Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Small and medium-sized enterprises - Key for delivering more growth and jobs. - A mid-term review of Modern SME policy.
Date: 2007-10-04
Institutions: European Commission
Subjects: economic growth, industrial policy, job creation, small and medium-sized enterprises

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 4.10.2007 
COM(2007) 592 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Small and medium-sized enterprises - Key for delivering more growth and jobs. A mid-
term review of Modern SME policy. 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

3. 

Introduction .................................................................................................................. 3 

Achievements of the Modern European SME Policy .................................................. 3 

Cutting red tape ............................................................................................................ 5 

Improving SMEs’ access to markets............................................................................ 6 

Promoting entrepreneurship ......................................................................................... 8 

Improving SMEs’ growth potential in a sustainable way ............................................ 9 

Strengthening SME policy communication and consultation with stakeholders....... 10 

The way ahead............................................................................................................ 11 

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1. 

INTRODUCTION 

Small and Medium-Sized Enterprises (SMEs) are the backbone of the EU economy. 
Their  prosperity  is  a  crucial  factor  for  achieving  more  growth  and  more  and  better 
jobs in the EU. That is why SME policy has become a key element of the renewed 
Lisbon Partnership for Growth and Jobs since its re-launch in 2005.  

The  principal  objective  of  the  Commission’s  Modern  SME  policy1  has  been  to 
mainstream SMEs’ concerns into Community and national policies by applying the 
“Think  Small  First”  principle.  In  addition,  the  European  Council  of  March  2006 
agreed on a set of priority actions to be implemented by the end of 2007 to unlock 
the business potential of European SMEs.  

This  Communication  presents  what  has  been  achieved  in  the  two  years  since  the 
launch of the Modern SME policy and sets out examples  of how  the “Think  Small 
First”  principle  has  been  applied.  While  confirming  that  the  orientation  of  the  new 
European SME policy is right, the Communication indicates the need to substantially 
step up policies to support SMEs at EU and national level given their economic and 
social importance.  

2. 

ACHIEVEMENTS OF THE MODERN EUROPEAN SME POLICY 

The implementation of the Modern European SME policy has been carried out in a 
context  of  increasing  economic  growth:  in  2006,  EU  GDP  growth  reached  3.0%  – 
almost twice the rate of 2005 – and about 3.5 million new jobs were created2. Indeed, 
SMEs  are  the  main  driver  of  employment  growth,  in  particular  in  sectors  like 
construction, transport, communication or tourism3.  

Action of the European Commission has been guided by policy commitments in all 
five key areas:  

–  cutting red tape 

–  improving SMEs’ access to markets  

–  promoting entrepreneurship and skills 

–  improving SMEs’ growth potential 

–  strengthening dialogue and consultation with SME stakeholders.  

As a result, SMEs are now fully integrated into Community policies, such as those 
promoting  competition,  research,  cohesion  and  rural  development.  SMEs’  interests 

1 
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3 

http://ec.europa.eu/enterprise/entrepreneurship/sme_policy.htm 
The European Commission’s Spring Economic Forecast 2007-2008. 
Statistics in Focus, 24/2006, Eurostat. 

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have also been mainstreamed in the recent initiatives in the fields of innovation4 and 
industrial policies5.  

The Commission has increased the SME focus within major Community spending 
programmes  for  the  period  2007-2013.  The  Structural  Funds  remain  the  largest 
Community  funding  instruments  benefiting  SMEs6.  Around  16-18%  of  the  total 
allocation for Cohesion Policy of €347.4 billion is planned to be spent in relation to 
SMEs. Moreover, the European Agricultural Fund for Rural Development (EAFRD)7 
will  spend  up  to  €10  billion  to  support  the  creation  and  development  of  non-
agricultural enterprises in rural areas, skills acquisition and training, as well as SMEs 
in agriculture, food industry and forestry. 

The  Seventh  Framework  Programme  for  Research  and  Technological  Development 
(FP 7) includes a number of incentives for SME participation, including an increased 
upper  rate  of  reimbursement  for  research  and  technological  development  activities 
from  50%  to  70%.  The  Competitiveness  and  Innovation  Framework  Programme 
(CIP)8,  with  a  budget  of  approximately  €3.6  billion,  provides  better  access  to 
finances for SMEs and support to entrepreneurship, innovation, ICT as well as to a 
wider uptake of new and renewable energies and improving energy efficiency. The 
Commission  also  strongly  supports  initiatives  to  make  education  and  training 
available for all through the Life Long Learning programme.  

In addition, the conclusions of the 2006 Spring European Council reinforced and 
complemented  the  approach  of  the  Modern  SME  Policy  by  calling  on  the  Member 
States  to  unlock  the  EU’s  business  potential  by  taking  the  following  five  priority 
actions:  

(1) 

(2) 

(3) 

Establish a one-stop-shop for setting up a company in a quick and simple way 
and to reduce the average time for setting up a business to one week. 

Encourage  entrepreneurship,  including  through  entrepreneurship  education 
and training. 

The recruitment of a first employee should not involve more than one public 
administration point. 

(4)  Make  the  ‘Think  Small  First’  principle  a  guiding  principle  in  all  relevant 

legislation and apply it systematically.  

(5) 

Facilitate SMEs’ access to public procurement. 

The  coordinated  European  reform  agenda  put  in  place  under  the  renewed  Lisbon 
Partnership for Growth and Jobs has encouraged an increasing number of Member 

4 

5 

6 
7 
8 

The Commission Communication ‘Putting knowledge into practice: A broad-based innovation strategy 
for the EU’  COM (2006) 502. 
The  Commission  Communication:  ’Mid-term  review  of  industrial  policy:  A  contribution  to  the  EU’s 
Growth and Jobs Strategy’ COM (2007) 374. 
http://ec.europa.eu/regional_policy/index_en.htm 
Council Regulation (EC) No. 1698/2005 of 20 September 2005. 
http://ec.europa.eu/enterprise/enterprise_policy/cip/index_en.htm 

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States  to  integrate  the  interests  of  SMEs  into  their  policy-making  processes. 
They have achieved this in different ways such as the creation of a specific body to 
represent  SMEs’  interests,  a  more  comprehensive  evaluation  of  the  impact  of 
legislation  on  SMEs,  systematic  consultations  with  SMEs  and  a  gradual 
improvement of the business environment.  

The  regular  dialogue  with  Member  States  on  SME-policy  has  led  to  better 
complementarity  between  national  and  EU  measures.  The  Commission  has 
supported this process by facilitating mutual learning and exchange of best practice. 
It has collected and published on-line, in the framework of the European Charter for 
Small  Enterprises’ process,  more than 250 good practices from the Member States, 
e.g. in the areas of improving on-line access, taxation and better regulation9. 

However, there is need for further improvement in mainstreaming SME aspects in 
Member States’ and EU policies.  

The following paragraphs set out in more detail the progress made in each of the five 
key  areas  of  Modern  SME  policy,  including  the  priority  actions  called  for  by  the 
2006 Spring European Council.  

2.1. 

Cutting red tape 

The Commission has taken important steps towards creating a more SME-friendly 
regulatory environment.  

For  instance,  the  revision  of  the  Community  state  aid  rules  has  increased  the  de 
minimis threshold under which aid need not be reported to €200,00010. The new rules 
also  include  proposals  for  increasing  the  intensity  of  aid  to  SMEs,  in  particular  for 
small  enterprises.  In  addition,  a  new  Community  framework  for  State  aid  for 
research and innovation11 introduces more flexible rules for SMEs’ costs related to 
Intellectual  Property  Rights  (IPR),  hiring  highly  qualified  staff  and  accessing 
innovation support services. This also makes it easier for SMEs to obtain funding for 
research, development and innovation and to benefit from technology transfer.  

The  Commission  has  also  published  a  proposal  for  a  Council  Directive  to  allow 
Member States to exempt from VAT businesses with an annual turnover of less than 
€100,000  and  to  introduce  a  VAT  one-stop-shop  system  to  simplify  VAT 
obligations for businesses trading in a Member State where they are not established. 
Moreover, the proposal includes simplified rules for claiming VAT refunds in other 
Member States thereby reducing burdens on SMEs and encouraging them to increase 
their  intra-EU  trade.  The  Commission  is  pressing  for  speedy  adoption  of  this 
Directive with some parts of the proposal likely to be adopted by 31 December 2007.  

The  Commission  regularly  assesses  the  impact  of  a  new  piece  of  Community 
legislation  in  view  of  reducing  the  administrative  burden  on  business  and  the 
recently  established  Impact  Assessment  Board  has  tangibly  started  to  improve  the 
overall quality of the Commission’s impact assessments.  

9 
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11 

http://ec.europa.eu/enterprise/enterprise_policy/charter/gp/ 
A different de minimis threshold is applied in some sectors, such as fisheries.  
http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/c_323/c_32320061230en00010026.pdf 

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Despite  these  considerable  improvements,  much  remains  to  be  done  to  free  SMEs 
from  unnecessary  administrative  burdens  and  to  further  simplify  the  regulatory 
requirements.  Therefore,  the  Commission  will  maintain  its  efforts  to  follow-up  the 
2006  Spring  European  Council  priority  action  making  the  “Think  Small  First” 
principle a guiding principle in all relevant legislation and to apply it systematically.  

The  EU’s  Better  Regulation  Agenda  already  sets  a  target  of  reducing  the 
administrative  burden  arising  from  Community  legislation  by  25%  by  2012  in  a 
number  of  priority  areas.  As  a  first  move  in  this  direction,  the  Commission  has 
already proposed ten fast-track actions in areas where such actions are likely to have 
the greatest impact,  such  as company law  and employment  relations. These 10 fast 
track actions, which have been endorsed by the 2007 Spring Council will make life 
easier for SMEs and are likely to save up to €1.3 billion in administrative costs.  

The  Commission  is  fully  aware  that  small  and  medium  sized  enterprises  bear  a 
disproportionate  regulatory  and  administrative  burden  in  comparison  to  larger 
businesses  -  it  has  been  estimated  that  where  a  big  company  spends  one  Euro  per 
employee  because  of  a  regulatory  duty,  a  small  business  might  have  to  spend  on 
average up to ten Euros12. In order to alleviate this disproportionate burden on SMEs, 
the Commission has started proposing specific rules for micro and small enterprises. 
The  Commission  and  the  Member  States  are  further  challenged  to  refrain  from 
imposing detailed administrative requirements on SMEs at European level wherever 
appropriate enabling Member States to achieve commonly defined policy goals more 
efficiently by their own means reflecting better the particular needs of SMEs in the 
given local, regional or national circumstances.  

The  Commission  finally  welcomes  the  commitment  of  Member  States  at  the  2007 
Spring Council to participate in the reduction of administrative burdens in particular 
with  a  view  to  also  reducing  current  reporting  and  documentation  requirements  for 
SMEs at national level, notably for micro enterprises.  

2.2. 

Improving SMEs’ access to markets 

At  present,  18%  of  SMEs  have  international  activities  and  even  fewer  export  their 
products  outside  their  home  country13.  SMEs  also  face  obstacles  when  accessing 
public  procurement  markets,  when  selling  to  consumers  cross-border  or  applying 
standards. Therefore, facilitating SMEs’ access to markets and in particular to the 
Single Market remains vital.  

Despite the fundamental principle of free movement of goods, many companies still 
face technical barriers when exporting to another Member State as the authorities 
require  goods  coming  from  other  Member  States  to  be  adapted  to  their  national 
technical  rules.  The  Commission  has  therefore  tabled  a  proposal  for  a  regulation 
which will require national authorities who deny market access to duly justify their 

12 

13 

‘Models  to  reduce  the  disproportionate  regulatory  burden  on  SMEs.  Report  of  the  Expert  Group’, 
European Commission, May 2007. 
http://ec.europa.eu/enterprise/enterprise_policy/analysis/doc/smes_observatory_2003_report4_en.pdf) 

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decision14.  This  will  put  the  onus  on  national  authorities  rather  than  on  companies 
facing such barriers. 

An integrated business and innovation  support network is being set up in 2007 
and will become fully operational in 2008 to assist SMEs in benefiting more from the 
opportunities of the Single Market. It promotes match-making events between SMEs, 
technology  brokerage  and  partner  searches,  organise  feed-back  from  SMEs  on  EU 
legislation  and  standards  as  well  as  support  the  internationalisation  of  SMEs.  This 
network  reaches  out  to  2,000,000  SMEs  via  some  600  European  business  and 
innovation support organisations. 

The new Services Directive15 will  free up the provision of services,  which account 
for  70%  of  EU  value  added  and  have  a  considerable  potential  to  stimulate  growth 
and employment. It will make it easier for businesses to provide services and to set 
up  an  establishment  in  other  EU  countries  by  cutting  down  bureaucracy  and  by 
providing  assistance  to  foreign  businesses  wanting  to  do  so.  Likewise,  a  certain 
degree of harmonisation of consumer protection legislation could also help SMEs to 
sell their products outside their home country.  

Standardisation  plays  a  key  role  in  fostering  the  competitiveness  and  growth  of 
SMEs  by  increasing  the  quality  of  their  products  and  consumers’  confidence.  The 
Commission  is  therefore  increasing  its  co-funding  to  support  the  participation  of 
experts  representing  the  SMEs’  interests  in  the  process  that  establishes  European 
standards. The Commission also fully supports the initiatives of European Standards 
Organisations targeted at SMEs. Finally, in the context of its work on standards and 
innovation, the Commission is examining ways to enhance the potential of standards 
to encourage innovation by SMEs. 

The Public Procurement Directives provide a framework to foster competitive public 
procurement  markets  to  the  benefit  of  SMEs.  In  response  to  the  2006  Spring 
European  Council,  the  Commission  has  taken  action  in  analysing  how  public 
procurement  markets,  which  account  for  about  16%  of  EU  GDP,  could  be  better 
used  to  promote  the  growth  and  competitiveness  of  SMEs.  Recent  findings  show  a 
slight  improvement  regarding  the  participation  of  SMEs  in  public  procurement 
markets in recent years although the trend is not uniform throughout the EU.  

The  Commission  has  also  published  a  practical  Guide  on  the  promotion  of 
innovation16.  Member  States  are  introducing  measures  to  raise  enterprises’ 
awareness  of  procurement  opportunities  and  to  improve  access  to  information  on 
public tenders. However, very few countries, such as the UK, Italy and France, have 
already  put  in  place  a  specific  strategy  to  help  SMEs  participate  in  public 
procurement.  

Finally, the EU’s renewed market access strategy highlights multilateral and bilateral 
efforts  to  assist  European  businesses,  including  SMEs,  in  overcoming  barriers  they 
face when accessing third country markets17. The actions include the development 

14 
15 
16 
17 

http://ec.europa.eu/enterprise/regulation/goods/mutrec_en.htm 
Directive 2006/123/EC of 12 December 2006. 
http://ec.europa.eu/enterprise/innovation/documents_en.htm 
‘The Global Europe: Competing in the World’ COM (2006) 567. 

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of  trade  facilitation  provisions  in  future  free-trade  agreements  (FTAs)  and  in  the 
WTO  and  regulatory  and  industrial  policy  dialogues  with  third  countries  to  tackle 
regulatory obstacles to trade. In addition, specific measures such as information and 
awareness-raising campaigns and match-making events to facilitate SMEs’ access to 
third-country  markets,  such  as  AL-INVEST,  MEDINVEST  and  PROINVEST  have 
proven successful and will be continued.  

2.3. 

Promoting entrepreneurship  

The  Member  States  have  also  made  considerable  efforts  to  deliver  by  the  end  of 
2007  the  entrepreneurship  priority  actions  as  requested  by  the  2006  Spring 
European Council.  

Most  countries  have  established  a  one-stop-shop  or  equivalent  arrangement  for 
setting  up  a  company,  even  though  in  some  cases  they  do  not  cover  all  types  of 
companies. In general, registration times have improved and in many Member States 
and  regions  it  is  now  possible  to  register  a  company  within  one  week.  However, 
there is still scope and need for greater simplification. Last but not least, the services 
Directive obliges Member States to set up “points of single contact” through which 
service providers can complete all formalities relating to their activities.  

As  to  developing  entrepreneurial  skills  through  school  education,  the  majority  of 
Member States have taken some measures in this field. However, progress is rather 
slow in explicitly embedding entrepreneurship as a key competence within national 
(or  regional)  framework  curricula  for  general  secondary  education.  This  has  been 
achieved  in  some  Member  States,  while  others  are  starting  to  implement  or  are 
planning reforms in the same direction.  

For  its  part,  in  February  2006,  the  Commission  adopted  a  Communication  on 
fostering entrepreneurial mindsets through education and learning18, providing 
examples  of  good  practices  which  were  discussed  at  the  Oslo  conference  on 
entrepreneurship  education.  Moreover,  it  is  estimated  that  more  than  200,000 
secondary  school  students  participate  in  a  practically-oriented  training  scheme, 
launched  by  the  Commission,  whereby  they  run  mini-companies  to  familiarise 
themselves  with  basic  business  concepts  and  skills.  These  students  are  four  times 
more likely to create their own company than others.  

To date, around one third of Member States appear to have established a one-stop-
shop system for recruiting employees (e.g. in combination with one-stop-shops for 
start-ups)  or  have  recruitment  procedures  that  are  so  simple  that  they  can  be 
considered  a  "one-stop".  Progress  has  been  achieved  in  decreasing  the  number  of 
procedures.  

Last  but  not  least,  to  safeguard  the  estimated  2.8  million  jobs  which  are  at  stake 
through  the  transfer  of  businesses  each  year,  the  Commission  is  promoting  good 
practices on how to design services which aim to establish contacts between potential 
to  a  Commission 
sellers  and  buyers  of 

transferable  businesses.  Further 

18 

http://ec.europa.eu/enterprise/entrepreneurship/support_measures/training_education/commplan.htm 

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Communication19, a pilot action aims to promote mentoring schemes in EU Member 
States in order to enhance the knowledge and core competences that are essential for 
the successful transfer of business ownership.  

The  image  of  entrepreneurs  and  in  particular  to  tackle  the  stigma  attached  to 
business  failure  remains  an  issue  of  concern.  Only  a  small  minority  of  failed 
entrepreneurs make another attempt to establish a business, despite often retaining a 
preference  for  entrepreneurial  endeavour.  Yet,  those  who  do  try  again  are  likely  to 
benefit  from  their  previous  experience  and  are  more  likely  to  be  successful.  Some 
areas  of  action  for  facilitating  the  fresh  start  of  honestly  failed  entrepreneurs  are 
therefore put forward in the Commission Communication "Overcoming the stigma of 
business failure – for a second chance policy"20.  

The wide potential of women, elderly people and ethnic minority entrepreneurs 
has not yet been fully exploited.  

2.4. 

Improving SMEs’ growth potential in a sustainable way 

To improve SMEs’ access to finance, more than €1 billion has been earmarked for 
financial  instruments  within  the  Competitiveness  and  Innovation  Framework 
Programme  (CIP)  for  the  period  2007-2013.  This  amount  will  enable  financial 
institutions to provide about €30 billion of new finance to SMEs, because each euro 
spent from the EU budget is complemented by private investor money thus creating a 
substantial leverage effect. These funds will therefore benefit an estimated 400,000 
SMEs in the EU, most of these being micro or small enterprises.  

A significant share of the Structural Funds (2007-2013) will be spent to support the 
creation  and  growth  of  SMEs,  notably  to  improve  their  innovative  capacity,  their 
investment  in  RTD  and  skills.  To  improve  the  availability  of  sustainable  financing 
for micro-enterprises and SMEs at regional level, the Commission with the European 
Investment  Bank  (EIB)  and  the  European  Investment  Fund  (EIF)  launched  the 
JEREMIE initiative21. It gives Member States the option of using money from the 
Structural Funds in financial products such as venture capital, guarantees and micro-
finance.  The  Commission  encourages  Member  States  to  actively  use  these  funding 
opportunities. 

The  Commission  has  also  promoted  active  dialogue  and  cooperation  between 
bankers  and  SMEs  which  has  lead  to  improved  mutual  understanding  and  more 
transparency.  The  5th  Round  Table  of  Bankers  and  SMEs22 discussed transparency 
issues  as  well  as  innovative  financing  tools  like  mezzanine  finance  and  SME 
securitisation, which  will  make additional sources of SME finance easier  to access. 
Finally,  the  Commission  has  identified,  together  with  Member  States  and  industry, 
the  main  obstacles  to  the  development  of  cross  border  capital  markets  in  order  to 
encourage the development of a truly European venture capital market.  

19 

20 
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22 

Implementing  the  Lisbon  Community  Programme  for  Growth  and  Jobs:  Transfer  of  Businesses  - 
Continuity through a new beginning  COM (2006)117. 
[Reference to be added] 
http://ec.europa.eu/regional_policy/funds/2007/jjj/jeremie_en.htm 
See the final report at http://ec.europa.eu/enterprise/entrepreneurship/financing/round_table.htm 

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The Commission’s innovation policy and specific support actions have contributed 
to  increasing  SMEs’  participation  in  innovation  by  addressing  market  failures  and 
promoting  cooperation  between  stakeholders.  The  launch  of  a  new,  broad-based 
Innovation  Strategy  with  a  ten-point  action  plan  addresses  several  key  issues  for 
SMEs,  including  skills,  standardisation  and  IPR.  The  Commission  is  also  actively 
promoting  cluster  policies  in  the  Member  States  and  ensures  the  co-ordination  of 
clusters at EU level to help the emergence of world-class European clusters.  

To further enhance access to finance for very small enterprises or craft businesses, 
the  Commission  is  promoting  the  provision  of  micro-credit  in  Europe.  More 
attention  has  also  been  paid  to  reinforcing  SMEs’  access  to  equity,  in  particular  in 
their  growth  phase.  Equity  investments  in  SMEs  should  not  be  disadvantaged,  for 
instance due to less favourable tax treatment as opposed to other sources of capital.  

To help to avoid SMEs and in particular crafts businesses being negatively affected 
by  shortages  of  skilled  labour  and  the  lack  of  managerial  skills,  the  Commission 
launched  a  pilot  action  for  an  ERASMUS-type  exchange  programme  for 
apprentices  to  encourage  them  to  get  professional  experience  in  another  Member 
State. This action is currently being evaluated.  

Skills  and  competencies  are  key  for  SMEs  and  in  particular  for  the  craft  sector. 
Better  anticipating  future  skills  requirements  remains  challenging,  since  emerging 
skills  needs,  drivers  for  jobs  renewals,  and  necessary  improvements  to  strategic 
planning in education and training systems will impact on a broad range of industrial 
activities. To facilitate the take-up of e-skills, not least by SMEs the Commission has 
proposed a new e-skills policy agenda23. 

Finally,  the  ambitious  environmental  goals  of  increasing  energy  efficiency  and 
reducing  greenhouse  gas  emissions  by  at  least  20%  by  2020  and  promoting 
renewable  energy  sources  require  the  emergence  of  a  new  business  paradigm.  The 
challenge is to help SMEs to adopt sustainable production and business models and 
thus  make  them  active  players  in  shifting  the  European  economy  towards  more 
environmentally-friendly  production  and  consumption,  while  in  parallel  allowing 
SMEs  to  reap  the  economic  benefits  that  this  presents.  This  will  build  on  the 
experience of supporting socially responsible practices among SMEs. As a first step, 
the Commission is proposing a programme to help SMEs to integrate environmental 
concerns  into  production  processes  and  products  starting  with  a  better  compliance 
with  environmental  legislation24.  In  addition,  the  forthcoming  Action  Plans  on 
Sustainable Industrial Policy and Sustainable Consumption and Production will also 
contribute towards boosting the competitiveness and sustainability of SMEs. 

2.5. 

Strengthening SME policy communication and consultation with stakeholders 

Regular 
information  and  discussion  meetings  with  European  business 
organisations chaired by the SME Envoy25 provide a forum for a regular exchange of 
information  on  the  Commission’s  major  legislative  and  policy  initiatives  and  their 
impact  on  SMEs.  This  has  contributed  to  strengthening  the  SME  Envoy’s 

23 
24 
25 

E-skills for the 21st century: Fostering Competitiveness, Growth and Jobs (2007-2010). 
[Reference to be added] 
http://ec.europa.eu/enterprise/sme/envoy_en.htm 

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“watchdog”  function,  feeding  SME  concerns  into  the  European  policy  and  law-
making process at an early stage and enabling stakeholders to be an integral part of 
the European SME policy-making process.  

Furthermore,  several  high-level  stakeholder  conferences  have  brought  together  a 
wide  variety  of  representatives  from  the  European  Parliament,  Member  States  and 
business  community,  furthering  the  commitment  of  all  key  players  to  implement 
Modern  SME  policy.  The  Commission  is  also  fostering  a  new  dialogue  between 
higher  education  and  business  representatives,  within  which  specific  issues  of 
concern to SMEs will be raised. 

The  ‘European  Enterprise  Awards’,  organised  for  the  first  time  in  2006, 
contributed  to  raising  awareness  about  entrepreneurship  and  SME  policy  and  the 
diverse  and  creative  ways  in  which  regions  encourage,  support  and  help  small 
business  succeed.  A  second  edition  of  the  Awards  will  be  organised  in  December 
2007 together with the Portuguese Presidency of the Council. Last but not least, the 
Commission’s  new  SME  web-portal  (http://ec.europa.eu/enterprise/sme/)  has 
considerably facilitated access to on-line SME-related information.  

3. 

THE WAY AHEAD 

The  Modern  SME  policy  launched  in  2005  has  started  to  bear  fruit.  A  coherent, 
inclusive and proactive SME policy has put SMEs high on the national and European 
reform  agenda  and  increased  the  commitment  of  stakeholders  to  commonly  agreed 
goals. Both Member States and the Commission have made considerable progress in 
implementing actions to create a better business environment, to mainstream SME 
issues  in  major  policy  areas  and  to  encourage  more  people  to  become 
entrepreneurs.  

As a result, it has become easier to start up a company, entrepreneurship education is 
is  a  growing  awareness  of 
increasingly  part  of  school  curricula, 
entrepreneurship  and  SME  issues  within  the  EU,  and  the  “Think  Small  First” 
principle is being integrated into Community and national policies. However, there is 
still room for improvement, both at Community level and within Member States. 

there 

The  better  regulation  "culture"  has  also  begun  to  take  root  across  the  EU:  the 
institutions  need  to  lead  the  way.  The  Commission  has  made  major  changes  in  the 
way it develops new proposals and monitors implementation of existing acquis. The 
European Parliament has also begun to use impact assessments but the Council has 
yet to begin to use it as a working tool. 

But  the  benefits  of  better  regulation  need  to  be  felt  at  all  levels.  All  Member 
States have agreed to set targets to reduce administrative costs by 25% by 2012. To 
cut the burdens for SMEs who are disproportionately affected by such burdens, there 
should  be  a  presumption  that  SMEs  will  not  be  covered  by  administrative 
requirements of EU legislation unless there is a clear need to do so and the issue can 
not be better tackled at national, regional or local level. Where SMEs are covered by 
EU  legislation,  special  measures  should  be  designed  to  help  them.  More  generally, 
the  EU  needs  to  find  ways  to  cut  existing  burdens  wherever  circumstances  allow. 

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The  next  stage  is  to  modernise  public  administrations  so  that  they  provide  a 
transparent, predictable service and an effective means of redress.  

The Commission has listened to important stakeholders in view of further developing 
and  sharpening  the  modern  SME  policy.  It  has  analysed  the  results  of  recent  high-
level  conferences,  in  particular  the  4th  European  Conference  on  Craft  and  Small 
Enterprises26 and the High-Level Conference on SME policy27, took inspiration from 
initiatives  implemented  or  proposed  by  Member  States  and  from  recent  reports  by 
other EU institutions.  

The task now is to fully unlock the growth and jobs potential of SMEs and make 
full use of their innovative capacities. The Commission is convinced of the need to 
put even more emphasis on SMEs in the context of the next Lisbon cycle 2008-
2010.  It  will  seek  the  views  of  small  businesses  and  their  representatives  as  it 
considers  designing  a  "Small  Business  Act"  for  Europe  with  a  view  to  making 
concrete proposals to further support SMEs. 

In  its  new  set  of  proposals  for  SMEs  in  the  context  of  the  next  Lisbon  cycle  the 
Commission will take into account the diversity of the SME community: craft and 
small businesses, social economy enterprises and family-run SMEs all show potential 
for strengthening European growth and acting as a driving force for innovation, local 
development,  training  and  employment,  while  sometimes  displaying  special 
problems and needs. 

It is finally equally important that Member States also step up their efforts and put 
their SME policy higher on the agenda within the context of their National Reform 
Programmes. 

26 
27 

http://ec.europa.eu/enterprise/entrepreneurship/craft/4th_conference.htm 
Brussels, 14 September 2007 

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