Evaluation 
Partnership, Centre for Strategy and Evaluation Services, and Centre for European Policy Studies 
5 By the Centre for European Policy Studies (CEPS). 
6 http://ec.europa.eu/cip/public_consultation/index_en.htm 
 
EN 3  EN  – an online survey (including a specifi c survey on financial instruments7), which was open 
from 8 November 2010 to 11 February 2011; 
– a public conference organi sed on 25 January 2011;  
– meetings with the representatives of Member s States in the different CIP management 
committees; and 
– a meeting the CIP Strategic Advisory Board on 2 February 2011.  
The consultation confirmed that many parts of the current programme work well, and that 
there is wide support for maintaining an EU  programme targeted at supporting SMEs and 
creating a favourable business environment. I ssues concerning access to finance for SMEs 
have also been discussed in the meetings of  the SME Finance Forum in September 2010 and 
March 2011. (A more detailed summary of th e consultation is provided in Annex 7.) 
2.3.5.  Survey on administrative costs  
In June 2011 a survey was conducted on the ad ministrative costs incu rred by entities that 
received support under the EIP. Out of 795 entit ies contacted, a total of 153 organisations 
replied, a response rate of about 19%. The execu tive summary of the final report is provided 
in Annex 8. 
2.4. Scrutiny by the Commission Impact Assessment Board 
The Impact Assessment Board of the European  Commission assessed a draft version of the 
present impact assessment and issued its  opinion on 02/09/2011. The Impact Assessment 
Board made several recommendations and, in the light of the latt er, the final impact 
assessment report has been amended. 
3. CONTEXT  
The need to stimulate the competitiveness of European business has been emphasized 
repeatedly by the EU over the past decade.8 At the core of the Eu rope 2020 strategy, which 
sets a new policy agenda aimed at achieving th e overriding objective of “smart, sustainable 
and inclusive growth”, lies the belief that the lo ng-term sustainability of  Europe's way of life 
depends on its ability to provide its citizens with growing living standards on a sustainable 
basis and broad access to jobs.9 
European competitiveness policy is intended to  put into place the institutional and policy 
arrangements that create conditions under whic h businesses can grow in a sustainable way. 
Improved productivity is the dominant source of sustainable income growth, which in turn 
contributes to growing living standards. Comp etitiveness also depends on companies’ ability 
                                                 
7 http://ec.europa.eu/cip/files/docs/public-consultation-annex2-to-final-report_en.pdf 
8 Competitiveness is defined here as a sustained rise in the standard of living of a nation or region and as 
low a level of involuntary unemployment as possible. Sustainable competitiveness reflects the ability to 
achieve and maintain the (econo mic) competitiveness of industry  in accordance with sustainable 
development objectives. EC, European Competitiveness Report, 2010.  
9  Sternberg and Arndt, The Firm or the Region: What Determines the Innovation Behaviour of European 
Firms?, Economic Geography, Vol. 77, No. 4 (Oct., 2001), pp. 364-382. 
 
EN 4  EN  to take full advantage of opportunities such as the Europ ean Single Market.10 This is 
especially important for SMEs, which constitu te 99% of European businesses, provide two 
out of three  private sector jobs and contribute more than half of the total value-added created 
by businesses in the EU. In the past five years, 80% of new jobs in Europe have been created 
by SMEs.11 
Evidence gathered by the Commission suggests that the potential for competitiveness and 
entrepreneurship of the European economy still has to be fully unleashed12, that Europe is 
under-performing compared to the USA and more  advanced Asian economies (Japan, South 
Korea) and that its advance on the BRIC countri es (Brazil, Russia, India and China) is 
gradually shrinking.13 
In response to this long-term trend, the European Parliament and the Council decided in 2006 
to establish the current programme to address key issues affecting the competitiveness of the 
European economy, namely, the weak entrepreneur ial spirit in Europe , an insufficiently- 
friendly business environment, in particular fo r SMEs, difficulties that SMEs face in getting 
access to finance and sub-optimal exploitation of innovation. 
Background: The EIP pillar of the CIP 
The EIP has six key objectives:  
i to facilitate access to finance for the star t-up and growth of SMEs and encourage 
investment in innovation activities; 
ii to create an environment favourable to SME c ooperation, particularly in the field of cross-
border cooperation;  
iii to promote all forms of i nnovation in enterprises;  
iv to support eco-innovation;  
v to promote an entrepreneurship and innovation culture;  
vi to promote enterprise- and innovation-rela ted economic and administrative reform. 
The recent evaluations of the EIP have highlighted a number of striking successes:   
–      Over 130,000 SMEs have so far received loans thanks to the EIP guarantee facility, 
where the leverage ratio is currently around 1: 32 (i.e. for every Euro spent on guarantees 
through the EIP, €32 are finally obtained by the beneficiary). A further 185,000 are expected 
to benefit from this measure, a target which has been verified by the Court of Auditors as 
                                                 
10 Eckehard Rosenbaum, Competitiveness Rankings of European Countries – How Much Do They Tell 
Us?, Intereconomics 2 (2011) 83 
11 Structural Business Statistics Database (Eurostat) 
http://epp.eurostat.ec.europa.eu/portal/page/ portal/european_business/data/database 
12 EC, A rationale for action, accompanying docume nt to the Communication Europe 2020 Flagship 
Initiative Innovation Union, COM(2010) 546. 
13 EC, EU and BRICs: Challenges and opportunities for European competitiveness and cooperation, 
Industrial Policy and Economic Reform Papers 13 (2009) 
 
EN 5  EN  “likely to be achieved”.14 Since each loan case leads on average to 1.2 jobs per each firm 
assisted15, the programme is expected to ha ve generated close to 380 000 jobs. 
–      €1.267 billion of venture capital has been  mobilised for innovative SMEs, resulting in a 
1:6.8 leverage ratio. For example, the 2010 Nobel Prize laureates in physics, Professor Andre 
Geim and Dr Konstantin Novoselov, are part of  a UK venture-backed team which is partly 
financed by EIP. 
–      The Enterprise Europe Network is provi ding integrated services to SMEs via more than 
3,000 staff in 600 regional offices.16 The Network helps SMEs to access market information, 
to find potential business and technology pa rtners and to participate in the 7th Framework 
Programme for Research and technological Deve lopment (FP7). It offers advice on funding 
and internationalisation serv ices. More than 4,000 cross-bor der partnership agreements 
between companies have already been conclude d through the Network in just 30 months and 
15,000 promotion, information, match-making and br okerage events have been organised.  
–      70,000 students and pupils and 1000 teachers and professors  of entrepreneurship have 
been beneficiaries of nine projects in entr epreneurship education co-founded by the EIP in 
2009 and 2010. These projects will serve as models for introducing novel methods of 
entrepreneurship education and speed up its expansion in all Member States. 
–      Studies collecting data, assessing market  performance and the re gulatory framework at 
industry level in the single market have identif ied strengths and weaknesses at industry level 
and shaped the Europe 2020 flagship Communi cation on a new industrial policy for the 
globalisation era. 
–      The European Network of Female En trepreneurship Ambassador s has campaigned in 22 
Member States to inspire women to set up businesses. 101 new women-led companies 
resulted from the work of the Am bassadors in the first year alone. 
–      There has been a major reduction in th e time taken and the cost s involved in starting up 
and running a small enterprise. In  2010 the average time and cost  to start up a private limited 
company was 7 days and  € 399, compared to 12 days and € 485 in 2 007; this reduction is 
partly due to best practice exchange s and benchmarking financed by the EIP. 
–      The China Intellectual Property Rights (IPR) SME Helpdesk  provides training to 
European SMEs on how to protec t their intellectual property when doing business in China, as 
well as confidential consultations on individua l business problems. It does this over the web, 
by e-mail and telephone in both China and Europe. In its first three years it served about 
50,000 website users and offered over 400 private consultations. 
The management of over 80% of the progra mme in budgetary terms has benefited from 
efficiency gains from delegation of responsibil ity for implementation fr om the Commission to 
external agencies (to the Eur opean Investment Fund (EIF) for financial instruments and the 
                                                 
14 European Court of Aud itors, Special report on the effectiveness of the Small and Medium Enterprise 
Guarantee facility, No 4, J une 2011, http://eca.europa.eu/por tal/pls/portal/doc s/1/8006724.PDF 
15  EIP  Final Evaluation, April 2011 
16 The network's geographical coverage includes EU Member States, candidate countries, future candidate 
countries and other third countries. http://www.enter prise-europe-network.ec.europa.eu/index_en.htm 
 
EN 6  EN  Executive Agency for Competitiveness and I nnovation (EACI) for the Enterprise Europe 
Network, pilot and market replic ation projects, and IPR-relate d projects). Both external 
agencies have been highly efficient, examples  being the low level of overhead costs for the 
EIF and the short payment times of EACI. (See also Section 8.3.2 below). 
4. PROBLEM DEFINITION  
Competitiveness has been put under the spotli ght of EU policy-making in recent years 
because of the market, policy and institutional failures that undermine the competitiveness of 
European enterprises at the globa l level, and in particular SMEs, the main source of economic 
growth and job creation in the EU. The ability of enterprises to adopt more sustainable 
processes and products, as well as their capacity  to grow through easier access to finance and 
global markets, are key elements of thei r competitiveness in terms of productivity.17 
Impact of the financial a nd economic crisis post-2008 
The economic environment for European busi ness has been made more difficult by the 
economic crisis from 200818, which has also had long-term consequences for the 
competitiveness of European businesses.19 Productivity has been nega tively affected by firms 
having to freeze investment projec ts. This will reduce future pr oductivity by extending the life 
of relatively obsolete equipment and remove the opportunity to improve productivity through 
re-organisation of th e production process.  
A downturn in the business cycle has a struct ural impact on access to finance. During 
recessions, use of short-term debt increases wh ile use of long-term debt (used to finance 
investment) slows down.20 The economic crisis has had an adverse effect on SMEs’ access to 
bank financing.21 For micro-firms, the tightening of ba nk lending is frequently reported as a 
source of deteriorating access to finance. SMEs have been  disproportionally affected by the 
economic downturn.22 The most pressing problem faci ng Euro-area SMEs is “finding 
customers” (28%), whereas access to finance is the second most important problem (19%).23 
Banks are more risk-averse, asking for highe r risk margins and demanding more collateral 
and security.24 
The economic crisis has presented both an oppo rtunity and a challenge for European policy-
makers. On the one hand, it has made the task  of securing future economic growth more 
difficult. On the other hand, the downturn has spurred them to improve the structural 
conditions for competitiveness of European busin esses and unlock the potential of growth for 
SMEs, as reflected in the endorsement by th e European Council of the EU Small Business 
                                                 
17 These are further developed below in section 4.2. 
18   Commission Communication “Review of the “Small Business Act” for Europe, COM(2011)78 final. 
 http://ec.europa.eu/enterprise/policies/sme/small-business-act/index_en.htm 
19 EC, European Competitiveness Report, 2009 p. 5-6 
20 Michaelas et al. (1999), "Finan cial Policy And Capital Structure Choice In U.K. SMEs: Empirical 
Evidence From Company Panel Data", Small Business Economics, 12, 113-130.  
21 ECB, Survey on the Access to Finance of Small and Medium-sized Enterprises in the EU, September 
2009 and subsequent surveys for the euro area first and second half of 2010 .  
22  OECD, ‘The Impact of the Global Crisis on SME and Entrepreneurship Financing and Policy 
Responses’, 2009 
23 ECB, Survey on the Access to Finances of SMEs, February 2010 
24 UEAPME, European SME fina nce Survey/Results, 2009 
 
EN 7  EN  Act in December 2008 including an action plan a nd of the Review of the Small Business Act 
in May 2011. 
Against this background the European Commission has considered the options for a new 
programme for the next multi-annual financia l framework that, building on the experience 
accumulated with the current programme and taking account of the difficult economic and financial situation, could contribu te to achieving the objectives identified in the Europe 2020 
strategy.  
4.1. The problems that require action 
The overarching problem is that the European businesses are losing out on competitiveness on 
a global scale
25, due principally to market failur es which undermine the capacity of 
enterprises to compete with th eir counterparts in other parts of the world. European SMEs 
show lower productivity and grow  more slowly than their counterparts in the USA for 
example, and they are less able to adapt succ essfully than larger businesses in Europe. 
Aggregate labour productivity tends to be lower for EU SMEs than for large EU firms since 
their share of value-added is typically lowe r (45% in manufacturing and almost 60% in 
services) than their share of employment. This size-class difference is partly due to the 
sectoral distribution of small and large enterp rises. Larger companies are more present in 
manufacturing, which is capital-intensive, wh ereas smaller companies are predominantly 
active in the service sector, which is more la bour-intensive. (This difference does not exist in 
the US, where small businesses employ about ha lf of the private sector work force and 
produce about half of private sector output).26 
As recently as in 2009, firms cited lack of access to finance,  l ack of incentives facilitating 
cooperation between actors, diffi culties in finding partners, and lack of knowledge about 
support instruments as hampering their growth.27 Pressing global challenges, such as 
increased competition from emerging economies have further hampered European business’ development on the global stage and in key third markets. Against the background of 
globalisation, which is also driv ing structural changes, some i ndustrial sectors such as tourism 
and consumer goods
28 are failing to reap the potentia l benefits of restructuring.  
Many of the European businesses' competitiveness problems can be classified under two 
categories: on the one hand, underlying constraints to sustainable competitiveness and, on the other hand, unfriendly conditions for entrepreneur ship and growth of SMEs. This intertwined 
challenge can be broken down into a set of stru ctural problems which have been amplified by 
the recent economic crisis: 
                                                
 
25 ec.europa.eu/enterprise/enterprise_policy/analysis/observatory_en.htm 
26 Impact Assessment on the SBA, SEC(2008) 2 101. See also Flash Eurobarometer Series #196, 
 Observatory of European SMEs, 2007, available at: 
 ec.europa.eu/enterprise/enterprise_policy/analysis/observatory_en.html 
27 Commission of the European Communities, ‘Making public support for innovation in the EU more 
 effective: Lessons learned from a public consultati on for action at Community level’, Brussels, 9.9.2009 
 SEC(2009)1197 final 
28 Tourism directly contributes almost 5% of the EU  GDP, and its indirect impact on competitiveness and 
sustainability appears substantial. In terms of growth  of the EU tourism industr y, however, the pace of 
growth in Europe is significantly slower than in  the rest of the world. World Travel and Tourism 
Council, “European Union 2011 Key Facts” (2011) 
 
EN 8  EN  • problematic access to finance for SMEs that struggle to dem onstrate their credit- 
worthiness and have difficulties in gaining acces s to risk capital: this has a negative effect 
on the level and quality of new business crea tion. The fragmentation of the EU venture 
capital (VC) market means that VC funds ar e usually smaller than  counterparts in the 
USA, for example. The contribution of specialis t skills, deeper pockets and better links to 
industry networks allow US funds to support firms to grow more rapidly. As a 
consequence European SMEs are less reliant on equity capital than their US counterpart 
and many fast-growing European enterprises lo ok to expand in the US instead than in 
Europe.29 Concerning lending to SMEs who app lied for a bank loan in 2009 and 2010, on 
average 29% did not get any credit or got less than they applied for.30 Regarding the 
venture capital markets, there is a long term deficiency related to the level of funding and 
investments partly related to the fragmentation of the EU market.31 
• low levels of entrepreneurial firm creation and poor performance:  notwithstanding the 
similar number of EU and US firms founde d each year, European SMEs have lower 
productivity levels than  their US counterparts.32 For instance, young leading high-tech 
companies are not created as often in Europe as in other regions of the world. Early-stage 
entrepreneurial activity in the USA is higher than in any of the 14 EU countries 
considered in the Global Entrepreneurship Mo nitor. And SMEs are structurally weaker 
than bigger firms. About 20% to 40% of entering firms fail within the first two years of 
life, while only 40% to 50% survive beyond the seventh year.33  
• weak entrepreneurial spirit:  according to the 2009 Eu robarometer survey on 
Entrepreneurship, only 45% of European citi zens would like to be self-employed. For 
comparison, in the United States 55% of the population would like to be their own boss 
(and in China 71%). 
• a business environment not conducive to start-up and growth , characterised by  
persistent regulatory fragmentation acros s Europe in some areas and excessive 
administrative burdens in some Member  States: this limits economic growth.34 According 
to different surveys, between 70% and 88% of businesses consider difficulties with 
administrative rules in other EU Member Stat es as ‘very important’ or ‘important’ in 
deciding whether or not to e ngage in cross-border trade.35  
• Issues preventing industry specializa tion and sectoral competitiveness : the erosion of the 
competitive edge of Europe’s economy is also a consequence of its industrial structure, in 
which new enterprises fail to play a significan t role in the dynamics of the industry and 
                                                 
29 Europe Innova, Meeting the challenge of Europe 2020, A report by the Expert Panel on Service 
Innovation in the EU, February 2011 
30 European Central Bank and European Commission, SME Finance Surveys, 2009-2010 
31 Communication from the Commission on Removing obstacles to cross-border investments by venture 
capital funds, COM(2007)853 final;  the "Commission summary report on the cross-border venture 
capital in the EU, December 2009":  
 http://ec.europa.eu/enterprise/newsroom/cf/item longdetail.cfm?item_id=4053&tpa_id=127&lang=en 
32 McKinsey Global Institute, Global Entrepreneurship Monitor, 2007, 2009. 
33 European Competitiveness Report 2008, Communication from the Commission, COM(2008) 774 final, 
p.81. 
34 http://www.consilium.europa.eu/App/NewsRoom/r elated.aspx?bid=76&grp=19214&lang=EN&id=347 
35 CSES study, pages 29 and 31 respectively. 
 
EN 9  EN  are unable to enter markets and to subseque ntly grow into market leaders.36 Policy 
makers must tackle specific ba rriers faced by firms in new sectors, such as access to risk 
finance, reflect general, systemic weaknesses.37 In particular, strong European sectors 
(such as tourism and textiles38) still need to adapt to changing market conditions, 
including growing international competition,  and ensure a diversified offer of new 
products and services. Concerning tourism, th ere is a general lack of knowledge outside 
Europe about European tourist destinations and inside the Union about thematic tourism 
products such as cultural and sustainable touris m. Consumer goods sector s such as textile, 
footwear or sport goods are characterised by strong predominance of small traditional 
companies39 with a limited capacity to take up the ri sks and costs of incorporating creative 
business concepts. 
• These problems are also linked to the limited internationalisation  o f  S M E s  i n s i d e  a n d  
outside Europe.40 The single market is not always a friendly environment for SMEs. Only 
8% engage in cross-border activities on a re gular basis and only about 5% have set up 
subsidiaries or joint ventures abroad.41 The 2010 Monti Report recommended action in 
order to create a business environment that is more tailored to SMEs' needs (see box 
below).42  
Despite the creation of an EU Single Market, doing business acro ss borders in Europe is still 
subject to significant barriers for SMEs. Acco rding to a survey of  nearly 10,000 companies 
across the EU27 carried out in Spring 2009, thes e barriers include insufficient access to 
capital, lack of information, ad ministrative burdens associated  with launching cross-border 
activities, especially in view of the fragment ation of the regulatory landscape in Europe.  
Outside Europe, there are even lower levels of company internationa lisation (25% of EU 
SMEs export directly outside national market s but only 13% export beyond the EU), partly 
because of the much greater policy and regul atory divergence between the EU and other 
major economies. Only 16% of SMEs are aware of support programmes for 
internationalisation abroad.43  
This situation is a matter of concern as internationalisation plays an essential role in the 
creation of new fast-growing busin esses at a time when long-term domestic growth prospects 
                                                 
36 Cincera M and Veugelers R, Young Leading Innovators and EU’s R&D intensity gap, IPTS Working 
Paper on Corporate R&D and innovation - No. 07/2010 
37 Veugelers R and Cincera M Europe’s missi ng Yollies, Breugel Policy Brief 2010/06 
38 According to the latest issue of the UNWTO World Tourism Barometer, tourist growth was positive in 
all regions of the world with the exception of the Middle East. Some sub-regionsachieved double-digit 
growth: South America (+17%), South Asia (+14%) and South-east Asia (+10%). Europe exceeded expectations (+6%) but is still lagging behind. 
39  The total annual turnover is estimated at €500 b illion with approximately 5 million people, with high 
average female employment.  
40 European Commission, Internationalisation of European SMEs. Final Report, EIM on behalf of 
European Commission, DG Enterprise and Industry (2009) 
41 A New Strategy for the Single Market, report by Mario Monti, May 2010, p. 42; "Internalisation of 
European SMEs", Final report, December 2009, 
 ec.europa.eu/enterprise/policies/sme/files/support_ measures/internationalisation/internationazlisation_s
me_final_en.pdf 
42 A New Strategy for the Single Market, report by Mario Monti, May 2010, p. 43 
43 According to the study conducted by EIM 
 
EN 10  EN  are limited. The large and positive impact of engaging in international activities on SMEs’ 
productivity and competitiveness are well documented.44 Companies with more than 10 years 
of activity are nearly twice as  internationally active than the average, which means that 
companies at the beginning of their life cycle are less likely to take this step. In 2009 only 
2.5% of European SMEs invested abroad, but SMEs involved in international subcontracting 
reported faster employment growth from 2007 to 2008 than non-active SMEs.45 
4.2. Underlying drivers of the problem 
The challenges facing European businesses in terms of their economic growth and 
competitiveness can be traced back to a number of concurrent factors, and primarily to the following market, policy and institutional failures: 
• Information asymmetries  are a key determinant of the problems experienced by SMEs in 
accessing finance
46, as they reinforce the hesitancy of providers of finance and limit the 
supply of risk financing. Risk-taking rewards are often considered to be insufficient and 
therefore risks are not been taken whic h would have positive societal effects.47 
• Transaction costs  tend to magnify the impact of information asymmetries in financial 
transactions, aggravating the conditions faced by smaller firms. Similar problems occur in 
other contexts, as when small firms need to  go through intermediaries when engaging in 
cross-border activities, which often opera te according to different rules and cost 
structures. 
• Lack of policy coordination and networking  reduces the benefits associated with the 
dissemination of best practices. Ineffectiv e policy coordination, often accompanied by 
competing networks providing business services to  SMEs, leads to duplication of effort 
and waste of scarce resources. Lack of coordination hampers the search for the best skills and the creation of new business models that exploit these skills and competences across the EU27 and beyond. 
• The sub-optimal situation created by the above  factors is amplifie d by the diversity (and 
sometimes the lack) of entrepreneurship and SME-related policies at Member State level, 
which contribute to the fragmentation of the policy framework in Europe. The result is an 
uneven regulatory landscape w ith lack of pro-active support
 (individual encouragement of 
                                                 
44 A study for the UK government found a strong positive correlation between being internationally active 
and reporting high turnover and employment growth . Technopolis, Drivers, Barriers, Benefits and 
Government Support of UK International Engagement, 2005. 
45 According to the study conducted by EIM in 2009 and basically conf irmed by the more recent study by 
EIM, "Opportunities for the Internationalisation of SMEs",  June 2011: 
- exporters’ employment growth 7% versus non exporters 3%; 
 - importers employment growth 8% versus non importers 2%; 
 - SMEs both importing and exporting employment growth 10% versus others 3%; 
 - SMEs with FDI employment growth 2007-2008 16% versus others 4%. 
46  OECD Observer, Financing SMEs and entrepreneurs , Policy Brief November 2006 
47 Binks, M.R., Ennew, C.T. & Reed, G.V., Information Asymmetries and the Provision of Finance to           
Small Firms, International Small Business Journal, 1992,Volume 11, No 1; Chan, Y-S., Kanatas, G, Asymmetric Valuations and the Role of Collateral in Loan Agreements, Journal of Money, Credit and 
Banking, 1985,  Volume 17, No 1; Sharpe, S. A., Asymmetric Information, Bank Lending and Implicit 
Contracts : A Stylized Model of Customer Relationships, Journal of Finance, 1990, Volume 45, No 4 
 
EN 11  EN  SMEs to use the tools and services availa ble) in some Member  States and regions, 
especially in the EU12.  
These problem drivers are clos ely linked to each other and do not allow EU companies to 
perform at their best in terms of competitiveness and sustainability.  
Findings of evaluations and cons ultations with stakeholders 
The current EIP programme has to a certain ex tent mitigated the degree to which European 
businesses, and SMEs in particul ar, are affected by these factors . The EIP final evaluation and 
the public consultation have shown a number of positive developments: 
– Financial instruments : The final evaluation has shown that the 12 years of EU presence 
in the venture capital market has had a stabilisi ng effect and has kept  this market going in 
difficult times. The guarantee facility, too, has proven to be an efficient way of responding 
to challenging market circumstances in SME finance and of developing guarantee 
instruments and markets across Europe. Since 2007, the loan guarantee f acility has helped 
SMEs to borrow over 6 billion EUR for inve stment under more favourable conditions. 
According to stakeholders, the financial inst ruments (both, the risk capital and guarantees 
instrument) are seen as highly relevant a nd having impressive leverage effect.   
– According to the EIP final evaluation, the Enterprise Europe Network  is well- focused 
on its main objectives of promoting innovati on, business co-opera tion and cross-border 
trading, but its basic information service is also important for clients. A client survey in 
2009 suggested that the Network has been delivering its integrated serv ices to the high 
satisfaction of its clients with answers to al l survey questions being generally positive and 
ranging between 70% and 90%. Satisfaction ra tes are particularly high (80-90%) for 
general information services, Network serv ices SMEs can subscribe to (such as 
customised (automated) partnership proposals,  tender alert services, legislation watch, 
etc.) and the Network's publications.48 With its integration in to the business support 
system across Europe and the strength of the personal links between its members, the 
Network has become a major policy asset for the EU’s relationship with enterprises and 
has considerable further potential in terms of  the engagement of SMEs with the objectives 
and actions of the EIP.  
– As regards smaller-scale actions , the final evaluation of the EIP found that there are some 
elements which have had a major effect. Fo r example, the action programme for reducing 
administrative burdens and its follow-on actio ns has been effective in identifying and 
following through regulatory simplifications valued at over €40 billion. Other actions 
contributed to developments that have signi ficant support, such as the measures that 
support SBA implementation. The public consultati on revealed that measures designed to 
promote entrepreneurship and to improve the business environment are supported but 
stakeholders underline that they shoul d have clear European added-value. 
The evaluations of the current programme have been positive as regards the effectiveness and 
efficiency of the programme, especially regardin g the high level of part icipation of SMEs and 
the promotion of an environment favourable to  their competitiveness and job creation. Most 
                                                 
48  A summary of the survey results is provided in Annex 9. 
 
EN 12  EN  measures of the current CIP work well, as de monstrated for instance by the high level of 
satisfaction of the clients of th e Enterprise Europe Network, which is proposed to be retained 
as the main vehicle for reinforcing interact ions and synergies with  other EU financial 
programmes. The need for continuity and stabi lity of actions was underlined by stakeholders. 
One of the main messages received from stakehol ders at the conference on the future of the 
measures supported by the CIP which took place in Brussels at the end of January 2011 was 
“Don’t fix what is not broken”.  
Furthermore, statistics and repor ts from the public consultation49 show support for all 
envisaged activities from well above 80% of re spondents. As regards support for to improve 
the framework conditions of the business enviro nment and access to finance scores are even 
higher, above 90%. For the latter,  Equity capital (71%), Hybrid instruments (78%) and Loan 
guarantees (71%) are deemed the most relevant financial instruments in terms of promoting 
competitiveness. In light of the lessons learned from the economic downturn and the fragile economic recovery, any future programme would retain the in-built flexibility for the implementation of the current programme to re act to changing economic circumstances. The 
possibility to react to changes in market de mand, for example by shif ts between the equity 
and debt facilities of the Financial Instrument s under the current programme, will be retained 
in future. Also the other fields of envisage d activities received br oad support such as the 
provision of business support se rvices (85%), support to the internationalisation of SMEs 
(76%) and the exchange of best practices (73 %). As not so relevant was sector-specific 
support considered with around 50% of respondent s considering it as very relevant or 
relevant. However, certain recommendations from the evaluations and from the public 
consultation have been taken into account in th e design of the new programme such as greater 
focus on SME internationalisation. 
In 2011, the European Court of A uditors issued a special repor t on the effectiveness of the 
SME guarantee facility (SMEG) with six reco mmendations to improve the design of the 
SMEG. The main recommendation concerned the European added value of the SMEG and is 
considered in the corresponding section of this report (see section 4.5). In addition, a general assessment of the monitoring system of the current EIP was conducted in a recent IAS 
performance audit. The recommendations of this audit report are considered  in the sections on 
monitoring and indicators (see sections 9.2 and 9.3). 
See Annexes 3, 7 and 11 for further details of  the evaluations, consultation results and the 
audit. 
                                                
 
49  Available under HTTP ://EC.EUROPA .EU/CIP/PUBLIC _CONSULTATION /INDEX _EN.HTM  
 
EN 13  EN  Figure 1 Problem Tree 
 
4.3. Who is affected, in what ways and to what extent? 
European firms are the main stakeholders affect ed by the underlying drivers of the problem to 
which the new programme should respond. SMEs are more affected than larger firms because 
of their characteristics in term s of capital ownership, manageme nt and methods of financing, 
which call for tailor-made policy intervention. 
European SMEs are heavily affected by the following problems50: (i) low market stability, 
low levels of capital investment, weak management skills and resistance to advice or change; (ii) lack of entrepreneurial drive, which is mostly a cons equence of non-economic motives, 
such as ‘the way of life’, living in an attractiv e area, and/or family ties  that drew the owners 
into the occupation in the first instance; (iii) limited business skills, which lead to limitations 
in respect of marketing, deliveri ng quality, price policy, cost cont rol and ability to re-adjust; 
(iv) lack of finance, due to informational asymmetries as well as the problem drivers outlined 
above, which become even more severe in times of financial constraint . 
As SMEs are the main source of new jobs in the EU, their weakness directly affects the labour 
force. Addressing these weaknesses would signi ficantly improve EU employment prospects. 
Many workers would be affected by the new progr amme, as SMEs are Europe’s main engine 
for employment. In 2010, SMEs accounted for 99.8% of the stock of enterprises, and 67% of 
employment in the non-financial  business economy. 30% of tota l employment is concentrated 
in micro-enterprises (10 employees or fewe r). Between 2002 and 2008,  employment in the 
non-financial business economy has on average increased by 1.9 million jobs annually, or 
                                                
 
50 Kristin Hallberg, 'A Market-Oriented Strategy fo r Small and Medium Scale Enterprises', World Bank, 
2000 
 
EN 14  EN  1.5% a year. Over 80% of this employment grow th has been registered in SMEs, which is 
more than the SMEs’ share in total empl oyment (67%). SMEs have a much higher 
employment growth rate (1.9% annually) than large enterprises (0.8% a year). Within the 
SME-sector (firms with up to 250 employees), th e highest growth rate is found in micro and 
small enterprises.51 
Any proposed programme will be horizontal in its  nature and will target excellence among all 
businesses eligible fo r support, being open to  all economic actors and in this sense non-
discriminatory. The same applies also to the geographical distribution of beneficiaries. As 
high-growth SMEs are the main stakeholders of  the new programme, it is difficult to predict 
which Member States are going to be direct be neficiaries. However, smaller Member States 
are likely to benefit proporti onally more from any new programme, as they have more 
fragmented business structures. 
4.4. Foreseen evolution of the problem 
Given the severity of the cons equences of the economic crisis52 and the declared intentions of 
the EU to address it through the Europe 2020 st rategy, this Impact Assessment Report takes 
the 'business as usual' as the baseline opti on. A discontinuation option, will however, also be 
considered. 
Notwithstanding the gradual pace of economic recovery, the economic outlook in the EU 
remains fragile, especially taking into account st ructural challenges such as high debt levels, 
an ageing population, and a shrinking labour fo rce. Over the medium term, the economic 
growth is likely to remain subdued in those Memb er States with specific challenges resulting 
from domestic macroeconomic a nd structural imbalances accumula ted prior to the crisis. The 
aggregate picture is likely to mask differe nces in development, with some countries 
registering a solid rebound in activity whil e others lag behind. Emerging economies are 
expected to perform strongly thanks to robust domestic de mand, trade and commodity price 
developments. Global market competition from  developed and emerging economies, such as 
China and India, will further in tensify. This will go hand in ha nd with increased competition 
for scarce resources and rising resource prices, to which SMEs are sensitive.53 
Apart from these macroeconomic considerations , other more specific f actors will affect the 
policy problem, providing a mixed pictur e of positive and negative trends: 
• Regulatory developments  will influence the future conditions for SME access to finance. 
On the one hand, implementatio n of the Basel III rules on capital and liquidity 
                                                 
51 Figures based on Structural Business Statistics Database (Eurostat) 
 http://epp.eurostat.ec.europa.eu/statistics_explained/ index.php/Structural_business_statistics_overview 
52 OECD, ‘The Impact of the Global Crisis on SME and Entrepreneurship Financing and Policy 
Responses’, 2009 
53 European Commission, Directorate-General for Economic and Financial Affairs, European Economic  
 Forecast, Commission Staff working document, 2010. 
 
EN 15  EN  requirements might lead to a ti ghtening of lending conditions.54 On the other hand, the 
recently recast Directive on late payments is expected to improve business cash flow.55 
• Developments in public policy : At Member State level, budg etary difficulties are likely to 
reduce state support for the development of en trepreneurship and SME-friendly policies. 
• Development of smart, green jobs, product s and services in traditional industries  are 
expected to have strong positive impact on European competitiveness in the future56. High 
demand for sustainable products and services are expected from the implementation of the 
climate and energy strategy across the EU, as we ll as other environmen t-related provisions 
derived from the Community acquis . The same development is likely to apply in 
traditionally strong sectors where the EU’s glob al position is currently being eroded, such 
as tourism or textiles, characterised by a high proportion of SMEs, where high demand for 
personalised, inclusive products and services  can be expected as a result of global 
demographic changes and emerging social trends.57 
In the absence of new policy initiatives at the Eu ropean level to reinforce current measures to 
promote competitiveness, entrepreneurship and SMEs, the market, institutional and policy failures outlined in the preceding sections would persist and perhaps worsen. More 
specifically:  
• The external study found that, with reasona ble estimates, the SME financing gap would 
concern between 400,000 and 700,000 enterprises gi ving a static view based on the total 
number of 23 million existent SMEs. This is a general indication of the market 
deficiencies but it most likely underestimates them since it does not consider the average 
inflow per year of 1.8 million start-ups to th e EU market or recurrent financing needs 
from the existent stock of SMEs.
58 Significant numbers of SMEs could use funds 
productively if they were available but cannot  obtain finance from the financial system:  
total foregone loans are estimated to be between € 40 and € 70 billion.59 European SMEs 
would be deprived also of the benefit of an improved trans-European venture capital 
market, and the ratio of VC investments to GDP would remain much lower in the EU than in the US.
60 
                                                 
54 Basel Committee on Banking Supervision, Basel III:  A global regulatory framework for more resilient 
 banks and banking systems - revised version June 2011, http://www.bis.org/publ/bcbs189.htm 
55 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 recasting 
 the legislation on combating late payment in commercial transactions. 
56 Tukker, Tischner, New Business for Old Europe – Product-Service Development, Competitiveness and 
Sustainability, Greenleaf Publishing (2006) 
57 US EP, "Green Servicizing" for a More Sustainabl e US Economy: Key Concepts, tools and analyses to 
inform policy engagement, www.epa.gov/osw/par tnerships/stewardship/docs/green-service.pdf 
58 European Commission, European SMEs under pressure, Annual on Small and Medium-sized 
Enterprises, 2009 
59 One fundamental problem in dealing with the SME financing gap is lack of basic information about just how 
big such a gap may be.  Moreover, the definition of an  SME varies between financial institutions, some only 
compiling figures by size of loan, not by size of the borrower, and some not keeping regular statistics of SME 
lending at all . OECD, Financing SMEs, 2006. 
60 Europe’s venture capital investments as a share of GDP are only around 25 % of that of the US. 
Although there is clearly some diversity across Europe an countries, even the European country with the 
greatest investment as a share of GDP in 2009 (Sweden) manages only half the rate of the US. /…/ 
 
EN 16  EN  • The role and effectiveness of  national and European busine ss support structures would be 
undermined by national budget cuts, sub-optimal coordination with other EU and national 
initiatives, and uncertainties about the role of  the private sector in  developing networks 
and facilitating partnerships.  
• The EU is facing the key challenge of ensu ring its long-term economic growth through 
modernisation of traditionally strong sectors. In such sectors as textiles or tourism, the 
lack of EU support would make it more difficult to achieve sustainability and 
inclusiveness objectives by promoting more sustainable models of business and more 
efficient use of natural resources. 
• SMEs’ internationalisation would be promoted by Member States with different intensity, 
and sometimes not at all, with the risk of under-performing in fast-growing emerging 
markets. In particular, Europe’s outstandi ng potential for SMEs to access global markets 
would not be fully exploited.61 
The economic crisis and its consequences have  demonstrated that uncoordinated national 
policy responses are of limited value, as they do not muster the critical mass to influence the 
performance and growth of European businesses in global markets and they lack consistency. 
Against this backdrop, a co-ordinated EU-level support to European competitiveness and entrepreneurship, with a special focus on SMEs, could constitute a significant additional contribution to the challenges that Member Stat es are facing. Without further action at EU 
level, European businesses would have even mo re difficulties to adapt in an increasingly 
competitive and interconnected global market.  
A failure to address these proble ms at European level, even w ith limited resources that can 
only have mitigating effects in the event of a major economic downturn, would make it more 
difficult for the European economy to achieve the Union’s Europe 2020 goals. In any case, 
any new programme is supposed to tackle market  and regulatory failure s which are likely to 
persist under any conceivable economic developm ent. Concerning access to finance, for 
instance, there is a well-identified need to support the development of a European cross-
border market for venture capital, inter alia through the provision of initial funding through 
the EU. These long-term efforts are necessary wh atever phase the economy is in due to the 
structural deficiencies in the EU as compared to othe r economies such as the US. 
Nonetheless, in order to adapt to changing economic conditions, the new programme will be 
designed in such a way as to have enough in-built flexibility for its implementation arrangements to shift its strategic focus and operational measures to react to the general 
economic development. 
                                                                                                                                                        
 
Such venture capital is not particularly mobile in  Europe, meaning that the already limited syndication 
possibilities are reduced still further compar ed to the US. EIF working paper 2011/09 
 
61 A study by EIM conducted on the opportunities for EU SMEs in markets outside the EU, in 2011, 
highlighted the potential for growth for SMEs in relation to seven key target markets: Brazil, Russia, India, China (BRIC), Japan, South Korea and Ukraine. In addition, five other target markets were 
considered (Armenia, Azerbaijan, Belarus, Georgia and Moldova) as constituting a good example of 
untapped growth markets for SMEs. 
 
EN 17  EN  4.5. EU right to act and added value 
The EU right to act derives from the Treaty  on the functioning of the European Union, 
particularly from Article 173: EU action should be aimed at “ encouraging an environment 
favourable to initiative and to the developm ent of undertakings throughout the Union, 
particularly small and medium-sized undertakings .” Entrepreneurship and SME support 
measures do not constitute an exclusive co mpetence of the EU. The Lisbon Treaty endowed 
the European Union with powers to support, coordinate and complement action by Member 
States in this field.  
In addition, in the case of tourism, EU intervention also draws on Article 195: “ The Union 
shall complement the action of the Member Stat es in the tourism sector, in particular by 
promoting the competitiveness of Union undertakings in that sector. ” The Lisbon Treaty, 
providing this new legal basis in  the area of tourism, recogni ses its economic weight as a 
sector within the EU62  and the EU value added of polic y initiatives in this sector.  
In these areas of competence, the case for action at  the EU level relies on five main sources of 
European added value: 
• the benefits associated with the strengthening of the Single Market , by overcoming 
market fragmentation in areas such as ve nture capital investment , cross-border lending 
and credit enhancement as well as inform ational and organizati onal constraints which 
prevent SMEs from taking advantage of the op portunities that the Single Market offers. 
For instance, the main purpose of the financial instruments will be to improve access to finance to SMEs in a market segment which is not covered by Memb er States’ measures, 
which are restricted to investments and s upport within each country. The focus will be on 
financing expansion of growth-oriented ente rprises that are aiming at international 
expansion, cross-border activ ities and to develop a cro ss-border SME finance market. 
Only an EU-level programme can fulfil this role. In this way, the improved design of the 
guarantee facility will also respond to the si xth recommendation of the Court of Auditors’ 
special report. 
• the possibility of achieving significant demonstration and catalytic effects , through the 
dissemination of industrial and policy best practices. Under the current programme, the 
best examples in promoting entrepreneurship  and SMEs at national, regional and local 
level can be selected for the European Enterprise Awards competition. The Awards are aimed at rewarding the best measures taken by public authorities. Every year around 400 
projects have competed in the national comp etitions and around 56 are selected by their 
countries to participate in the European Co mpetition where the European jury selects six 
winners. From the 250 national nominees, more  than 30 have won an award and been 
showcased across Europe as a best practic e. Transferring skill s and knowledge across 
frontiers contributes  to align Member States ' policies, create new business partnerships 
and reduce the gap between European ec onomies. European national and local 
administrations have the possibility to pres ent their successful initiatives at the SBA 
Conference, organised every year by th e Commission and the EU Presidency. The 
                                                
 
62 Tourism industry generates more than 5% of the EU GDP, with about 1,8 million enterprises employing 
around 5,2% of the total labour force (approximately 9,7 million jobs). When related sectors are taken 
into account, the estimated contribution of tourism to  GDP creation is much higher: tourism indirectly 
generates more than 10% of the European Union's GDP and provides about 12% of the labour force 
 
EN 18  EN  Conference has become the key event for prom oting the exchange of  good practices in the 
EU and beyond. For example, the latest SB A Conference in B udapest attracted 340 
participants from EU and 30 non-MS. 28 good practices were presented in the work-
shops. As regards financial instruments, the ro le of the EIF facilita tes constant exchange 
of best practices in the areas  of both guarantees and ventur e capital, while the catalytic 
effect is acknowledged to be part icularly high for venture capital. 
• the achievement of economies of scale  in areas where it would be difficult for individual 
Member States to achieve the required critical  mass. For instance, in the field of support to 
SMEs abroad, European added value is creat ed by the bundling of national efforts and, by 
establishing services that would lack critical mass if provided at national level (for example, through support to IPR enforcement) . The China IPR SMEs Helpdesk, funded 
by the current programme, offers advice which would be otherwise unavailable to SMEs 
from smaller Member States.
63 Otherwise, EU interventi on can contribute to avoid 
duplication of effort, promote cooperation betw een Member States and coordination with 
relevant non-Member States. In the case of t ourism, there is clear added value in taking 
initiative at the EU-level especially in the following areas: the consolidation of the 
knowledge base in the tourism sector by the means of pan-Eu ropean surveys and studies 
to better understand the demand and the s upply side, without which data comparability 
and consistency across the EU would not be achieved64; the development of joint 
transnational strategies for tourism promoti on of Europe as home  to high quality and 
sustainable tourist destinations65; as well as the extension of the tourism season, which 
could be done better with exchanges between different Me mber States than by each 
country individually. 
• supporting coherence and consistency  in national measures through the exchange of best 
practices at European level and benchmarking.66 One of the best examples for the success 
of benchmarking exercises financed under the current programme  is the action for 
simplification of start-up procedures. Sin ce 2008, the situation a nd progress country-by-
country and year-by-year has been monito red taking into account three aspects of 
simplification (in respect of which a be nchmarking exercise was mandated by the 
Competitiveness Council): average time, admini strative costs and procedures to start-up a 
limited company. The action consisted of semi -annual expert meetings  ("the network of 
National Start-up Co-ordinat ors") nominated by Member States. Its purpose was to 
develop a measurement methodology, track progr ess and support this progress with the 
exchange of good practices and information. Since 2002 registration times have dropped 
by 70% and costs have more than halved. Fo llowing the success of this measure, targets 
have been reviewed by the February 2011 Re view of the Small Business Act (SBA). 
                                                 
63 Over 50,000 different users of the IPR web portal and e-learning services over the first 3 years, with 
over 2 million hits; more than 30 training seminars and interactive workshops run every year, of which 
2/3 performed in Europe, to gather SMEs' concerns. 
64 Studies/surveys carried out by individual smaller Member States would have less European added-value 
and fail to cover the EU wide scope and might generate  a duplication of research  already carried out in 
other countries. 
65 This type of measures implies a higher added-value and impact if done with a 
coordinated/complementation approach between the Member States; moreover smaller Member States 
tend to have fewer resources for promotion of thei r destinations and especially for the promotion of 
transnational tourism products. 
66 EIM, June 2011 
 
EN 19  EN  • the unique expertise acquired by EU institutions:   
• This is the case of the EU financial institutions, the European Investment Bank 
(EIB) and the European Investment Fund (EIF) , whose experience in designing and 
implementing SME-friendly financing scheme s is unparalleled. The experience gained 
by the EIF over more than 10 years constitute s a uniquely valuable asset. It has acted 
since 2007 as an investor in 19 CIP-supported venture capital funds, often in a cornerstone role, leveraging over €1.4 billion of total investment in growth-oriented 
SMEs. As regards historical performance, under the first generation of EU venture 
capital (the ETF Start-up Facility under the Growth & Employm ent Initiative from 
1998-2000) over 98% of the money invested ha s already been, or should ultimately be, 
paid back from beneficiaries, including Skype (voice-over IP telephony), Vertaris 
(paper recycling) and Solaire Di rect (Photovoltaic structures).  
• The Enterprise Europe Network
 has achieved tangible results by putting 
emphasis on promoting the internationalisati on of SMEs (in the Internal Market and 
beyond) through providing information on EU matte rs as well as the possibility to feed 
into the decision making process. Its role  is especially important in overcoming 
information asymmetries faced by SMEs and alleviating transaction costs associated 
with cross-border activities. The value of th e Enterprise Europe Network is constituted 
by the shared methodologies, instruments and tools used qualified service providers 
mandated and (co-) financed by thei r regional / national authorities. 
Taking into account the above, the subsidiarity principle according to which the EU  is entitled 
to act if “the objectives of the proposed action cannot be suffi ciently achieved by the Member 
States”, is fully respected. The proposed EU inte rvention is in line with  the Lisbon Treaty, as 
it will specifically target policy failures such as  lack of coordination and effective networking 
and market failures such as information asymme tries which can only be  tackled at European 
level. In particular, the activities related to tourism will address the absence of a well-consolidated and coordinated t ourism policy, both in terms of streamlining initiatives at the 
EU level, and in terms of  coordination between the EU  and its Member States.
67  
None of the measures considered under the current or future programme calls for the 
substitution of national initiatives by an EU -level measure or binding decisions at the 
European level. On the contrar y, EU intervention is designed to  make national measures work 
better, by giving a European dimension to them, by better coordination and the removal of cross-border obstacles to c ooperation either by private act ors or public authorities. 
Cooperation of national and regi onal actors and structures is encouraged by means of 
“horizontal” networking rather than “ver tical” centralization. Fo r instance, the SME 
Performance Review regularly provides info rmation structured according to the SBA 
principles and based on core indicators compar ing the performance of the individual Member 
States to the EU average. Moreover, the "Good Practices" database provides this information 
on-line and contains activities taken by public authorities in the 27 EU Member States to 
improve the business environment of SMEs. Ov er 90 good practice exampl es at national and 
regional level were proposed during the second half of 2010. 
                                                
 
67  OECD Centre for Entrepreneurship, SMEs and Local Development. (2010). “OECD Tourism Trends 
and Policies 2010” 
 
EN 20  EN  EU action also has to be proportional, in other words, efforts and means deployed have to be 
fully justified by the goals. In this respect, given the challenges faced by the European economy, the size and scale of EU action is ex pected to generate positive impacts across 
Europe through crowding-in and multiplier e ffects. Because of the current budgetary 
constraints, any EU-level measures have been ca refully selected in order to provide measures 
which can demonstrate EU added value.  
Based on the above analysis, it can be concluded that the propos ed EU-level intervention to 
promote entrepreneurship and competitiveness, es pecially taking into account SMEs needs, is 
fully justified.  
5. O
BJECTIVES  
The hierarchy of objectives is su mmarised in Figure 2 below. 
5.1. General policy objectives 
The overarching objective of the new programme would be to contribute to the achievement 
of Europe 2020’s objective of “ smart, sustainable and inclusive growth ”. In particular, the 
proposed programme would contribute to the he adline target concerning employment (75% of 
the 20-64 year-olds to be employed). In order to  contribute to this overall objective, two 
general objectives are envisaged:  
• to strengthen the sustainable competitiven ess of Europe's industrial base and,  
• to encourage entrepreneurship and the creation and growth of SMEs. 
5.2. Specific policy objectives  
In view of the above general objectives, the specific objectives to be pursued are: 
(a) to improve framework conditions for the co mpetitiveness and sust ainability of EU 
businesses; 
(b) to promote entrepreneurship; 
(c) to improve access to finance; 
(d) to improve access to markets. 
 These objectives describe the results to be  achieved by the new programme, respect the 
S.M.A.R.T. (specific, measurable, achievabl e, relevant and timed) criteria and are 
accompanied by performance indicators. 
5.3. Operational policy objectives 
The specific objectives identified above can be broken down into more operational objectives, 
focusing on the overcoming of specific obstacles  to growth and/or the creation of more 
 
EN 21  EN  conducive framework conditions for growth, largely based on the principles of the Small 
Business Act for Europe (SBA)68: 
i to enhance the effectiveness of policies and institutions supporting competitiveness and 
growth; 
ii to foster the competitiveness of targeted EU sectors;  
iii to facilitate market uptake of sustainable,  inclusive products, serv ices and processes; 
iv to tackle obstacles to SMEs’ pot ential to grow and create jobs; 
v to improve framework conditions fo r entrepreneurship development; 
vi to foster entrepreneurial attitudes, mindsets, skills and capabilities;  
vii to improve SMEs’ access to venture capital and mezzanine markets and strengthen EU-
wide markets for these instruments; 
viii to improve conditions for guarantees and ot her forms of risk sharing including cross-
border lending and commercial activities; 
ix to help SMEs take full adva ntage of the Single Market; 
x to help SMEs to access and develop activities in markets outside the EU; 
xi to reduce differences between EU and third co untry regulations for industrial products, 
industrial policy and bu siness environments. 
                                                 
68 http://ec.europa.eu/enterprise/policies/sme/small-business-act/ 
 
EN 22  EN  Figure 2 Hierarchy of objectives 
 
 
 
EN 23  EN  Table 1 summarises the relations hip between the problems identi fied in Section 4 and the 
proposed objectives. 
Table 1 Logic of Intervention 
 Problems Objectives 
I) Loss of competitiveness of the 
European economy  I) To strengthen the sustainable 
competitiveness of Europe's industrial base  GENERAL II) Lack of entrepreneurship and SME 
creation II) To encourage entrepreneurship and the 
creation and growth of SMEs 
(a) fragmentation of regulatory 
scenario (a) to improve framework conditions for 
the competitiveness and sustainability of EU business; 
(b) lack of policy coordination and 
ineffective networking (b) to promote entrepreneurship; 
(c) information asymmetries in 
accessing funding (c) to improve access to finance; SPECIFIC 
(d) transaction costs in cross-border 
activities (d) to improve access to markets; 
(1) issues in industr y specialization and 
competitiveness; (1a) to enhance the effectiveness of policies 
and institutions supporting competitiveness and growth; 
(1b) to foster the competitiveness of 
targeted EU sectors;  
(2) limited investment  and adoption of 
(eco)-sustainable products and 
processes; (2) to facilitate market uptake of new 
business concepts as well as sustainable, inclusive products and processes; 
(3) unfriendly business environment; (3) To tackle obstacles to SMEs’ potential 
to grow and create jobs; 
(4) low levels of entrepreneurial firm 
creation and poor performance; (4) To improve framework conditions for 
entrepreneurship development; OPERATIONAL 
(5) weak entrepreneurial spirit;  (5) to foster entrepreneurial attitudes, 
mindsets, skills and capabilities; 
 
EN 24  EN  (6) problematic access to finance; (6a) to improve SMEs’ access to venture 
and mezzanine markets and strengthen EU-wide markets for these instruments; 
(6b) to improve conditions for guarantees 
and other forms of risk-sharing including cross-border lending and commercial activities; 
(7) limited internationalization of 
SMEs (7a) to help SMEs take full advantage of 
the Single Market; 
(7b) to help SMEs to access and develop 
activities in markets outside the EU; 
(7c) to reduce differe nces between EU and 
third country regula tions for industrial 
products, industrial policy and business environments. 
 
5.4. Consistency with other policies and objectives 
The Commission Communication on the next MFF ha s underlined that it is essential that the 
specific interests and circumstan ces of SMEs are taken into account in the design of all EU 
policies and funding programmes. The future financial framework will be designed to 
facilitate the participation of small busine sses in funding programmes,  by simplifying rules, 
reducing the costs of particip ation, accelerating award proce dures and providing a “one-stop 
shop” to make life easier for beneficiaries of EU funding.  
The Europe 2020 Strategy identifies the enhanc ement of competitiveness as an objective of 
high importance to be achieved, inter alia, by setting up a “frame work for a modern industrial 
policy, to support entrepreneurship , to guide and help industry to become fit to meet these 
challenges, to promote the competitiveness of Europe’s primary, manufacturing and service 
industries and help them seize the opportunities of globalizati on and of the green economy”.69  
The relevance of SMEs for the Europe 2020  strategy was recently acknowledged in the 
Review of the Small Business Act (SBA) of Fe bruary 2011, endorsed by the Competitiveness 
Council of 30 May 2011, which emphasised three pr iority areas: smart regulation, access to 
finance and access to markets. Although most initiatives foreseen by the 2008 SBA have been 
launched, the Review states th at more must be done to help  SMEs, especially by reducing 
deficiencies in financial markets, prom oting business cooperation and cross-border 
partnership, and sectoral initia tives in line with the Industria l Policy Flagship initiative. 
Due to its importance for the achievement of the Europe 2020 goals, the improvement of the 
business environment for SMEs is mentioned in six out of seven Europe 2020 flagship 
                                                 
69 Europe 2020 Communication, COM(2010) 2020 final. 
 
EN 25  EN  initiatives.70 Of particular relevance for the new pr ogramme is the flagship initiative “An 
industrial policy for the globalization era” which outlined a new strategic approach, 
addressing European competitiveness as well as the creation and growth of small and 
medium-sized enterprises and the prom otion of an entrepreneurial culture.71 Its key objectives 
include: 
– strengthening the Single Market  by improving market surveill ance, information, partner 
search and advice services for SMEs, crea ting a market for business services, and 
reinforcing IPR enforcement as well as European standardisation; 
– improving sectoral policy frameworks  at both EU and Member State and regional level 
particularly relevant for EU competitiveness, such as tourism and user-driven consumer goods, as well as addressing key social challenges; 
– promoting entrepreneurship, j ob creation and inclusive growth
 by simplifying 
administrative requirements and procedures to start up a business, promoting the 
development of critical skills and mindsets for future entrepreneurs and generating  
entrepreneurship among women and young people; 
– improving the business environment , in particular by improving access to finance, smart 
regulation, and reinforcing the “T hink Small First” Principle; 
– capitalising on globalisation  through support services to improve  access to markets 
outside the EU particularly for SMEs.  
The proposed new programme will also prov ide a tool which can serve other policy 
objectives. The Enterprise Europe Network w ill provide a vehicle for links with other 
programmes and initiatives , in terms of “top-down” diffusion of information, promoting them, 
as well as “bottom-up” collec tion of feedback from stakeholde rs. Other Commission services 
are interested in using the Network partners both in Europe and overseas for the delivery of 
parts of their programmes to SMEs: DG RTD wishes   to build the National Contact Points for 
SMEs into the Enterprise Europe Networ k, DG CLIMA is exploring how a Network-like 
structure could contribute to making a “tech nology mechanism” of the Climate Change 
Convention (UNFCCC) accessible to Europe an SMEs, and DG AIDCO believes that a 
Network-type mechanism can deliver programmes like SWITCH Asia (encouragement of cleaner production in Asia) more effectively. 
Synergies with other programme s will also be maximised. For example, the guarantee 
activities proposed in the new programme will operate alongside guarantee activities funded 
under the EU Structural Funds. The SMEG  successor will focus more on guarantees 
supporting cross-border and multi-country lending, as well as securitisation, in line with a 
recommendation by the European Court of Aud itors to maximize EU added value in any 
successor to the SMEG facility.
72 This would ensure a high degree of complementarity with 
                                                 
70  An Industrial policy for the Globalisation Era, Innovation Union, Youth on the Move, A Digital Agenda 
for Europe, Resource Efficient Europe, An Agenda for new Skills and Jobs. 
71 Communication from the Commission, An Integrated Industrial Policy for the Globalisation Era Putting 
Competitiveness and Sustainability at Centre Stage, Brussels, COM(2010) 614. 
72 European Court of Auditors, ibid, page 50. 
 
EN 26  EN  other EU programmes, such as JEREMIE, wh ich are focused on the national and regional 
levels. 
The new programme would avoid overlaps with other programmes . As stated earlier, the 
programme will not cover actions addressing ma rket failures related to innovation, which will 
be included in the Horizon 2020 programme. For example, it is foreseen that Financial 
Instruments in Horizon 2020 will focus on fi nancing research- and innovation-driven 
enterprises, in particular clean technologies and life sciences, where the funding is at a sub-
optimal level given the high leve l of capital required. As a consequence, the new programme 
would instead target growth-ori ented SMEs in their growth and internationalisation phases. 
Also other actions targeting i nnovative SMEs currently covered by the CIP would in future be 
supported by Horizon 2020 so that a clear dis tinction according to beneficiaries will be 
achieved. With this target group, the new progr amme would also avoid overlaps with the 
European Progress Microfinance Facility (Progr ess Microfinance), as there is no specific 
microfinance facility in the proposed Financial Instruments.  The Progress Microfinance was 
set up as part of the EU response to the crisis  with rising unemployment and social exclusion. 
Its goal is increasing access to and availabi lity of microfinance for vulnerable groups, 
especially in the social economy. The same  would apply to its successor after 2013, which 
will be extended to investments in social enterprises.   
For the new programme, the responsible Commi ssion services for activities to promote 
entrepreneurship plan to closel y coordinate to establish comple mentary links between all their 
actions. Already, unemployed youth benefiting from  the microfinance credit for starting an 
enterprise have the opportuni ty to also participate in the exchanges programme for 
entrepreneurs to acquire the necessary entrepre neurial skills. In addition, cooperation has been 
initiated to integrate all Commission entrepreneur ship measures in order to jointly target 
migrants and senior entrepreneurs and potentially other target groups. 
Careful consideration will also be given to the complementarity of the new programme with 
the proposed Partnership Instrument. It will be  essential that the ex ternal action of the 
European Union be complementary to the external dimension of the internal agenda of securing sustainable growth  and jobs in Europe.  
Finally, the proposed programme  would be fully complement ary with existing national 
measures supporting SMEs. For instance, the cross-border and multi-country focus of the proposed financial instruments would avoid undue interference with public support measures 
which are of a national nature. In particular, the Guarantee Agreements between the EIF and 
participating financial intermediaries provide that the EU Guarantee will not be used to 
substitute existing public support, thus ensuring  additionality in the unlikely case that the 
instruments overlap. Finally, if the existence of an EU guarantee scheme encourages the 
development of national schemes targeting th is area or inter-linka ges between national 
schemes in order to mutually support SME cro ss-border activities it would in fact have 
achieved its objective of enhancing SME credit  access with respect to such activities. 
6. P
OLICY OPTIONS  
The scale and nature of the considered options are based on the proposed architecture of the 
post-2013 MFF as described in the Commi ssion's Communication “A budget for Europe 
 
EN 27  EN  2020”.73 All the options are consistent with the proposed budgetary allocation. In addition, 
however, this report also  refers to a hypothetical scenario (3a), based on the analysis provided 
in the external study concluded before June 2011. The budgetary assu mptions of this study 
were not consistent with the Commission’s fi nal proposal but the quantitative analysis of the 
study is still relevant to the considered options.  
The different options can be described as busin ess-as-usual, discontinuation and expansion.   
¨ Option 1 – Business-as-usual (baseline) , the continuation of current EU support 
activities on their current scale; 
¨ Option 2 - Discontinuation , in which all the measures envisaged under Option 1 would 
be terminated; 
¨ Option 3 - Expansion , in which two sub-options a nd one hypothetical scenario are 
analysed: 
• Hypothetical Scenario 3a – Significant budgetary expansion for all components:  this 
scenario reflects the ‘preferred’ sub-option identified by the exter nal study. (Although 
assuming a budget that exceeds (sometimes significantly) the budget proposed by the Commission on 29 June, this scenario provid es most information on (quantitative) 
impacts, which is relevant for the asse ssment of the two sub-options below).  
• Sub-Option 3b - Modest budgetary expansion for all components: all components 
are retained and their scale is adapte d to the total budget proposed for the 
Competitiveness and SME programme in COM(2011)500.
74 
• Sub-Option 3c – Budgetary expansion wi th focus on the two main components : 
the budget is the same as in Option 3b but is concentrated on the financial instruments 
and the Enterprise Europe Network. 
Table 2 below provides a synthetic presentatio n of the distribution of budgetary allocation 
among different proposed options and corresponding envisaged measures.  
Table 2  Summary of Options 
 Option #1 Option #2 Option #3  
 Business as Usual Discontinuation of 
EU intervention Expansion of EU  intervention 
Measures €213 million/year  €0 million/year  Option 3B:   €340 million/year 
Option 3C:   €340 million/year  
1 – Activities to 
improve European 
competitiveness Improvement of the 
economic and regulatory 
environment through Discontinuation of all 
current activities Option 3B : Baseline plus launch of 
a range of complementary actions 
in new areas (e.g. Corporate Social 
                                                 
73 COM(2011)500 
74 The options are built upon average yearly budget allocations. In view of the proposed, steeply 
increasing profile for the new programme, it is expected that all activities would start at a budget level 
comparable to 2013 and would increas e over the life-time of the programme. 
 
EN 28  EN  benchmarking, the 
exchange of best practices 
and sectoral initiatives 
(€11 million/year) Responsibility) (€14 million/year); 
Option 3C : Discontinuation of all 
current activities 
2 – Developing 
SME policy and 
promoting SMEs' 
competitiveness Implementation of the 
SBA and its Review at 
European and national 
level (e.g. Promotion of the "Think Small First" 
principle) (€9 million/year) Discontinuation of all 
current activities Option 3B : Same as Baseline 
option (€9 million/year);  
Option 3C : Discontinuation of all 
current activities 
3 – New business 
concepts for 
sustainable, user-
driven design-
based consumer 
goods Analysis related to design-
based consumer goods and 
support measures in the 
areas of IPR or e-business (€1 million/year) Discontinuation of all 
current activities Option 3B : Use of instruments 
such as “market replication 
projects” in areas where SMEs face 
obstacles to take-up new eco-sustainable technologies and new 
user-driven business concepts (€ 12 
million/year); 
Option 3C : Discontinuation of all 
current activities 
4 – Tourism Continuation of current 
initiatives in the field of tourism co-financed under 
CIP/EIP (e.g. follow-up to 
preparatory actions for sustainable tourism: 
EDEN, CALYPSO) (€5 
million/year) Discontinuation of all 
current activities Scenario 3B : Expand the scope of 
intervention to new activities related to sustainability and 
targeting diversification of 
products and services  (€18 million/year); 
Option 3C : Discontinuation of all 
current activities 
5 – Activities to 
promote 
Entrepreneurship Encouraging the 
development of 
entrepreneurial skills and 
attitudes, including 
exchange programmes for 
entrepreneurs (€11 million/year) Discontinuation of all 
current activities Option 3B : Same as Baseline 
option plus modest expansion of 
activities focused on the increase of 
number of exchanges (€12 
million/year); 
Option 3C : Discontinuation of all 
current activities 
6 – Financial 
instruments Continuation of support to 
access to finance, mainly 
through provision of guarantees to SMEs and 
Venture Capital funds 
targeting firms in the growth stages  (€113 
million/year) Discontinuation of all 
direct intervention in 
financial instruments, with EU action 
limited to elimination 
of regulatory barriers to cross border 
venture capital Option 3B : 80% increase in 
resources, relative to Baseline, with  
the same range of instruments funding both debt and equity (€200 
million/year); 
Option  3C: Focused expansion of 
activities, reflecting an increase of 
risk sharing finance in venture and 
mezzanine capital (€280 million/year) 
7 – Enterprise 
Europe Network Maintain the Network’s 
role and scope as it is (€60 
million/year)  Discontinuation of all 
direct financial 
support to the regional Network 
consortia Option 3B : Same as Baseline 
option (€60 million/year); 
Option 3C : Re-orient the Network 
as an entry point for equity 
financing  (€60 million/year) 
8 – SME support 
abroad Continuation of current 
initiatives (i.e. limited financial support to 
selected initiatives such as 
China IPR SME Helpdesk) 
(€2 million/year) Discontinuation of all 
forms of direct initiatives Option 3B : Expansion of the range 
of instruments including: a) coordination and information 
dissemination activities; b) 
financial support to existing SME 
help structures in key third 
 
EN 29  EN  markets; c) possible establishment 
of EU support centres where 
appropriate (€12 million/year); 
Option 3C : Discontinuation of all 
forms of direct initiatives 
9 – International 
industrial 
cooperation Continuation of current 
initiatives focused on SME 
and industrial policy co-operation with third 
countries in the “Near 
Europe” aiming to 
facilitate EU - third 
country convergence of industrial policy and 
regulatory frameworks (€1 
million/year) Discontinuation of all 
current activities Option 3B : Expansion of the range 
of instruments including: a) 
industrial and regulatory dialogues with third countries; b) business-to-
business dialogues with third 
countries; c) SME industrial policy 
co-operation (€3 million/year); 
Option 3C : Discontinuation of all 
current activities 
 
Option 1 – Baseline   
Under this option, the new programme would cover the same competitiveness- and SME-
related elements as the EIP  is expected to cover in 2013 and would have a budget of about € 
213 million per year. It would include the following elements: 
• Activities to improve European Competitiveness, aimed at supporting coherence and 
consistency in implementation as well as in formed policy making at European level, 
would be allocated a budget of €11 million/ year. They would aim to improve the 
economic and regulatory environment thr ough benchmarking, the exchange of best 
practices and sectoral initiatives. 
• Activities to develop SME policy an d promote SMEs competitiveness, aimed at 
implementing the SBA and its Review at Europ ean and national level, would be allocated 
€9 million/year. Priorities would be to promote the use of the “Think small first” principle in EU and Member State policy making and to exchange good practices in relation to the 
implementation of the SBA. 
• Activities targeting specific sectors: 
• New business concepts for sustainable, user-driven design-based consumer 
goods, aimed at getting new business concepts to the market,  would receive a budget 
of less than €1 million/year to fund analysis  related to design-based consumer goods 
and support measures in the areas of IPR or e-business; 
• Tourism -related initiatives co-financed under the EIP, aimed at promoting 
competitiveness and sustainable growth in the EU tourism industry, would be 
maintained (€5 million/year), including measures related to EDEN (European Destinations of Excellence), CALYPSO (social tourism) and sustainable tourism, previously implemented as preparatory actions. 
• Promotion of entrepreneurship aimed at fostering entreprene urial attitudes, mindsets, 
skills and capabilities would be allocated €11 million/year to encourage the development 
 
EN 30  EN  of entrepreneurial sk ills and attitudes, especially among new entrepreneurs, young people 
and women. An exchange programme for en trepreneurs would be maintained at the 
current budgetary level. 
• Actions in the field of Financial Instruments  aimed at facilitating access to finance for 
SMEs would be allocated a budget of a pproximately €113 million/year and would be 
centred on the provision of gua rantees to SMEs and investme nt in venture capital funds 
targeting firms in the growth stages, but not  excluding others. On average, 55% of the 
total resources would be allo cated to venture capital and me zzanine instruments and 45% 
to loan guarantees, though flexibility should be  maintained between the two instruments. 
Depending upon market developments and resources  available, investments might also be 
provided to securitization schemes. 
• Further development of EU level SME support networks: 
• The Enterprise Europe Network  providing business support  services to SMEs 
on the ground would be kept in place as it is. Budget would be in the order of €60 million/year. 
• Support for SME abroad,  aimed at supporting the internationalisation of 
European SMEs in third country markets, es pecially in the fast est-growing economies, 
would continue through limited financial s upport to existing initiatives such as the 
China IPR Helpdesk and the EC-Japan Centre with a budget of €2 million/year.  
• Support to international industrial cooperation with candidate c ountries and the 
European Neighbourhood countries aiming to faci litate EU - third c ountry convergence of 
industrial policy and regulatory frameworks w ould be continued at a modest level of €1 
million/year.  
Option 2 – Discontinuation 
This option would see a halt to all current fina ncial intervention with a budget saving of about 
€213 million/year. EU action would be limited to regulatory actions aimed at creating supportive framework conditions (for example, in the case of access to finance, regulatory 
measures aimed at improving the legal and commercial environment for venture capital 
operations).  
Scenario 3a – Significant budgetary expansion for all components 
Under this scenario, which is not considered as  a viable policy option and is presented as a 
hypothetical point of reference, the overall budget would increase considerably (to €883 
million/year) and all competitiveness- and SME-related components of the EIP as of 2013 would be expanded to the level consid ered optimal by the external study.  
• An increase in the budget for activities to improve Eu ropean competitiveness  (to €20 
million/year) would allow the launch of new complementary actions needed for the 
implementation of the Europe 2020 flagship "An Integrated Industrial Policy for the Globalisation Era". This would include impl ementing new industrial policy actions such 
as the development of new sustainable pr oduct policies, the follow up to High Level 
 
EN 31  EN  Group on Business Services, and support for the ne w policy initiative on corporate social 
responsibility. An important goal  of such activities would be to use relatively small EU-
level funding to leverage much larger part icipation by Member States and the private 
sector.  
• An increase in the budget for activities to develop SME policy and promote SMEs 
competitiveness (to €10 million/year) would allow new measures to take into account the 
new political priorities identified by the SBA Review, in partic ular by enhancing the 
governance structure and monitoring of  SBA implementation through the SME 
Performance Review, exchange of good pr actices and communication activities.  
• Activities targeting specific sectors: 
• The increase in the bu dget of the component new business concepts for 
sustainable, user-driven de sign-based consumer goods (to €20 million/year) would 
allow broadening the range of instruments av ailable. The financing of 20 to 25 pilot 
and market replication projects would be  envisaged each year. Projects would 
encourage market uptake of competitive business models to achieve multi-functionality of products, in telligent manufacturing and the smart value chain, new 
design and product life cycle concepts , and increased customisation and 
personalisation of products. Part of th e budget would be devoted to enhancing 
specialised skills and facilita ting multi-sector collaboration. 
• An increase in the budget and scope of the instrument covering Tourism -
related measures would encompass the chal lenges confronting en terprises and public 
stakeholders in the sector. This would incl ude an expansion of actions addressing the 
reduction of seasonality, the diversification of transnat ional tourism products, the 
enhancement of sustainability and promo tion of sustainable and inclusive tourism 
products, services and destin ations, EU-level collection and coordination of socio-
economic data and research,, the uptake of ICT and the improvement of skills, professionalization and mobility of personnel. It would also imply an expansion of the 
scope of intervention to new activities, fo cusing especially on joint strategies for 
tourism promotion targeting both the EU a nd third countries’ markets and enhanced 
international cooperation in tourism.  The budget would be €35 million/year. 
• An increase in the budget for  promotion of entrepreneurship  (to €18 million/year) would 
accelerate the development and implementation of common European solutions to 
disseminating best practice. In particular , the increased budget would more developed 
exchanges of experience between entrepreneur s and to foster entrepreneurial attitudes, 
skills and capabilities, in pa rticular of women and young peop le. This would involve the 
provision of support to Member States a nd regions willing to  launch programmes 
implementing best practices al ready tested at EU level. 
• A major increase in the budget for  Financial Instruments  (to €700 million/year from its 
baseline level of €113 million/year) would allow for a considerable expansion of 
activities, providing a much-needed increase of risk sharing finance in particular venture 
capital and mezzanine capital: 
 
EN 32  EN  o €300 million/year for several (up to fou r) “fund-of-funds”, which would invest 
in venture capital funds which subsequently  invest in enterpri ses, in particular 
in their internationalisation stage , but also in others, and support a structural 
development bringing an EU-wide ventur e capital market closer towards the 
level of comparable economies, such as the USA;  
o €150 million/year for investments in venture capital and mezzanine funds 
which invest in particular in growth-oriented enterprises with a potential to internationalise; 
o €250 million/year for a loan guarantee faci lity, providing direct or other risk-
sharing arrangements with financial intermediaries. The facility would generate a high leverage effect and would provide the cross-border and multi-
country lending that could not easily be achie ved through facilities at national 
level, and for securitisation of portfolios of SME loans. 
The choice of instruments is based on the eval uations, the external st udy, market analysis 
and, in particular, in close cooperation with the EIF. Since each financial instrument is 
market-based, they would recei ve only tentative initial allo cations, in order to allow 
flexibility in adapting to market conditions that  are likely to change during the lifetime of 
the programme. This applies also to Options 3b and 3c. 
• Further development of EU-level SME support networks: 
• An increase in the budget for  the Enterprise Europe Network  to €65 
million/year would allow opening up the Network to more third countries and put 
some mechanisms in place to support the internationali sation of SMEs in third 
countries. Under this scenario, the Networ k would be able to connect and link to 
actions developed worldwide by other Comm ission services (such as SME/business 
centres, brokerage events programmes, Gate ways), and accelerate integration of new 
Network members from third countries. It would provide support to the forthcoming 
EU strategy to support th e internationalisation of  SMEs beyond the EU.  
• A major increase in the budget for  support for SME abroad  (to €12 
million/year) would allow broadening the range of instruments, including: (i) coordination and information dissemination ac tivities, (ii) strengthening of existing 
SMEs support structures in key third markets, and (iii) establishment/expansion of EU 
support structures in key third markets based on mapping of existing services 
reinforcing European Business Organisations  abroad and where appropriate setting up 
additional EU SME support centres.  
• An increase in the budget (to €3 million/year) and th e range of instrume nts for support to 
international industrial cooperation  would include (i) industria l and regulatory dialogues 
with third countries (main trading partners), (ii) business-to-business dialogues with third 
countries, (iii) SME policy and industrial poli cy co-operation in the “near Europe”. It 
would extend the thematic and geographic scope  of the co-operation with third countries 
and to increase the effectiveness and efficiency of the co-operation. 
 
EN 33  EN  Option 3b - Modest budgetary expansion for all components: Under this option all 
envisaged components w ould be included in the new progr amme at a level of financing 
matching the budget envelope foreseen for the Competitiveness and SME instrument in the 
Commission’s proposal for the ne xt MFF (€340 million/year on average). This implies that 
for some components the budget considered op timal by the external study would not be 
available and activities would be restricted to the most essential. 
• A limited increase in the budget for activities to improve Eu ropean competitiveness  to € 
14 million/year would, compared to Option 3a, result in less budget for all actions 
foreseen. 
• Activities to develop SME policy an d promote SMEs competitiveness : same as baseline 
option (approximately €9 million/year) 
• Activities targeting specific sectors: 
• Similarly to Scenario 3a, the propos ed increase in the budget (to  €12 
million/year) of the component new business concepts for sustainable, user-driven 
design-based consumer goods would allow broadening the range of instruments to 
complement previous EU intervention in areas where SMEs face similar obstacles. Projects would encourage market uptake and competitive business models to achieve the objectives outlined in Scenario 3a. Part  of the budget would be devoted to enhance 
specialised skills and facilita te multi-sector collaboration. 
• Under a moderate extension opt ion, EU intervention in the tourism  sector (to 
€18 million/year) would be focused on a core set of activities offering the highest 
potential benefits in terms of economi es of scale and generation of positive 
externalities. This would imply the conti nuation of the measures currently undertaken 
in the tourism field and their moderate expansion. The focus would therefore be on 
sustainability and extension of seasonalit y, the diversification and promotion of 
transnational high-quality and inclusive to urism products and services, use of ICT, 
skills and the consolidation of the soci o-economic knowledge base in the sector. 
• An increase in the budget for  promotion of entrepreneurship  (to €12 million/year) would 
allow accelerating the development and implem entation of common Euro pean solutions to 
disseminating best practices. In  particular, the best use of  this moderately increased 
budget would be to enhance the number of  exchanges of experiences between 
entrepreneurs.  
• Financial Instruments : a budget of €200 million/year woul d allow both debt and equity 
instruments to be funded, albeit at a lower le vel than in Scenario 3a and Option 3c. The 
budget would be indicatively split as follows:  
o €100 million/year, including the establis hment of one fund-of-funds, which 
would invest in venture capital funds that in turn invest in enterprises with high 
growth potential in their expansion and in ternationalisation st ages, but also in 
others, and a limited amount which would be invested directly in venture 
capital funds; 
 
EN 34  EN  o €100 million/year for a loan guarantee facili ty, providing direct or other risk 
sharing arrangements with financial intermediaries to cover loans for SMEs. The facility would generate  a high leverage effect and would provide the cross-
border lending or multi-country lending that could not eas ily be achieved 
through facilities at national level. 
• Further development of EU level SME support networks: 
• The Enterprise Europe Network:  same as baseline option (€60 million/year). 
• Support for SME abroad:  same as Scenario 3a (€12 million/year).  
• International industrial cooperation:  same as Scenario 3a (€3 million/year). 
Option 3c – Modest budgetary expansion with focus on the main components 
Under this option the overall budget of th e new programme would increase to €340 
million/year (as proposed in the MFF Comm unication), but these resources would be 
concentrated on the financial in struments and the Enterprise Eu rope Network. This option is 
considered because some stakeholders during  the public consultatio n proposed that limited 
EU budgetary resources should be devoted to th e most successful measures of the current 
programme. 
• An increase in the budget for  Financial Instruments  to €280 million/year would allow for 
a significant expansion of activities.  
o €185 million/year, for the establishment of one or two funds-of-funds, which 
would invest in venture capital funds that in turn invest in enterprises with high 
growth and a potential to in ternationalise, but also in others; in addition there 
would be investments directly into ve nture capital funds focussing on growth 
stages;  
o €95 million/year for a loan guarantee faci lity, providing direct or other risk 
sharing arrangements with financial intermediaries to cover loans for SMEs, including securitisation. The facility would generate a high leverage effect and 
would provide the cross-border lending or  multi-country lending that could not 
easily be achieved through fac ilities at national level.   
• The Enterprise Europe Network  would be kept in place but with a shift in priority in 
order to become an "entry point" for helping SMEs access to finance, including easing the 
provision of equity, mapping of financing available for SMEs in their region and 
investment readiness. Budget would remain in  the order of €60 million/ year, as this shift 
of priorities is relatively easy to implement. 
• All other activities would be discontinued, li miting EU intervention to the creation of 
supportive framework conditions through regulation. 
 
EN 35  EN  7. ANALYSIS OF IMPACTS  
This section analyses the impacts that c ould be achieved under the various options. The 
following points need to be highlighted:  
• First, given the composite na ture of the proposed programme, the impact assessment was 
carried out primarily at the component level. Details of this work are provided in Annex 5 
which gives a more exhaustive analysis of each component and Annexes 6 and 10 which 
focus on tourism and financial instruments, respectively. At the programme level, the 
analysis mainly consisted in the aggregati on of impacts, complemented by consideration 
of synergies between the proposed activities. 
• Second, an effort was made to achieve a qu antification of the ma in socio-economic 
impacts, in terms of gross national product ( GDP), value of lending /investment mobilised, 
employment creation75 and number of firms assisted.76 However, this quantification was 
not feasible for the measures that envisage th e use of indirect instruments, that is, those 
aimed at creating facilitati ng conditions through information provision, benchmarking and 
exchange of good practice, where impact w ould depend upon the behaviour of market 
participants and administrations . Therefore, the quantification exercise was limited to the 
financial instruments, and, to a lesser extent, the Enterprise Europe Network. (It should be 
underlined, however, that these measures account for the predominant share of the 
programme in terms of budget under all options.) 
An SME test and analysis of impacts on competitiveness were performed for each option and 
were found to be positiv e in all cases except di scontinuation. A summary report on the SME 
test is provided in Annex 12. 
7.1. Impacts - Option 1  
Option 1 would entail no cha nge from what is planned unde r the current programme. Support 
to competitiveness and entrepreneurship in Europe would be ensured through the continuation of ongoing activities. The costs of this option are €213 million/year.  
Many of the initiatives have  already yielded concrete economic impacts , which are in line 
with the anticipated targets for the ac tivities under the cu rrent programme.  
– Over the next programme period, the financial instruments
 are expected to result in an 
increase of GDP (added value) of approxima tely €660 million per year and to generate 
about €1.8 billion in additional lending/equ ity investment. Some progress would be 
expected in countering the fr agmentation of the venture ca pital industry. The collateral 
                                                 
75 Analytically, it proved impossible to distinguish between jobs created or safeguarded. Nevertheless, 
from a social point of view, saved jobs are also important. 
76 The estimates were obtained using a static com putational model, primarily based on two sets of 
parameters: (i) the ratios between the amounts made available under the proposed option and the 
number of enterprises served or the volumes of lending and venture capital investment mobilised; (ii) 
unit impact parameters, summarising the effects generated by the proposed option on employment and, indirectly, on value added. The estimates refer to net impacts alone, adjusted downwards to take into 
account possible modeling errors and the fact that so me of the proposed measures may not be fully 
additional but overlapping. 
 
EN 36  EN  constraint would be directly and indir ectly addressed through loan guarantees.77 It should 
be noted, however, that under the current pr ogramme, there is substantial excess demand 
that the EIF is currently unable to meet due to budgetary limitations.   
– Concerning indirect support, more than 600 pa rtners of the Enterp rise Europe Network  
provide services all over Europe and beyond to SMEs. It contacts more than 2.5 million 
SMEs via newsletters every week. Since it s launch in 2008, the Network has involved 
1,045,567 SMEs in local promotion and inform ation events via 19,115 organised events. 
More than 376,467 SMEs have been helped with queries on EU  matters. About 142,243 
expressions of interest on partnership proposals have been registered and 4,320 
partnership agreements have been conc luded. More than 10,000 SMEs have been 
consulted on forthcoming legislation, such as  the European working time Directive or 
European contract law. This is well in line with its targets of 5,800 local events per year, 
2.34 million of SMEs reached per year, 90,000 SMEs receiving advice after 3 years, 
25,000 SMEs participating in promotional events after 3 years, 1700 concluded 
partnership agreements on average per year78. The activities of the Network are expected 
to generate an increase of €200 million of incr emental turnover per year for assisted firms. 
Under Option 1, European business support se rvices provided under the Network (€60 
million/year) would continue to ensure that  SMEs are aware of European policies and 
actions. Tools which help to integrate busine ss' concerns into EU policy-making would be 
maintained, ensuring that the voice of small businesses is heard. The services offered by the Network would improve their cost-effectiveness. 
The Network would not be able to absorb a significant increase in funding without an 
expansion of its geographical coverage or its  activities. Such a change was not widely 
supported by stakeholders in the public cons ultation. Many participants underlined that 
the role and activities of the Network should remain focused and the number of services 
should not to be extended beyond reasonable lim its, in order for the Network to continue 
to provide high quality services. 
– Other activities
 to be continued under the programme would account for €40 million/year 
on average and would address SMEs more indirectly by improving the framework 
conditions under which they operate. The impa cts are not quantifiable but would include 
the following features. The trend toward s best practice dissemination and cross-
fertilisation would continue. However, the eff ectiveness of support measures is likely to 
stay at a low level as the development of a clear policy framework could not be pursued. 
The deployment and commercialisation of ne w sustainable consumer goods would remain 
below potential, as only bac kground analysis would be provided. Support to SMEs abroad 
would remain limited to key markets and area s and, as regards inte rnational industrial 
cooperation, activities would concentrate on monitoring framework conditions impacting 
on the external competitiveness of European enterprises. Other actions would remain outside of the scope of the SME and Competitiveness programme, including supporting further SME centres abroad. There is a possibi lity that these could be carried on through 
external action programmes, wh ich would still need to have  an important European SME 
and competitiveness policy component. 
                                                
 
77  More detailed information on impacts is provided in Annex 10. 
78 EIP Final Evaluation, April 2011 
 
EN 37  EN  Moreover, evidence drawn from the interim evaluation of the Erasmus for entrepreneurs 
programme shows the impact of the exchange programme in relation to several problems 
that the proposed programme is supposed to tackle79: 
o Lack of entrepreneurial spirit: the programme helps increase new entrepreneurs 
confidence to start a business and helps en trepreneurs acquire the skills needed to 
successfully start a nd run a business. 
o Lack of entrepreneurial skills: the programme  helps build entrepre neurial skills through 
direct coaching of the new entreprene ur by an experienced entrepreneur. 
Acknowledging the need for future entrepreneur s to have managerial competence, some 
Member States require a certificate ensuring that new entrepreneurs have such skills before they can start a business. 
o Lack of sustainability of na scent businesses: 50% of the companies created in the EU 
do not survive the first five years. The ex change programme increases the quality of 
business start-ups and their long-term sustainability. 
o Internationalisation: SMEs do not take enough  advantage of the internal market and 
have difficulties accessing internationa l markets. SME founders’ international 
experience appears as one of the ma in drivers for internationalisation 
Positive social impacts  are expected in different forms.
 
– As regards the financial instruments , positive social impacts  are expected in terms of 
assisting approximately 26,000 firms, genera ting and/or safeguarding more than 16,000 
jobs per year.    
– The activities of the Network  are expected to generate and/ or safeguard 1,000 jobs as well 
as develop 900 new products, serv ices or processes per year.  
– Other support measures  addressing the overall business en vironment are also expected to 
yield social impacts, but it is difficult to quantify the number of SMEs directly benefiting 
from them. For instance, in 2010, the Europ ean SME Week consisted of more than 1,504 
national, regional and local even ts that took place in 37 participating countries. According 
to the EIP final evaluation, it was estimated that about 300,000 SMEs participated in those 
events.  
Environmental impacts are positive due to environmen tal support for sustainability 
objectives provided through networ king, funding and investing in resource efficient and low-
impact solutions through the Enterprise Euro pe Network. These impacts are striking: for 
instance, by 2011, Network partners are expected to deliver environment-related services to 
about 7,500 SMEs and sign cooperation agreem ents with more th an 400 environmental 
service providers. 
In the light of the experiences with the current progr amme, the baseline scenario is likely to 
develop modest synergies  among different components, most prominently between the 
                                                 
79  http://ec.europa.eu/enterprise/policies/sme/promoting-entrepreneurship/erasmus-
entrepreneurs/background_en.htm 
 
EN 38  EN  Financial Instruments and the Enterprise Europe  Network. However, as noted by stakeholders 
during the public consultation, ther e is lack of clarity of the in tervention logic involving other 
smaller actions, which are not unified by a strate gic approach and eventual synergies will be 
driven by an incremental and piece-meal evol ution. For instance, the European Network of 
Female Entrepreneurship Ambassadors, insp ired by Swedish and UK national programmes 
which provided promotion and support to wome n wanting or preparing to start up a new 
enterprise, will be complemented from 2011 on  by the European Network of Mentors for 
Women Entrepreneurs which will provide mentor ing services to women entrepreneurs who 
have recently started an enterprise.  
Based on the above consider ations, and in line with the findin gs of the final evaluation of the 
current programme and the external study, Option  1 would achieve the objectives of the new 
programme to a certain degree. The EIP final ev aluation confirmed, howev er, that the current 
scale of the programme is only sl ightly mitigating the underlying problems of EU competitiveness 
and entrepreneurship. Option 1 wo uld imply that initiatives that  are currently operating below 
optimal scale would remain under- developed, including in areas wh ere there is a clear need to 
expand EU action (such as  the financial instruments) . In the current economic climate, it is likely 
that the simple continuation of  the current programme under more  difficult conditions resulting 
from the economic crisis would help address the problems but it would not be able to alter the 
likely evolution of th e problem considerably. 
7.2. Impacts - Option 2 
The assessment of the economic impacts  of Option 2 implies resp onding to the question: 
“What would be the budget saved and the fore gone benefits of a discontinuation of all 
initiatives under the current programme?”  
The main benefit from Option 2 would be  a budget saving of  approximately €213 
million/year, which corresponds to the budget al location to the EIP’s competitiveness, 
entrepreneurship and SME-re lated activities in 2013. 
– The foregone benefits, however, would be signi ficant. For example, current activities 
under the financial instruments , which represent about half of  the EIP budget with about € 
113 million allocated annually, are estimated to have so far generated about € 1.8 billion 
per year in additional lending/ equity investment facilitated.80 Fragmentation of the venture 
capital industry would persist and probably aggravate. SMEs would face more stringent 
collateral requirements due to Basel III. 
– Looking at the other measures in place, th e costs of Option 2 clearly outweigh the 
benefits. For example, terminating the activity of the Network  would entail a loss of € 200 
million/year of added value in incremental turnover for assisted firms; a loss of 1,000 jobs created and/or safeguarded per year; a loss of  900 newly developed products, services or 
processes per year compared  with the baseline option.
81 These effects would impair access 
to the Single Market by European SMEs and would slow down the pace of developing 
cross-border collaboration.  
                                                 
80 External study, Economisti Associati, 2011 
81 External study, Economisti Associati, 2011 
 
EN 39  EN  Furthermore, without financial support from the European level, national business support 
services would have less incen tive to operate and to provide  feedback to the Commission. 
They would thus not be a European focal poi nt for first-hand information about business 
activities, and the EU would lack an instru ment for dissemination of best practices, 
counselling, feedback and relay functions fo cussed on SMEs. Spontaneous collaboration 
between national services is unlikely without  European coordinati on, as national or 
regional partners are unlikely to see an inte rest in offering common cross-border services. 
– As regards the discontin uation of other activities , Option 2 would deprive national and 
regional actors of existing opportu nities to work together, learn from each other and make 
quicker progress towards common goals th rough the exchange of best practice, 
benchmarking and expert groups in SME and entrepreneurship policy. Successful current 
activities such as the SME week, the Ambassador scheme for female entrepreneurs, the network of European destin ations of Excellence (EDE N) and the China IPR SME 
Helpdesk would be terminated and their positive impact on European competitiveness would be lost. 
As far as impacts on SME’s are concerned, Op tion 2 would mean failing to sustain existing 
actions as well as failing to deliver on the comm itments enshrined in the Review of the Small 
Business Act and the Industrial Policy Flagshi p. This would mean leaving the effort of 
promoting entrepreneurship and the competitiveness of SMEs wholly to the Member States.  
Furthermore, discontinuation under Option 2 woul d not only directly affect SME’s but also 
mean foregoing the positive social and environmental effects  as described under the 
baseline option, as well as existing synergies among different components of the current 
programme.  
Option 2 would save the resource s currently devoted to  the EIP but it would negatively impact 
on the EU’s long-term compe titive position and further wide n the gap with its main 
competitors. Cost savings would be accompanied by much higher forgone benefits. Based on 
the above considerations, and in line with the find ings of the final evaluati on of the current EIP, 
the external study a nd feedback from stakeholde rs during the public cons ultation, it em erges that 
Option 2 would fail to contribute to Europe’s entrepreneurship and competitiveness objectives 
on all fronts. 
This conclusion is in line wi th the responses to the CI P public consultation and the 
conclusions of the public conference. The ma in message was that any future programme 
should be carefully designed to build  on what has already been achieved.  
7.3. Impacts - Scenario 3a  
On the cost side, Scenario 3a involves a signi ficant increase in budget  to a total of €883 
million/year compared to €213 million/year in Opti on 1. By far the biggest increase would be 
for financial instruments (from €113 million/year  to €700 million/yea r), which would allow 
significant scaling-up of the level of interven tion and strengthening the range of financial 
instruments available. This would respond to one of the messages of the public consultation, 
where the Commission was aske d to provide a wider range of financial instruments 
addressing different needs and re sponding to future market cond itions. For example, it was 
asked to consider support to mezzanine funds or business angels. These elements would be 
included in this scenario. 
 
EN 40  EN  On the benefit side, Scenario 3a would generate substantial economic impacts :  
– These would be primarily measured in term s of incremental GDP from the financial 
instruments , estimated at an increase in GDP of approximately €2.3 billion per year. The 
financial instruments under this scenario ar e also estimated to generate €7.2 billion in 
additional lending and equity investment co mpared to the baseline scenario. These 
estimated benefits of financial instruments only concern the dire ct impacts, i.e. impacts on 
the benefiting enterprises, without consider ation of wider impacts. The latter would 
include indirect impacts on ot her economic actors, in terms of increased business activity 
(e.g. an increase in output from the supplie rs to the enterprises assisted under the 
programme), as well as induced impacts, resu lting from increased household spending due 
to the direct and indirect increase in econom ic activity. While a prec ise quantification of 
indirect and induced impacts is not feasib le, previous studies on similar financial 
instruments suggest that they could accoun t for anywhere between 50% and 100% of 
direct impacts.82 In particular, substantial indirect impacts are to be expected in the case of 
intervention in support of vent ure capital investments, which exert a deep impact on the 
business process, contributing to the emer gence of entirely new lines of businesses.83  
All financial instruments will have impact s beyond the programme period, in particular 
those that help to create new financi ng markets for SMEs (such as the further 
development of the securitisation instrument).84 They will act as a catalyst to accelerate 
national policy development in the field of access to finance, contribute to the development of new SME financing instruments and increase the supply of development equity for SMEs in their expansion stag e (“follow-on” capital in order to bring 
products/services to market, to continue cr oss-border activities and to allow further 
growth). They will increase the supply of de bt finance for SMEs th at lack the necessary 
collateral to obtain such loans.  They will contribute to capac ity-building in countries with 
banking intermediation that is si gnificantly lower than the EU-a verage, in partnership with 
the international financial institutions that provide loans to these countries.  
Regarding the financial instruments, Scenario 3a would constitute a major increase in the 
level of funding for the EU vent ure capital market. About two th irds of the total budgetary 
resources would be allocated to venture capita l and more than 40% would be destined to 
setting up three or four “funds-of-funds” in public-private partners hip with institutional 
and strategic investors. Such actions would need  to be finely tuned as to avoid influencing 
capital allocation processes, create disincentiv es and crowding-out. Taking these factors 
into consideration would require a cautious and stepwise approach, which would tend to 
indicate that a low level of EU funding, combin ed with legislative measures to reduce the 
fragmentation of the EU venture capital mark et might be preferable. These instruments 
                                                
 
82  Hayton K. and others, Evaluation of the Scottish Co-Investment Fund, Report to Scottish Enterprise, 
May 2008 ; EKOS Limited, Economic Evaluation of South of Scotland Loan Scheme, Final Report for 
SEBSED Ltd, June 2008. 
83 An example is the telecom system Skype, whos e early development was actively supported by an 
equity investment under one of the predecessors of the proposed programme, the ETF facility. Apart 
from the financial profits generated (Skype was repo rtedly sold to eBay for about US$2.6 billion in 
2005 and later re-sold to Microsoft for US$8.5 billion) , the emergence of Skype dramatically altered the 
landscape in the telecoms sector, bringing about a remarkable decline in th e cost of communications, 
which in turn generated further business opportunities in areas that depend on telecoms (such as call 
centres and telephone marketing). 
84 A detailed discussion about the envisaged instruments is provided in the external study. 
 
EN 41  EN  would structurally reinforce the venture capital i ndustry and reduce its fragmentation. An 
improved range of financial instruments would be available. Furthermore, the collateral 
constraint would be directly addressed through loan guarantees and securitisation. 
Similarly to the venture capital measures, the risk-sharing facilities for debt financing in 
Scenario 3a would have a structural effect , making possible an increase in the credit 
volume of €5.5 billion per year. This, however , might raise concerns whether such an 
increase in public sector risk  sharing and coverage would result in private guarantee 
providers withdrawing to some extent  from the market (“crowding-out)”. 
– The increase in budget for the Enterprise Europe Network  (from €60 million/year to €65 
million/year) would allow opening up the Networ k to more third countries and put new 
mechanisms in place to support the internationalisation of SM Es. The change in scale and 
scope of the Network's activit ies would, however, be modest and it was not possible to 
quantify it. Compared to the baseline, positive economic impacts can nevertheless be expected via improved support to SMEs co vering new themes and new geographical 
areas. 
– The budget of the remaining activities
 would also increase co nsiderably under this 
scenario (from €40 million/year to €118 milli on/year). Again, quantitative impacts are 
difficult to measure, but positive impacts c ould be expected. Acti vities to improve 
European competitiveness and entrepreneurship would lead to relevant policies based on best practices being implemen ted at EU and Member State level. As regards consumer 
goods, the deployment of market replication projects would be si gnificant, with 40 
projects to be supported per year. This woul d bring forward the commercialisation of such 
products, with positive effects on sustainability  and consumer satisfa ction as the number 
of available user-driven products and servic es would be increased. Tourism-related 
actions would further help businesses to sa ve costs, improve their competitiveness, 
stimulate the regional economy, and improve su stainable and inclusive development and 
to fulfil the guests’ expectations in this respect.
85 As regards SME bus iness support in 
markets outside the EU, a cons iderable scaling-up of financ ial support would lead to 
increased direct presence of SMEs in key glob al markets, as they could rely on specialised 
support. Improved international cooperation would also have positive impacts on business 
internationalisation. 
Several interventions envisaged unde r Scenario 3a would have positive social impacts .  
– A major contribution to employment would be expected fr om the financial instruments, 
which are estimated to contribute to the ge neration and/or preservation of more than 
50,000 jobs and assisting approximately 65,000 firms more compared to the baseline 
option.  
– The Network would be expected to have an impact of 1750 additional created or 
safeguarded jobs per year compared to ba seline. Quantitative im provements would be 
accompanied by significant advances in qualita tive terms, which would empower SMEs in 
the development of solutions to common challenges. 
                                                 
85 As demonstrated by the prepar atory actions EDEN and CALYPSO: 
 http://ec.europa.eu/enterprise/sectors/tourism/index_en.htm 
 
EN 42  EN  Scenario 3a would also bring about environmental impacts :  
– The expansion of the Network  would spread the EU enviro nmental rules to additional 
third countries, generalising be st practices. Increased collabo ration with Member States 
through supporting best practices in relation to support for green businesses would result 
in improvements in policy co-operation a nd co-ordination across the EU. The Action 
Programme on Administrative Burden Reductio n that was funded thr ough the EIP is an 
example of this virtual circle. Moreover, sm all-budget sectoral studies financed by the EU 
can be used as the catalyst for major public-private sector initiatives (such as the early 
development of the project on user-driven consumer goods). 
– Environmental impact would also come from the scaling-up of other initiatives  in support 
of eco-sustainable processes an d products in traditional industr ial sectors and in tourism. 
First, initiatives in the ar ea of personalised consumer goods would allow companies to 
match production and demand, cont ributing to more sustaina ble consumption patterns. 
Second, tourism would be more closely linked to the environment, as travel is responsible 
for a significant share of CO2 emissions and tourists’ behaviour can significantly impact 
on the local territory. Sustainable management both at enterprise and destination level, 
detailed information and awareness-raising cam paigns for visitors and staff, as well as 
uptake of sustainable products and processes on the ground w ould considerably help to 
reduce the environmental impact of tourism.86 
Based on the above consider ations, it emerges that Scenario 3a would achieve the objectives of 
the new programme to a considerab le degree, although at a cost that is not considered by the 
Commission to be compatible with othe r demands on the EU budget post-2013.  
7.4. Impacts - Option 3b 
Option 3b refers to a situati on in line with th e budgetary allocation foreseen under the 
Commission’s MFF proposal, with an  average yearly budget of €340 million. 
With this expansion of the budge t compared to the baseline, economic impacts  are expected 
to be higher than in the baseline scenar io, as support to the financial instruments  is increased 
considerably (from €113 million/year to €200 milli on/year). This can be expected to lead to 
sustainable effects. Yet this option would assume a more dire ct and increasing response from 
private investors but wo uld provide a balanced approach in  supporting the development of the 
European venture capital market. Considering the total resource level in Option 3b and the need to cover both the venture capital and the guarantee segment, the most appropriate 
strategy would be to split th e resources in a similar way to the baseline option.  
Regarding the potential crowding out of private guarantee provide rs, the new facility (at the 
suggested resource level) is expected to have the opposite effect. The provision of loan 
guarantees is generally recognised as one of th e least distortive public interventions in the 
credit markets. The proposed facility will al so cover cross-border and multi-country lending 
and guarantee schemes, areas with higher risk s where very few private guarantee schemes 
operate. It is essentially a new market that will strengthen the Single Market and support SME internationalisation. In addition, the proposed fa cility will offer counter-guarantees and other 
                                                
 
86 As demonstrated by the preparatory actions EDEN and CALYPSO, see above. 
 
EN 43  EN  risk sharing arrangements to guarantee providers thus allowing them to expand their business. 
So, overall, far from crowding-out existing priv ate schemes in this area it is expected to 
reinforce them and attract new players by expanding the market segment and providing 
additional funds. In particular, investment parame ters will be set in such  a way that specific 
policy objectives, including the targ eting of particular groups of potential beneficiaries, can be 
achieved while still preserving the market-ori ented and demand-driven approach of this 
instrument.  
Concerning provision of ventur e capital, in the current econom ic circumstances, private 
investors are withdrawing from the market at the same time as we see an increasing demand 
for capital from SMEs. It is a vicious circle with a diminishing market for institutional and other private investors. At the light of the experience accumulated with the current 
programme, there is a long-standi ng, widely recognised shortage of venture cap ital in Europe, 
which is regularly confirmed by contacts with stakeholders, by studies and by the European 
Investment Fund, which has an unparalleled overv iew of the European VC market, since it is 
invested in almost 350 funds.  
– Compared to the baseline, financial instruments
 are expected to result in an increase of 
GDP of approximately €500 million above base line level and to generate about €1.7 
billion in additional lending and equity investment. However, under this option, the focus of the financial instruments would be more  narrow than Scenario 3a, addressing the 
financial needs primarily of growth-orien ted enterprises, but also including young 
enterprises to some extent.  
The level of budget envisaged for the financia l instruments would mean that it would 
certainly not be possible to meet all mark et demands. However, the venture capital 
schemes would be focussing on cross-borde r operating funds, which thereby support the 
development of an EU-wide venture capital market. Investments in funds will be made 
alongside private investors. For the guarantee s schemes the expected leverage of EU 
budget resources is about 1:30, based on e xperiences from current and previous 
programmes. However, the leverage would, at least initially, not in crease proportionally to 
the resources, but the number of benefici aries would still be more than 275,000 for the 
programme period, i.e. an almost 50% increase compared to the baseline. 
– Compared to the baseline option, no additional impact is expected by the Enterprise 
Europe Network  as the budget is kept at the same level (€60 million/year).  
– Under this option, the budgetary allocation for other activities  is increased in order to 
reach a more appropriate scale (from €40 m illion/year to €80 million/year). A limited 
increase in the budget for support for Eur opean competitiveness to €14 million would 
make it possible to implement some of th e new actions included in the Europe 2020 
flagship "An Integrated Industrial Policy for the Globalisation Era" as compared to the 
baseline option. These new acti ons would notably relate to monitoring and best practice 
exchange at the level of Member States, launc hing initiatives relating to corporate social 
responsibility as well as new pr eparatory work for industrial policy initiatives related to 
sustainability in specific sectors. The corresponding potential for leverage in terms of influencing Member States programmes and ex penditures and on privat e sector activities 
would present an improvement compared to the baseline. As regards SME policy development, the same budget as under the base line scenario would be  maintained and the 
same impacts can be expected. With an increased budget in relation to user-driven 
 
EN 44  EN  consumer goods (to €12 million), it would be  envisaged to support market replication 
projects, albeit at a reduced level compared to Scenario 3a. However, it would still be expected to support 20 projec ts per year with the induced  impact on availability and 
sustainability of products. 
– Concerning SME business support in  markets outside the EU, a considerable scaling up of 
financial support would lead to  increased direct presence of  SMEs in key global markets 
as they could rely on specia lised support. Improved interna tional cooperation would also 
have positive impacts on bus iness internationalisation. 
In stakeholders' views, a future programme  should concentrate on creating a favourable 
business environment, including support to access the internal market, standardisation and 
better regulation. The need to co ntinue the exchange of best  practices and general policy 
support as well as European added-value of support to specific sectors was also widely 
recognised. Specific consultations  with tourism stakeholders showed strong interest and 
support in most Member States for transnatio nal cooperation projects and exchange of good 
practices. The mid-term evaluation of the pr eparatory action “European Destinations of 
Excellence” underlined the scope for continuation and extension.
87 
As regards social impacts ,  
– the financial instruments  are expected to assist appr oximately 13,000 firms, generating 
and/or safeguarding 11,000 jobs more than the baseline option.   
– Moreover, an increase in budget support to tourism -related activities (to €18 million) 
would not only allow for the continuation of cu rrent activities, but also  for their scaling-up 
and the addition of new support measures  to tackle the issue of seasonality.88 Putting in 
place measures meant to tackle seasonality  at EU level would counter-balance the 
negative effects of seasonality by ensuring a wi der time-wise spread of touristic/economic 
activity. This can be done through changing marketin g techniques and by creating 
incentives for different target groups, for exam ple, youth and the elderl y, as well as other 
groups, to visit destinations off-season. Positiv e externalities would be generated not only 
in economic but also in social returns.  
– In general, the envisaged measures are desi gned to be open to all groups of economic 
actors and in this sense non-discriminatory. However, the planned activities to promote 
entrepreneurship  are an exception, as th ey are designed to also  target specific groups. 
Their aim is to promote and fo ster entrepreneurship across Eu ropean societies, including 
social entrepreneurs, long-term unemployed, el derly workers, migrants, ethnic minorities. 
For instance activities promoting entrepreneur ship are expected to lead to a direct 
employment effect of 300-400 additional jobs, due to th e internationalisation of 
                                                 
87 http://ec.europa.eu/enterprise/dg/files/evaluation/report_eden_en.pdf 
88 The core of the problem lies in the concentration of tourists in cer tain destinations for often short 
periods of time in specific periods of the year. This phenomenon results in the congestion of local facilities and puts a destination’s resources under seve re strain. Moreover, during the low season, these 
same destinations have very limited touristic activity, with obvious negative consequences for those 
employed in the sector and in terms of exploiting existing facilities in an efficient manner throughout the year. Overall, seasonality negatively affects the long-term sustainability of tourism in some areas. 
Data on the seasonality of tourism in Europe are available at 
 epp.eurostat.ec.europa.eu/statistics_explai ned/index.php/seasonality_in_tourism_demand  
 
EN 45  EN  beneficiary entrepreneurs. Awareness campa igns to promote exchanges of female 
entrepreneurs are planned to start in 2012, in  order to improve th e 46/54% ration of 
registered entrepreneurs for this programme.  Besides these proposed measures targeting 
young people and women, it is envisaged to conduct promotion campaigns targeting 
specific disadvantaged or vulnerable groups through intermediaries of the Enterprise 
Europe Network. 
– The increased budget for the exchange pr ogramme for entrepre neurs would allow 
organising 1300 exchange visits  per three-year cycle, co mpared to 900 today. These 
mobility exchanges would likely increase the numb er of business start-ups, their survival 
rate, and the extent of SME internationalis ation. Based on the interim evaluation report 
and previous estimations, this budget could co ntribute to the creat ion of some 200 start-
ups, and 850 to 1,500 jobs created or maintain ed per year (including additionality, 
displacement and indirect job creation effects).  
Environmental impacts  are not expected to be significant ly higher compared to the baseline, 
especially as a result of promotion of sustai nable processes and products  in targeted sectors 
such as tourism. 
Aggregate impact due to synergies  among the different compone nts of the programme is 
expected to be important compared to the base line as the reinforced financing of different 
measures is expected to enhance cooperation be tween policy-makers at EU and national level. 
Strong emphasis would be placed on identi fying and disseminating best practices.  
– The Network would be the centre-piece co nnector of different components of the 
programme, multiplying synergies between measur es such as support to SMEs abroad and 
international industrial coopera tion. The major direct benefit would be to increase the 
Community dimension in the c ontent of national policy as the Network would contribute 
to avoid duplication of efforts between Me mber States by disseminating information and 
know-how of best practices. This development is  expected to lead to an increase in the 
number and quality of specific nationa l and regional policies on SMEs and 
entrepreneurship.  
– Activities to improve European competitiven ess, on the one hand, and the activities to 
develop SME policy and to promote entrepre neurship, on the other, will be mutually 
reinforcing as all are intended to impr ove the framework conditions under which 
European businesses operate. 
– Another example of expected synergies is th e interplay between the Enterprise Europe 
Network and other activities under the new pr ogramme. The services of the Network will 
cover the improvement of access to finance for SMEs such as through the financial instruments. The “use” of the Network for the promotion of the financial instruments will, for example, make further promotional act ivities unnecessary. The Network will also 
promote the internationalisation of SMEs in close collaboration with the other measures 
envisaged in that respect (support to SM Es abroad and international industrial 
cooperation). 
– As regards international i ndustrial co-operation, in pa rticular the government-to-
government industrial and regulatory dialogue,  the objective is to  enhance convergence 
 
EN 46  EN  between regulatory and busine ss environments between the EU  and third countries. As a 
consequence, the Network will benefit if there is more convergence because that will make international business deals easier. Li kewise, the SME support abroad action will 
benefit because regulatory dialogues can unloc k markets and therefore make them more 
attractive for SME's to explore.  
Based on the above considerations, Option 3b woul d achieve in a satisfactory way the objectives 
of the new programme, by stri king a balance between them and allocating scarce EU budgetary 
resources in a proportional way. The overall impact of the pro posed programme, however, will 
depend on the surroundi ng economic condi tions and this woul d be reflected in a flexible use of 
available instruments and measures . In any case, compared to the baseline option, impacts would 
be considerably higher. 
7.5. Impacts – Option 3c 
Option 3c would also be in line with th e budgetary allocation foreseen under the MFF 
proposal (€340 million/year), but the activities would be limited to the financial instruments 
and the Enterprise Europe Network.  
In this option a priority would be given to venture capital investments so that the additional 
€80 million compared to Option 3b would be allocat ed to that segment. Thereby, it will be 
possible to set up two fund-of-funds rather th an one as is the case in Option 3b.  
Concerning economic impacts ,  
– the concentration of resources ma inly on the financial instruments
 (€280 million/year) 
would allow further reduction of the estimat ed market gaps for SME financing, without 
being able to eliminate it completely. Since th e resource level is less than half of Scenario 
3a the structural effects on the venture capit al market would clearly be more limited. 
Compared to the baseline, financial instrument s are expected to generate an increase in 
GDP of approximately €0.3 bil lion and €1.1 billion in a dditional lending and equity 
investment facilitated. Some additional impact is expected from the Network  compared to 
the baseline, due to the shift in priority to  become an "entry point" for helping SMEs 
access to finance in connection with the incr eased budget for the financial instruments. 
As, however, the budget for the Network is kept  at the baseline le vel of €60 million/year, 
this effect is not quantifiable. 
– The main economic costs under this option w ould concern the opport unity costs of not 
tapping the European added value which could be generated by the other, smaller-scale 
support activities  proposed under the baseline option a nd Option 3b. It is not possible to 
quantify their economic impact as they are mo stly indirect instrume nts, i.e. aimed at 
creating facilitating conditions, whose ultim ate impact would depend upon the behaviour 
of market participants  and administrations.  
As regards social impacts  under this option: 
– Financial instruments would cr eate an additional 5,300 jobs per year compared to the 
baseline. 
 
EN 47  EN  – Nonetheless, this option would have a negati ve impact in terms of missed opportunities of 
European added value resulting from the discon tinuation of the smaller-scale activities of 
the baseline scenario. Similar to the discontinuation option, th e concentration on only the 
two main activities of the current progra mme would mean failing to sustain some 
important existing actions. The value added of policy coordination at European level 
would be foregone and establis hed networking structures in areas such as SME policy and 
tourism would be terminated. Moreover, withou t activities to support SMEs abroad, it is 
likely that European SMEs would be less successful in seizi ng the opportunities in 
emerging markets that recent studies have  highlighted, which would imply negative 
economic and social impacts from this option.89 Furthermore, fact-based policy making at 
the European level would become more difficu lt without support from  EU-level analysis 
and benchmarking activities. 
This option was considered because in the final evaluation of the EIP some Government 
representatives and business organisations questi oned the number of small-scale activities that 
are supported under the current programme. Th e suggestion was that there ought to be a 
greater concentration on a few main areas of  activity in order to avoid dispersion.  
However, the final evaluation did not endorse  this recommendation, commenting that these 
views do not represent a balanced assessment of small-scale activities such as benchmarking, 
exchange of best practices or networking ca rried out under the EIP. These activities suffer 
from a sub-optimal budgetary allocation, which a llows only a minimal level of intervention, 
even in areas where there is a clear need to expand EU acti on. Other stakeholders (Member 
States´ representatives as well as business orga nisations) expressed str ong support for smaller-
scale activities such as support to the inte rnationalisation of SM Es, entrepreneurship 
benchmarks and the dissemination of best practices in entrepreneurship policy and 
implementation. They urged that measures to promote entrepreneurship, improve the 
regulatory environment and promote corporate soci al responsibility should be retained in a 
future programme. This was also confirmed in the public consulta tion, where there was 
widespread support for measures oriented to  create a favourable business environment for 
SMEs.90 
Environmental impacts  are expected to be positive, but not significantly higher compared to 
the baseline. 
Aggregate impact due to synergies  among different components of the proposed programme 
under this scenario is deemed to be inferior  to the baseline scenario, as only synergies 
between Financial Instruments and th e Network are going to be present. 
Based on the above considerations and the r ecommendations of the EIP final evaluation, 
Option 3c would partially achieve the objectiv es, but at the cost of neglecting certain 
underlying problems of competitiveness and entrepreneurship. 
                                                 
89 EIM, June 2011 
90 Public consultation on the future EU support to competitiveness and innovation, p. 2 and 33 
 
EN 48  EN  8. COMPARING THE OPTIONS  
8.1. Effectiveness 
Based on the above consider ations, and in line with the findin gs of the final evaluation of the 
current EIP and the external stu dy to inform this impact assess ment, the baselin e option would 
achieve some of the programme’s general objec tives, whereas Option 2, discontinuation of all 
current European measures, would fail to  promote Europe’s entrepreneurship and 
competitiveness capacity on all fronts. Option 3c would leave many of the underlying problems untreated, so that Op tion 3b would represent the best response to the identified 
objectives as well as being in  line with budgetary reality.  
The externalisation of implementation tasks for the future programme to the successor of the 
Executive Agency for Competitiveness and Innovation will be confirmed and strengthened, as the performance audit of the current program me conducted by the IAS highlighted the scope 
for more outsourcing in order to improve the effective use of staff resources. The IAS 
recommended to analyse the cost-effectiveness of managing diverse one-off actions with a 
view to standardisi ng their management, better segrega ting policy-related work and budget 
implementation, and concentrating the funds on fe wer types of financia l operations under the 
next Multiannual Financial Framework. Ther efore, the future programme would be 
outsourced significantly more to  EACI. A summary of the expected impacts is provided in 
Annex 13.In reply to the recommendations made by the Court of Auditors concerning the effectiveness of the SMEG, any future programme will implement improvements to the management of the Financial Instruments: 
– signing agreements with intermediaries as soon as the programming period has legally 
begun;  
– any future fiduciary and management agreement (FAM) between the Commission and the 
EIF will specify a scoring system to be used by EIF in its selection of intermediaries; 
– in order to reduce the relative number of en terprises that have used a loan guarantee 
without actually needing it, it is envisaged that th e future FAM will require that Guarantee 
Agreements signed by the EIF and the intermedia ries reflect the undert akings in terms of 
EU added value. The EIF will be contractuall y required to check in their monitoring the 
system of decision making by the financial inte rmediaries to ensure that only enterprises 
that are in need of the instruments are using them. 
– the programme’s objectives will be translated into clearly defined eligibility criteria. 
A summary of the Court of Auditors' special  report recommendations and the Commission’s 
reaction is provided in Annex 11. 
8.2. Efficiency 
In order to assess the efficien cy of proposed options, the quant itative analysis covered three 
aspects: (i) the cost-effectiveness of the proposed  measures, measured in terms of cost ratios 
 
EN 49  EN  linking budgetary outlays to the expected impacts91, (ii) administrative expenses for the EU92, 
and (iii) administrative e xpenses for beneficiaries93. 
8.2.1.  Cost-effectiveness 
As indicated above, it was not possible to arrive at a quantitative estimate of impacts for all 
the proposed measures. Nonetheless, the availabl e data for financial instruments can provide 
useful indications of the level of cost-effectiv eness under the different options, as they would 
account for the largest share in terms of budget of the programme under all options.  
Typical cost-effectiveness indicators include the average budget allo cation per enterprise 
assisted and net incremental value added pe r budget costs. The cost-effectiveness of the 
various options was analysed compared to the in itial budgetary cost. Howe ver, it is important 
to note that in the case of financial instrument s, budgetary allocations do not correspond to the 
final cost to the EU budget, as resources allo cated to some instruments, such as venture 
capital funds, are largel y recovered, sometimes with profit,  in the longer term. The relevant 
parameters for the financial instruments are presented in the table below. 
Table 3 - Comparison of cost-effec tiveness for financial instruments94 
 Option 1 - 
Baseline Option 3b - 
Modest 
expansion Option 3c - 
Focused 
expansion 
Number of firms assisted/Budget cost of assistance (firms per €1 
million) 611 523 280
Net incremental employment/Budget cost (jobs per €1 million) 366 354 228
Net incremental value added/Budget cost (€ million per €1 
million) 15 15 10
Budget cost per firm assisted (€) 1637 1913 3574
Budget cost per net incr emental job (€) 2735 2824 4385
 
The differences between the three options refl ect the allocation of budget between venture 
capital instruments and guarantee instrument s. Cost-effectiveness is estimated to be 
comparable for Options 1 and 3b reflecting the fact  that both entail a relatively high share of 
the resources being spent on guarantee instru ments. The latter reach a high number of 
enterprises and thereby generate a substantia l employment effect. The budgetary cost per 
enterprise and job are therefore relatively low.  Investments via venture capital funds reach 
fewer enterprises, but would in  the longer term generate subs tantial economic effects as well 
as jobs.  
The outcome of each of the two expansion op tions is sensitive to the composition of the 
measures. Option 3b has a larger part of guara ntees than 3c. In the former, the guarantee 
instrument, due to the much higher leverage, benefits many more enterprises and generates 
more employment which leads to higher value added (GDP) per unit of budgetary resources. 
In the latter, venture capital investments based on new pr oduct and service concepts in a 
                                                 
91 In terms of marginal job cost and incremental impact to budget cost 
92 Measured by the ratio of administrative personnel costs to the overall budget 
93 Based on the survey on administrative costs 
94  External study, Economisti Associati, 2011 
 
EN 50  EN  longer perspective can generate higher value added and growt h. EU venture capital spending 
can also contribute to the development of the eq uity market and strengthen the entrepreneurial 
eco-system.   
Additionally, an estimate of the cost-effectiveness for the Enterp rise Europe Network can be 
provided under Option 1. This is based on a C lient Satisfaction Survey undertaken in 2009 
among beneficiary SMEs, collecting impact data  for partnership building services, which are 
the most important category of services provided by the Network.95 The average impact per 
firm was € 220,000 of increased tu rnover per year and 0.6 jobs created or safeguarded per 
firm per year. This baseline cost-effectiveness is estimated to remain stable under all options, 
as the budgetary allocation doe s not change significantly. 
8.2.2.  Administrative Costs 
The analysis of administrative costs for the di fferent options is base d on two factors: (i) 
estimates provided by the EIP final evaluation and (ii) information on  expected staffing 
levels. 
The estimates of administrative costs for grants under the baselin e are in line w ith comparable 
schemes (6.3%). However, as a large part of the budget is implemented via financial 
instruments, which exhibit a much more favour able cost/budget ratio of less than 1%, the 
overall performance of the programme is favourable. 
The share of staff costs would improve for Opti ons 3b and 3c as compared to the baseline, 
due to significant economies of scale for financ ial instruments, the main measure under both 
options in budgetary terms. Th ese outweigh the impact of the additional resource-intensive 
small-scale activities en visaged under Option 3b. 
Details on the analysis of administ rative costs are provided in Annex 14. 
8.2.3.  Administrative costs for bene ficiaries: survey results 
A survey was conducted in June 2011 on the administrative costs incurred by entities that 
received support under the EIP. The survey cove red the financial instruments, the Enterprise 
Europe Network and other EIP grants and provides evidence on the time spent and expenses 
incurred in the various steps of the procedur e. For grant schemes the time needed on average 
is 160-180 staff days. In the cas e of financial instruments, it varies from 240 days for 
guarantees to 70 days for venture capital invest ment. The ratio of costs to budgetary allocation 
varies from 0.5 % for financial instruments to 10.9 % for the Network. For other EIP grants it 
is 8.3 %. Recurrent activiti es like reporting are most time-consuming, followed by the 
preparation of applications for support. 
Beneficiaries made the following recommendations: 
– the use of lump sums and flat rates and the elimination of nominative indications of staff 
employed on the project, which would simplify the preparation of financial proposals as 
well as financial reporting and auditing;  
                                                 
95  Enterprise Europe Network Client Satisfaction Survey, Annex 9 
 
EN 51  EN  – the reduction and/or simplification of administrative documents to be submitted at the 
application and/or at the contracting stage; 
– the elimination of the need for private sect or beneficiaries to pr ovide a bank guarantee; 
and  
– the simplification of periodic reporti ng and the adoption of  on-line reporting. 
In reply to these recommendations, any new pr ogramme will contribute to the reduction of 
administrative burden by: 
– applying the rules of the re vised Financial Regulation; 
– further simplifying reporting and documents, a nd striking a balance with the requirements 
for  sound financial management of the EU budget; 
– providing for on-line reporting. 
8.3. Coherence 
The success of some of the envisaged initiativ es in this programme significantly depends on 
factors external to the programme , as well as to internal fact ors that are conducive to better 
performance.  
The main external factor for the success of pot ential future EU intervention in the area of 
competitiveness will be the progress of overall economic recovery. Any intervention at EU 
level can only be of limited scale compared to the overall forces impacting on the economy. 
At the same time, the limited size of the programme requires a high degree of flexibility in the implementation stage in order to reap maximum benefits from the use of available resources. 
In addition, as underlined by the Europe 2020 strategy, European competitiveness can only be 
achieved through action taken in several fields a nd at different levels. Internally, it would be 
crucial to ensure that as many factors impac ting on competitiveness as possible are addressed 
by the future programme. Therefore, Options 2 and 3c would score badly compared to the 
baseline scenario in terms of coherence. Unde r Option 3b broadly the same range of activities 
is envisaged as under the baseline, its perf ormance in terms of coherence would be 
comparable to the baseline. However, as with  more budgetary resources more activities could 
be sustained over time, Option 3b can be regard ed as superior, as it is informed by the 
strategic approach outlined in the SBA revi ew of February 2011, which is unifying the 
different measures on competitiveness and entrepreneurship of the proposed programme. This also provides a link to the prom otion of the specific needs of SMEs across all EU policies and 
funding programmes. The mainstreaming of SMEs concerns is a key element to complement the provision of dedicated suppor t and services reflecting the pa rticular needs of the SMEs 
community at European level.  
Moreover, the dissemination of information on legislative initiatives and policies of the 
Commission relating to industria l and business activities provid ed by the Network is going to 
reinforce the link between any pr oposed programme and other elemen ts of enterprise policies. 
For instance, SMEs encounter a series of  problems with respect  to standards and 
standardisation due to the amount  of money and expertise necessa ry to follow highly technical 
 
EN 52  EN  matters and to adapt accordingly. Modern competitiveness, SME and entrepreneurship 
policies will build on a balance between regulat ory work and financial support. For example 
under the current programme, a promotion campaign was supporte d to raise awareness on CE 
marking (mandatory conformity mark for products placed on the European market) and its advantages among SMEs. 
Moreover, it will be important to ensure e ffective coordination between EU and Member 
State initiatives, on the one hand, and between diffe rent EU initiatives in related fields, on the 
other hand. All expansion options assume close co-ordination be tween EU level measures and 
those carried out by Member States, thereby focussing on EU added value and minimizing 
overlaps. For example, specific EU actions to support SME abroad will have to be fully coordinated with the services provided by Member  States and the Enterp rise Europe Network. 
The China IPR SME Helpdesk, funded by the cu rrent programme, provides a “best practice” 
example of such coordination. Care was taken not to duplicate services  normally offered by 
law firms or patents agents at the national level. As a consequence, this free-of-charge service provider was well received by Member States as an additional common instrument to protect 
IPR.  
8.4. Comparing the options accord ing to the three dimensions 
The following table assesses the options against th e criteria of effectiv eness (How far would 
the options achieve the objectives defined in ch apter 5?), efficiency (How cost-effectively 
would the objectives be achieved?) and cohere nce (How far would each option be internally 
coherent?). To facilitate comparison, a scorec ard methodology has been us ed to evaluate the 
performance of the options. Based on the intensity of impacts, options have been ranked using 
a scale from (+) to (+++) for positive impacts and from (-) to (---) for negative ones. Table 4 summarises the comparison of opti ons across the three dimensions. 
Table 4 - Comparison of options 
 Budget Effectiveness Efficiency Coherence 
Option 1 
(baseline) €213 million/year 0 0 0 
Option 2 €0 million/year --- - --- 
Option 3b - 
moderate expansion €340 million/year ++ 0 ++ 
Option 3c - 
focused expansion €340 million/year - + -- 
Legend: (---) very negative, (--) negative,  (-) slightly negative, (0) no change , (+) slightly positive, (++) positive, 
(+++) very positive 
Table 5 summarises the comparison of the imp acts of different options, taking the baseline 
option as the benchmark in relation to which othe r options are compared, in terms of impacts. 
 
EN 53  EN  Table 5 - Comparison of impacts 
 Budget Economic Social Environmental 
Option 1 
(baseline) €213 million/year €660 million per 
year increase to 
GDP 
 €1.8 billion in 
lending/equity 
investment 
€200 million 
incremental 
turnover per year 26,000 firms 
assisted 
17,000 jobs created 
and/or safeguarded 
900 new products, 
services or 
processes created 
per year 
 By 2011, 
involvement of at least 7,500 SMEs in 
more than 400 
cooperation agreements signed 
with  environmental 
service providers. 
 
Option 2 €0 million/year 0 0 0 
Option 3b - 
moderate expansion €340 million/year €500 million 
additional 
increase of GDP  
€1.7 billion in 
additional lending 
and equity 
investment 13,000 additional 
firms assisted  
12,500 additional 
jobs created and/or 
safeguarded 
200 additional start-
up companies 
created No change relative to 
baseline 
Option 3c - 
focused expansion €340 million/year €300 million 
additional 
increase of GDP 
€1.1 billion in 
additional lending 
and equity 
investment 5,300 additional 
jobs created and/or 
safeguarded No change relative to 
baseline 
 
Option 2 clearly fails to address the problem s of competitiveness and entrepreneurship; 
discontinuation of the programme would remove  the EU contribution to coping with the 
effects of the economic crisis on the compe titiveness of small business in the European 
economy.  
Option 1, although already proved to be useful, doe s not ensure the same economic and social 
impacts as Options 3b and 3c. The only realistic choice, other than main taining the status quo 
of Option 1, is between Options 3b and 3c. Wher eas Option 3c concentrates the budget on 
two measures only, Option 3b attempts to strike  a balance between different initiatives, in 
order to maximise the potential for added value of EU-level intervention across a wider field 
of activity. It also entails a relative balance between the different financial instruments. 
Option 3b, therefore, performs be tter in terms of achieving the programme’s objectives and of 
providing a coherent set of European support activities. Competitiven ess means many things, 
 
EN 54  EN  and only concentrating resources on financial instruments and the Network would not do the 
job. However, a wider range of activities does not come without  a price. It implies higher 
staffing levels and therefore hi gher administrative costs. Moreove r, the statistics and reports 
from the public consultation96 show support for all envisaged activities from well above 80% 
of respondents. 
As it offers the most comprehensive solu tion, and is widely supported by relevant 
stakeholders, Option 3b is the preferred option.  
9. MONITORING AND EVALUATION  
Due to the diversity of actions within the new programme, it will be crucial to develop a 
sound monitoring and evaluation system to ch eck that implementation of the future 
programme is on track and to record progress towards the achievement of its objectives. 
Defining clear objectives and meas urable indicators is a key requirement for all expenditure 
programmes and has to be set out in the ex-ante evaluation. This section  
– summarises the lessons learnt from implem enting the EIP and highlights shortcomings 
that need attention in the future programme; 
– provides an outline of monitoring and evaluation arrangements for the new programme;  
– identifies principles for the proposed set of indicators which are deve loped and illustrated 
in Annex 15. 
9.1. Lessons learnt 
The definition of indicators, monitoring and evaluation arrangements for the proposed new 
programme relies on two studies: (i) the final evaluation of the EI P, and (ii) the evaluation of 
the EIP indicators (hereinafter referre d to as the “study on EIP indicators”)97. 
The final evaluation of the EIP found that c onsiderable progress has been made in the 
development of a sound monitoring and evaluation system offering a valuable contribution to 
assessing the performance on an on-going basis. It formulated  three recommendations: (i) the 
monitoring system should be further developed in some areas; (ii) data should be provided on 
a regular basis in an easily accessible and standard format, notably in the implementation 
reports; and (iii) data should be  presented more consistently.  
The study on EIP indicators stated that the system in place allows for a well-founded 
assessment of the policy implementation agains t core evaluation criteria and for clear 
communication of the policy’s effects. Despite this overall positive assessment, the study highlighted the following weaknesses: (i) indica tors are too output-oriented and result/impact 
indicators are scarcely used; (ii) data are so metimes redundant and insufficiently coordinated; 
(iii) little consideration is given to the time dime nsion or context evolution over time; (iv) data 
is sometimes presented in a haphazard way in the implementation reports; and (v) there is widespread perception that mon itoring provisions are complex.  
                                                
 
96  Available under HTTP ://EC.EUROPA .EU/CIP/PUBLIC _CONSULTATION /INDEX _EN.HTM  
97 http://ec.europa.eu/cip/files/docs/eip_indicators_evaluation_finalreport_february2010_en.pdf 
 
EN 55  EN  The structure of the EIP monitoring and evalua tion system is judged to be largely viable. 
Taking account of the above studies, it will be further improved as outlined below. 
9.2. The new monitoring and evaluation system 
Monitoring of the future programme’s implem entation will be ensured by the European 
Commission on a continual basis, directly by  Commission services and indirectly by 
intermediaries such as EIF and EACI. The Commission will draw up an annual monitoring 
report examining the efficiency and effectivenes s of supported activities in terms of financial 
implementation, results and, where possible, impacts and to allow for any necessary adjustments of the policy and funding priorities.  Performance measurement will be subject to 
a consistent set of indicators. In addition, periodic stakeholders' surveys at appropriate 
moments of the implementation cycle are envisaged. 
The monitoring and evaluation system would largel y rely on that of the current programme, 
but the following improvements would be made to  the data collection and analysis system, as 
well as to the evaluation and monitoring approach (following the recommendations from the 
evaluations of the current programme): 
– formulation of a new set of specific indicators and monitoring arrangements ; 
– cross-reference to Europe 2020 flagship indicators  to steer the programme management 
process and to provide additional input to the Europe 2020 monitoring process; 
– utilisation of counter-factual methodologies , comparing samples of beneficiaries with a 
similar set of non-beneficiaries, if relevant, and in order to distinguish the impact of the 
programme on the proposed indicators fr om the effect of changing economic 
circumstances.  
– recourse to thematic evaluations  across the various components  of the future programme, 
where relevant.  
The monitoring system and the indicators used to assess the current programme have already 
been the subject of a specific external study and of the EIP final evaluation. The 
recommendations from these sources have been used to improve the monitoring of the current 
programme which will run unt il 2013. Moreover, the recomme ndations of a recent IAS 
Performance Audit of the EIP wi ll also be taken into account in the implementation of the 
current programme and in the design of the mo nitoring system and of the indicators for the 
next programme. To this end, a Performance Re port of the current programme is currently 
being conducted. 
The new programme will be subject to an inte rim and to an ex-post evaluation to assess 
progress towards the objectives and the results. The interim evaluation will be completed by end-2017 to feed into the preparation of a su ccessor instrument to the programme. The ex-
post evaluation will be undertaken within two years of completion of the programme. 
In the case of the Financial Instruments, the future monitoring and evaluation system will be 
based both on regular information about the beneficiaries collec ted by the financial 
intermediaries and intermittent sample-based su rveys that will cover some elements in more 
detail. Additional analyses will be carried out in the context of evaluations of the programme. 
 
EN 56  EN  In particular, such evaluations will compare the development of  the beneficiaries with groups 
of enterprises not using the instruments provide d. The latter will require a detailed analysis, 
since there are of course a number of factors that influence the development of an individual 
enterprise which need to be distinguished from the impact of the programme. The most 
important aspects to be assessed in such an ex ercise are actually the growth and employment 
foregone because a guarantee was denied or a venture capital application turned down. The 
scope of the evaluations will also be extended by considering impacts on the internationalisation of enterprise s. Data required for this purpos e will be collected by means 
of surveys, on a sample basis, rather than  through regular reporting, in order to avoid 
imposing a disproportionate burden on inte rmediaries and final beneficiaries. 
9.3. Indicators 
The monitoring and evaluation system of th e future programme will build upon a robust 
hierarchy of objectives, with a corresponding set of  indicators. The proposed  list of indicators, 
both qualitative and quantitative, is relatively complex as indicators vary according to the 
action (see Annex 15). It should be noted that while some indica tors are progressive to show 
the evolution of the programme, others  are meant to be used only for an ex-post  evaluation. 
Given the indirect nature of many of the propo sed actions including th e Network, it will be 
difficult to develop appropriate indicators to fu lly capture their impact . Extensive discussions 
with Member States are ongoing to tackle this inherent de sign problem and particular 
attention will be given to the deployment of indicators which could disentangle the impact of 
the programme activities from the general economic development.