COMMISSION STAFF WORKING PAPER EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
Date: 2011-11-30
Institutions: European Commission
Subjects: EU programme, administrative formalities, competitiveness, corporate finance, innovation, market access, research and development, small and medium-sized enterprises

EUROPEAN COMMISSION 

Brussels, 30.11.2011 
SEC(2011) 1453 final 

COMMISSION STAFF WORKING PAPER 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF 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) 1452 final} 

 
 
 
 
  
 
 
1. 

INTRODUCTION 

The  purpose  of  this  Impact  Assessment  Report  is  to  assess  the  expected  impacts  of  an  EU 
Competitiveness  and  SME  programme  (2014-2020),  as  proposed  by  the  Commission  in  its 
MFF Communication of 29 June 20111.  

To  prepare  this  initiative,  the  Commission  consulted  relevant  stakeholders  and  sought 
external  expertise.  It  commissioned  an  interim  and  a  final  evaluation  of  the  current 
programme  –    the  Entrepreneurship  and  Innovation  Programme2  –  and  a  survey  on 
administrative  costs  for  beneficiaries.  It  also  launched  a  public  consultation.3  Two  external 
studies provided empirical data and analysis supporting the impact assessment.4 

In  view  of  the  long-lasting  effects  of  the  economic  crisis  on  the  competitiveness  and 
entrepreneurship potential of the European economy, in particular on SMEs, it is necessary to 
look  at  possible  ways  to  tackle  the  underlying  problems  which  constrain  growth  at  the 
European  level.  The  crisis  and  its  consequences  have  demonstrated  that  uncoordinated 
national  policy  responses  are  of  limited  value,  as  they  do  not  gather  the  critical  mass  to 
influence  the  performance  and  growth  of  European  businesses  in  global  markets,  and  they 
lack the necessary consistency over the long term. 

2.  PROBLEM DEFINITION 

Market,  institutional  and  policy  failures  undermine  the  competitiveness  of  European 
enterprises, including SMEs, and in particular their ability to become more sustainable as well 
as their possibilities of growth linked to access to finance and global markets. 

A  particular  effort  is  needed  in  order  to  promote  the  interests  of  small  and  medium-sized 
enterprises  and  the  sectors  in  which  they  are  most  represented.  One  of  the  main  sources  of 
economic  growth  and  job  creation  in  the  EU  are  SMEs,  which  constitute  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.5 

2.1.  The specific problems related to competitiveness and sustainability 

in  Europe 

The  business  environment 
is  characterised  by  cross-border  regulatory 
fragmentation and the excessive administrative burdens in some Member States for starting a 
business.  According  to  different  surveys,  between  70%  and  88%  of  businesses  regard 
administrative  difficulties  in  other  EU  Member  States  as  ‘very  important’  or  ‘important’  in 
deciding  whether  or  not  to  engage  in  cross-border  trade6.  This  runs  counter  to  the  general 
principle  that  businesses  located  in  high  cost  locations,  such  as  Europe,  must  be  able  to 
permanently adapt in order to remain competitive in the global market. 

1   COM(2011)500 final 
2   http://ec.europa.eu/cip/documents/implementation-reports/index_en.htm 
3   http://ec.europa.eu/cip/public_consultation/index_en.htm 
4   Study on the successor of the current programme and study on tourism, conducted by Economisti Associati 
5 

Structural Business Statistics Database (Eurostat) 
http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/data/database  

6  European  Business  Test  Panel,  Commercial  Disputes  and  Cross  Border  Debt  Recovery,  14.07.2010–

13.08.2010, http://ec.europa.eu/yourvoice/ebtp 

 
 
                                                 
 
2.2.  The specific problems related to entrepreneurship, SME creation and growth 

According  to  a  2009  EuroBarometer  survey  dedicated specifically  to  entrepreneurship,  only 
45% of European citizens would like to be self-employed, as compared to 55% in the United 
States and 71% in China.  

2.3.  The specific problems related to access to finance 

In  many  Member  States,  SMEs  have  difficulties  in  obtaining  a  loan  from  bank  institutions. 
According to the external study7, between 400,000 and 700,000 SMEs are unable to obtain a 
loan  from  the  formal  financial  system,  with  total  foregone  loans  between  €  40  and  €  70 
billion,  because  financial  institutions  require  substantial  collateral  as  well  as  extensive 
financial and business records. Moreover, compared to their US counterparts, European start-
ups have less access to other financing such as venture capital, especially SMEs. As a result, 
many  fast-growing  European  enterprises  are  looking  to  expand  in  the  US  instead  of  in 
Europe8.  

2.4.  The specific problems related to access to markets 

According  to  a  2010  ECB  survey,  the  most  pressing  problem  facing  Euro-area  SMEs  is 
“finding  customers”  (28%).  However,  despite  the  existence  of  the  Single  Market,  doing 
business  across  borders  inside  and  outside  Europe  is  still  subject  to  significant  barriers  for 
SMEs. As a result, only 25% of SMEs in the EU export directly outside national markets and 
only  13%  export  beyond  the  EU9.  This  situation  is  a  cause  of  concern,  as  the 
internationalisation of businesses plays an important role in the creation of jobs and growth.10 

2.5.  Need for action at EU level 

•  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  venture  capital  investment,  cross-border  lending 
and  credit  enhancement,  as  well  as  informational  and  organizational  constraints  which 
prevent SMEs from taking advantage of the opportunities that the Single Market offers.  

• 

• 

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  of  promoting  entrepreneurship  and  SMEs  at  national,  regional  and  local 
level can be selected for the European Enterprise Awards competition.  

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 created 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 

7   See footnote 3 
8  Europe Innova, Meeting the challenge of Europe 2020, A report by the Expert Panel on Service Innovation 

in the EU, February 2011 

9   EIM, Opportunities for the Internationalisation of SMEs,  June 2011 
10   Ibidem 

2

 
 
                                                 
by the current programme, offers advice which would be otherwise unavailable to SMEs 
from smaller Member States.11  

•  supporting coherence and consistency in national measures through the exchange of best 
practices at European level and benchmarking.12 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.  

• 

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 schemes is unparalleled. The experience gained 
by the EIF over more than 10 years constitutes a uniquely valuable asset.  

• 
The  Enterprise  Europe  Network  has  achieved  tangible  results  by  putting 
emphasis  on  promoting  the  internationalisation  of  SMEs  (in  the  Internal  Market  and 
beyond) through the provision of information on EU matters, as well as the possibility 
of  feeding  into  the  decision  making  process.  Its  role  is  especially  important  in 
overcoming information asymmetries faced by SMEs and in alleviating the transaction 
costs  associated  with  cross-border  activities.  The  value  of  the  Enterprise  Europe 
Network  is  constituted  by  the  shared  methodologies,  instruments  and  tools  used 
qualified  service  providers  mandated  and  (co-)  financed  by  their  regional  /  national 
authorities. 

Applying  the  principle  of  subsidiarity,  the  measures  considered  under  the  current  or  future 
programme  aim  not  at  replacing  the  existing  national  actions,  but  rather  at  complementing 
them.  While  there  are  many  initiatives  in  place  in  the  Member  States  to  foster 
entrepreneurship and stimulate SMEs’ competitiveness, there is a need for coordination and 
sharing of best practices. For most SME-related issues, the EU and the Member States each 
appear to have an important complementary role to play, as there is scope for spillovers and 
synergies. In particular, the EU plays a key role in activating all policy areas and levers in an 
integrated way. 

In addition, and in order to take into account the current budgetary constraints, the measures 
considered were carefully selected as being those with the highest EU added value. 

3.  OBJECTIVES 

The overall objective of the proposal is to contribute to the Europe 2020 goals by addressing 
the specific constraints to the growth of the European economy. 

11  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. 

12  EIM, June 2011 

3

 
 
                                                 
The  twin  general  objectives  of  this  proposal  are  to  stimulate  the  potential  for  both 
competitiveness  and  entrepreneurship,  particularly  concerning  the  creation  and  growth  of 
SMEs, within the European economy. 

The specific objectives are to improve the framework conditions for the competitiveness and 
sustainability of EU business, to promote entrepreneurship, to improve access to finance and 
to improve access to markets.  

4.  POLICY OPTIONS  

Under  Option  1,  Business-as-Usual, 
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. 

the  new  programme  would  cover 

Option  2  would  see  the  Discontinuation  of  all  current  financial  interventions,  leading  to  a 
budget saving equivalent to the amount indicated in Option 1. 

Scenario 3a is based on the results of the external study and serves only as a reference point to 
assess the impacts of options 3b and 3c.13  

Option  3b  would  maintain  the  current  scope  of  intervention  with  a  balanced  budgetary 
expansion.  Option  3c  would  constitute  a  focused  budgetary  expansion,  where  financial 
support is restricted to the financial instruments and the Enterprise Europe Network. 

The options considered in this Impact Assessment Report are presented below. 

Table 1 

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 

the 
of 
Improvement 
regulatory 
economic  and 
environment 
through 
benchmarking, the exchange 
of best practices and sectoral 
initiatives (€11 million/year) 

Discontinuation of all 
current activities 

Option  3B:  Baseline  plus  launch 
range  of  complementary 
of  a 
actions 
(e.g. 
new 
Corporate  Social  Responsibility) 
(€14 million/year); 

areas 

in 

Option  3C:  Discontinuation  of  all 
current activities 

2  –  Developing 
SME  policy  and 
promoting 
SMEs' 
competitiveness 

Implementation  of  the  SBA 
and  its  Review  at  European 
level 
and  national 
(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 

13  The  budgetary  assumptions  of  this  study  were  not  consistent  with  the  Commission’s  final  proposal  for  the 
next MFF as the study was commissioned already in 2010, but the quantitative analysis remains relevant. As a 
consequence, Scenario 3a is omitted in the following tables. 

4

 
 
 
 
                                                 
3 – New business 
for 
concepts 
sustainable, 
user-driven 
design-based 
consumer goods 

Analysis  related  to  design-
based  consumer  goods  and 
support  measures 
the 
areas  of  IPR  or  e-business 
(€1 million/year) 

in 

Discontinuation of all 
current activities 

as 

Option  3B:  Use  of  instruments 
replication 
“market 
such 
projects” in areas where SMEs face 
obstacles  to  the  take-up  of  new 
eco-sustainable 
technologies  and 
new  user-driven  business  concepts 
(€ 12 million/year); 

Option  3C:  Discontinuation  of  all 
current activities 

4 – Tourism 

Discontinuation of all 
current activities 

of 

Continuation 
current 
initiatives  in  the  field  of 
tourism  co-financed  under 
CIP/EIP  (e.g.  follow-up  to 
preparatory 
for 
sustainable  tourism:  EDEN, 
CALYPSO) 
(€5 
million/year) 

actions 

5  –  Activities  to 
promote 
Entrepreneurshi
p 

the 
Encouraging 
development 
of 
entrepreneurial  skills  and 
attitudes, 
including 
exchange  programmes  for 
entrepreneurs 
(€11 
million/year) 

Discontinuation of all 
current activities 

6  –  Financial 
instruments 

Continuation  of  support  to 
access  to  finance,  mainly 
of 
through 
provision 
to  SMEs  and 
guarantees 
Venture 
funds 
Capital 
targeting firms in the growth 
stages  (€113 million/year) 

Discontinuation of all 
direct  intervention  in 
financial  instruments, 
with 
action 
EU 
limited to elimination 
of  regulatory  barriers 
border 
to 
venture capital 

cross 

Scenario  3B: Expand the scope of 
activities 
intervention 
and 
related 
to 
of 
targeting 
products  and 
million/year); 

to  new 
sustainability 
diversification 
services 

(€18 

Option  3C:  Discontinuation  of  all 
current activities 

Option  3B:  Same  as  Baseline 
option  plus  modest  expansion  of 
activities focused on the increase of 
number 
(€12 
of 
million/year); 

exchanges 

Option  3C:  Discontinuation  of  all 
current activities 

Option  3B:  Almost  a  doubling  of 
resources  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 
million/year) 

capital 

(€280 

7  –  Enterprise 
Europe Network 

Maintain the Network’s role 
and  scope  as 
it  is  (€60 
million/year) 

Discontinuation of all 
financial 
direct 
to 
support 
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 

of 
(i.e. 

current 
Continuation 
initiatives 
limited 
financial  support  to  selected 
initiatives such as China IPR 
SME 
(€2 
Helpdesk) 
million/year) 

Discontinuation of all 
forms 
direct 
of 
initiatives 

and 

including: 

instruments 

Option 3B: Expansion of the range 
of 
a) 
information 
coordination 
dissemination 
b) 
financial  support  to  existing  SME 
help 
third 
markets;  c)  possible  establishment 
of  EU  support  centres  where 
appropriate (€12 million/year); 

structures 

activities; 

in  key 

9  –  International 
industrial 

Continuation 
current 
initiatives  focused  on  SME 

of 

Discontinuation of all  Option 3B: Expansion of the range 
a) 

instruments 

including: 

of 

5

Option  3C:  Discontinuation  of  all 
forms of direct initiatives 

 
 
 
 
cooperation 

in 

industrial  policy  co-
and 
third 
with 
operation 
countries 
“Near 
the 
Europe”  aiming  to  facilitate 
country 
EU 
third 
- 
industrial 
convergence  of 
policy 
regulatory 
frameworks 
million/year) 

and 

(€1 

current activities 

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 

5.  ASSESSMENT OF IMPACTS 

As  far  as  possible,  a  quantitative  and  qualitative  assessment  of  impacts  has  been  developed 
for  all  options.  An  effort  was  made  to  quantify  the  main  impacts  in  terms  of  GDP  (added 
value),  value  of  lending/investment  mobilised  and  employment,  as  well  as  the  number  of 
firms  assisted.  However,  the  quantification  proved  unfeasible  in  the  case  of  indirect 
instruments,  i.e.  those  aimed  at  creating  or  facilitating  market  conditions  for  SMEs,  and 
whose  ultimate  impact  would  depend  upon  the  behaviour  of  market  participants  and 
administrations.  Therefore,  the  quantification  exercise  concerned  Financial  Instruments  and, 
to a lesser extent, the Entreprise Europe Network. 

Concerning  the  efficiency  of  the  proposed  options,  the  quantitative  analysis  covered  two 
aspects:  (i)  the  cost  effectiveness  of  the  proposed  measures  in  terms  of  cost  ratios  linking 
budgetary  outlays  to  the  expected  impacts  in  terms  of  marginal  job  cost  and  incremental 
impact  to  budget  cost,  and  (ii)  administrative  expenses  measured  by  the  ratio  of 
administrative  personnel  costs  on  the  overall  budget.  Concerning  the  financial  instruments, 
the analysis took into account the expenses for the management of various facilities, such as 
fees to the European Investment Fund and financial intermediaries.  

Option 1: Business-as-Usual 

The Business-as-Usual Option would meet the policy objectives of the proposed programme 
to a limited  extent only. In view of the effects of the economic crisis on business, Option 1 
would mean that initiatives that are currently operating below the optimum scale would remain 
under-developed, and areas where there is a clear need to expand EU action (such as the financial 
instruments) would suffer from the lack of a consistent, welfare-enhancing set of EU initiatives. 

investment  facilitated.  The  activities  of  the 

(a) Effectiveness: Economic impacts are nevertheless estimated to be significant, in terms of 
both  direct  and  indirect  support.  Concerning  the  net  impacts  of  financial  instruments,  these 
are expected to result in an increase of GDP of approximately €660 million and to generate 
about  €1.8  billion  in  additional  lending/equity 
Network  are  expected  to  generate  an  increase  of  €200  million  of  incremental  turnover  for 
assisted  firms.  Positive  social  impacts  of  financial  instruments  are  expected  in  terms  of 
generating and/or safeguarding more than 16,000 jobs in approximately 26,000 assisted firms. 
Moreover, the activities of the Network are expected to generate and/or safeguard 1,000 jobs, 
as  well  as  developing  900  new  products,  services  or  processes  per  year.  Environmental 
impacts are positive, due to environmental support provided through networking, funding and 
investing  in  resource-efficient  and  low-impact  solutions  through  the  Enterprise  Europe 
Network.  For  instance,  by  2011,  Network  partners  are  expected  to  deliver  environment-
related  services  to  about  7,500  SMEs  and  sign  cooperation  agreements  with  more  than  400 
environmental  service  providers.  Modest  synergies  among  different  components  of  the 
programme  are  expected,  most  prominently  between  the  Financial  Instruments  and  the 

6

 
 
Enterprise  Europe  Network.  Concerning  other  activities,  the  European  Network  of  Female 
Entrepreneurship  Ambassadors,  inspired  by  Swedish  and  UK  national  programmes  which 
provided promotion and support to women wanting or preparing to start up a new enterprise, 
will be complemented from 2011 onwards by the European Network of Mentors for Women 
Entrepreneurs,  which  will  provide  mentoring  services  to  women  entrepreneurs  who  have 
recently started a business.  

(b) Efficiency: cost-effectiveness for the financial instruments (measured in terms of cost per 
job  created  and/or  safeguarded)  is  estimated  to  be  €  2735  per  job.  Concerning  general 
administrative costs, the impact of staff costs across the total budget is 5.8% - mainly due to 
personnel costs. 

(c) In terms of Coherence, the intervention logic of the current programme will be linked to 
other  aspects  of  EU  Competitiveness  and  SME  policy,  such  as  a  reference  to  the  relevant 
Flagship Initiatives of Europe 2020 or the priorities of the Small Business Act. 

Option 2: Discontinuation 

The  Discontinuation  Option  does  not  achieve  the  policy  objectives  and  its  impacts  are 
generally negative, both in social and environmental terms, compared to the baseline. 

(a) Effectiveness: The only positive impact of this option would be in the area of cost savings.  

(b) Efficiency: the discontinuation option would lead to significantly decreased efficiency in 
programme  management  by  Member  States  due  to  the  fragmentation  of  the  management  of 
individual national programmes, instead of the benefits of coordination under a pan-European 
programme.  

(c)  Coherence:  the  discontinuation  option  would  have  negative  results  in  terms  of  the 
inconsistency of national approaches to competitiveness policy, as well as the absence of an 
EU dimension. 

Option 3: Expansion 

Different  degrees  of  expansion  of  the  current  Programme  were  explored  using  the  scenario 
envisaged by the external study as a benchmark, which is not considered to be a viable option.  

Scenario 3a: Optimal Expansion 

Scenario 3a would achieve the objectives of the programme to a considerable extent, but at an 
unrealistic cost.  

(a) Effectiveness: There are positive direct economic impacts from the financial instruments, 
estimated  at  an  increase  in  GDP  of  approximately  €2.3  billion  per  year  and  €7.2  billion  in 
additional lending/equity investment compared to the baseline scenario. The activities of the 
Network are not expected to have any additional result compared to the baseline scenario. The 
budget  of  the  other  activities  would  also  increase  considerably  under  this  scenario  and,  in 
qualitative terms, activities to improve European competitiveness and entrepreneurship would 
lead to relevant policies based on best practices being implemented at EU and Member State 
level. There are also positive social impacts regarding employment: a major contribution is 
again  expected  to  come  from  financial  instruments,  which  are  expected  to  contribute  to  the 
generation  and/or  preservation  of  more  than  50,000  jobs  by  assisting  approximately  65,000 

7

 
 
more firms compared to the baseline option, as well as an additional 1750 jobs/year generated 
or  safeguarded  by  the  Network.  Positive  environmental  impacts  are  expected  to  be 
significantly higher compared to the baseline, due to the scaling up of initiatives in support of 
eco-sustainable  processes  and  products  in  targeted  industrial  sectors  and  tourism.  The 
expansion  of  the  Network  would  spread  the  EU  environmental  rules  to  additional  third 
countries, generalising best practices.  

(b)  Efficiency:  cost-effectiveness  is  estimated  to  be  €  4732  per  job.  The  incidence  of  staff 
costs over the total budget is expected to be 2.6%, mainly due to the significant increase in the 
budget for financial instruments. 

(c) Coherence: this Scenario expands the current activities in order to reach out to other EU 
policies  and  programmes,  so  as  to  maximise  the  potential  for  added  value  of  the  EU-level 
intervention. 

Sub-Option 3b: Balanced Expansion 

The Balanced Expansion Option would achieve the policy objectives in a satisfactory manner 
by striking a balance and allocating the scarce budgetary resources accordingly. 

(a)  Effectiveness:  Economic  impacts  of  financial  instruments  are  expected  to  result  in  an 
increase  of  GDP  of  approximately  €500  million  a bove  baseline  level  and  to  generate  about 
€1.7 billion in additional lending/equity investment . No additional impact is expected by the 
Network in comparison with the baseline option.  

The budgetary allocation for other activities would be increased to achieve a more appropriate 
scale. A limited increase in the budget for support for European competitiveness would make 
it possible to implement some of the new actions included in the Europe 2020 flagship "An 
Integrated  Industrial  Policy  for  the  Globalisation  Era"  as  compared  to  the  baseline  option, 
such  as  initiatives  relating  to  corporate  social  responsibility.  As  regards  SME  policy 
development,  the  same  budget  as  under  the  baseline  scenario  would  be  maintained  and  the 
same impacts can be expected. As regards SME business support in markets outside the EU, a 
considerable  scaling  up  of  financial  support  would  lead  to  an  increased  direct  presence  of 
SMEs in key global markets, as they would be able to rely on specialised support. Improved 
international cooperation would also have positive impacts on business internationalisation. 

As  regards  social  impacts,  the  financial  instruments  are  expected  to  assist  approximately 
13,000  firms,  thereby  generating  and/or  safeguarding  11,000  more  jobs  than  under  the 
baseline option.  

Other  activities  are  expected  to  enhance  cooperation  between  policy-makers  at  EU  and 
national level, and a strong emphasis would be placed on identifying and disseminating best 
practices,  with  appreciable  effects.  In  general,  the  envisaged  measures  are  designed  to  be 
open  to  all  groups  of  economic  actors  and  therefore  non-discriminatory.  The  activities 
envisaged to promote entrepreneurship are an exception, as these are designed to also target 
specific  groups.  Their  aim  is  to  promote  and  foster  entrepreneurship  across  European 
societies,  including  social  entrepreneurs,  long-term  unemployed,  elderly  workers,  migrants 
and ethnic minorities. For instance, activities promoting entrepreneurship are expected to lead 
to  a  direct  employment  effect  of  300-400  additional  jobs,  due  to  the  internationalisation  of 
beneficiary entrepreneurs. 

Environmental impacts are not expected to be significantly higher than the baseline. 

8

 
 
Aggregate  impact  due  to  synergies  among  the  different  components  of  the  programme  is 
expected  to  be  significant  compared  to  the  baseline,  as the reinforced  financing of different 
measures is expected to enhance cooperation between policy-makers at EU and national level. 
Strong  emphasis  would  be  placed  on  identifying  and  disseminating  best  practices.  The 
Network would be the centre-piece connector of different components, multiplying synergies 
between measures such as support to SMEs abroad and international industrial cooperation. 
Another  example  of  expected  synergies  is  the  interplay  between  the  Enterprise  Europe 
Network  and  the  financial  instruments.  The  “use”  of  the  Network  for  the  promotion  of  the 
financial  instruments  will,  for  example,  obviate  the  need  for  further  promotional  activities. 
Activities  to  improve  European  competitiveness,  on  the  one  hand,  and  the  activities  to 
develop  SME  policy  and  to  promote  entrepreneurship,  on  the  other,  will  also  be  mutually 
reinforcing,  as  they  are  all  intended  to  improve  the  framework  conditions  under  which 
European businesses operate. 

(b)  Efficiency:  cost-effectiveness  is  estimated  to  be  €2824  per  job.  As  regards  general 
administrative costs, the impact of staff costs on the total budget is expected to be 4.1%.  

(c)  Coherence:  this  Sub-Option  attempts  to  strike  a  viable  balance  between  the  different 
objectives in order to maximise the potential for added value of the EU-level intervention, in 
several  fields  related  to  the  EU  competitiveness  and  SME  policy  and  identified  in  Europe 
2020 flagship initiatives and other EU programmes. 

Sub-Option 3c: Focused Expansion 

Option 3c would partially achieve the policy objectives by focusing only on a specific subset of 
the competitiveness and entrepreneurship problems of the European economy. 

(a) Effectiveness:  Concerning economic impacts, positive quantifiable impacts are expected 
to  flow  from  increased  access  to  finance.  Compared  to  the  baseline,  the  concentration  of 
resources mainly on the financial instruments would allow further reduction of the estimated 
market gaps for SME financing. The structural effects on the venture capital market would be 
limited. Compared to the baseline, however, financial instruments are expected to generate an 
increase  in  GDP  of  approximately  €0.3  billion  and  €1.1  billion  in  the  form  of  additional 
lending/equity investment facilitated.  

Under  this  option,  the  focus  of  the  financial  instruments  would  be  addressing  the  financial 
needs  of  growth-oriented  enterprises  and  primarily  those  planning  for  internationalisation. 
The increase in resources would allow more young enterprises to benefit from loan guarantees 
and  equity.  More  than  half  of  the  resources  in  this  scenario  would  be  allocated  to  equity 
instruments.  

Some  additional  impacts  compared  to  the  baseline  are  expected  by  the  Network  due  to  the 
shift  in  priority,  to  become  an  "entry  point"  for  helping  SMEs  access  to  finance.  However, 
this effect is not quantifiable  

The  main  economic  costs  under  this  option  would  concern  the  opportunity  costs  of  not 
tapping  the  European  added  value  which  could  be  generated  by  the  other,  smaller-scale 
support  activities  proposed  under  the  baseline  option  and  Option  3b.  It  is  not  possible  to 
quantify their economic impact as they are mostly indirect instruments.  

This option would involve positive social impacts by the financial instruments, resulting in 
an additional 5,300 jobs per year compared to baseline. Nonetheless, this option would have a 

9

 
 
negative impact in terms of missed opportunities of European added value resulting from the 
discontinuation  of  the  smaller-scale  activities  of  the  baseline  scenario.  Without  activities  to 
support SMEs abroad, it is likely that European SMEs would be less successful in seizing the 
opportunities  in  emerging  markets  that  recent  studies  have  highlighted,  which  would  mean 
negative economic and social impacts from this option. 

Environmental  impacts  are  expected  to  be  positive,  but  not  significantly  higher  than  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 the Network will be present. 

(b)  Efficiency:  Cost-effectiveness  is  estimated  to  be  €4385  per  job.  Concerning  general 
administrative  costs,  the  impact  of  staff  costs  over  the  total  budget  is  expected  to  be  4,9%, 
mainly due to personnel costs. 

(c)  Coherence:  This  sub-option  lacks  substantial  synergies  and  linkages  to  other  EU 
objectives and programmes, as it focuses mainly on the access to finance of EU businesses. 

6.  COMPARISON OF OPTIONS 

In  view  of  the  above  considerations,  the  following  tables  assess  the  options  in  terms  of 
impacts, taking the baseline as the benchmark against which the other options are compared 
(Table 2) and the criteria of effectiveness, efficiency and coherence (Table 3). 

The  effectiveness  of  each  of  the  two  expansion  options  considered  for  the  financial 
instruments is sensitive to how the measure is composed. Option 3b has a larger share of the 
guarantee instrument than 3c and, therefore, due to the much higher leverage of guarantees, 
benefits many more enterprises and generates more employment, which leads to higher value 
added (GDP) per unit of budgetary resources. Option 3c is based on new product and service 
concepts financed by venture capital, which could generate higher value added and growth in 
the long term. Cross-border venture capital spending can also contribute to the development 
of  the  equity  market  and  strengthen  the  entrepreneurial  eco-system  with  longer-lasting 
impacts on the economy.   

Table 2 

Comparison of the options' impacts  

  Budget 

Economic 

Social 

Environmental 

Option 1 
(baseline) 

€213 million/year 

€660 million per 

year increase to 
GDP 

 €1.8 billion in 
additional 
lending/equity 
investment 

€200 million 
incremental 
turnover per year 

10

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 

Option 3b - 
moderate 
expansion 

Option 3c - 
focused 
expansion 

€0 million/year 

0 

0 

0 

13,000 additional 
firms assisted  

No change relative to 
baseline 

12,500 additional 
jobs created and/or 
safeguarded 

200 additional start-
up companies 
created 

5,300 additional 
jobs created and/or 
safeguarded 

No change relative to 
baseline 

€340 million/year 

€500 million 

additional 
increase of GDP 

€1.7 billion in 

additional lending 
and equity 
investment 

€340 million/year 

€300 million 

additional 
increase of GDP 

€1.1 billion in 

additional lending 
and equity 
investment 

Table 3 

Comparing the options according to three dimensions 

Budget 

Effectiveness 

Efficiency 

Coherence 

Option 1 
(baseline) 

€213 million/year

0 

Option 2 

€0 million/year

- 

€340 million/year

--- 

++ 

- 

€340 million/year

- 

3b 

Option 
moderate 
expansion 

3c 

Option 
focused 
expansion 

0 

- 

0 

+ 

0 

--- 

++ 

-- 

Legend: (---) very negative, (--) negative, (-) slightly negative, (0) no change, (+) slightly positive, (++) positive, 
(+++) very positive 

Option  2  clearly  fails  to  address  the  underlying  problems  of  competitiveness  and 
entrepreneurship. Discontinuation of the programme would also remove the EU contribution 
to dealing with the effects of the economic crisis on small businesses.  

The  only  realistic  choice,  other  than  maintaining  the  status  quo  of  Option  1,  is  between 
Options 3b and 3c. Whereas 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 
striking a balance between the different financial instruments. Option 3b, therefore, performs 
better  in  terms  of  achieving  the  programme’s  objectives  and  of  providing  a  coherent  set  of 
European support activities. Competitiveness means many things, and concentrating resources 

11

 
 
 
 
on financial instruments and the Network alone would not do the job. However, a wider range 
of  activities  does  not  come  without  a  price.  It  involves  higher  staffing  levels  and  therefore 
higher  administrative  costs.  Moreover,  the  public  consultation  of  stakeholders  showed  well 
over  80%  of  respondents  supporting  all  of  the  envisaged  activities.  As  it  offers  the  most 
comprehensive solution, Option 3b is the preferred option.  

7.  MONITORING AND EVALUATION 

The  system  for  the  monitoring  and  evaluation  of  the  future  programme  would  build  on  a 
robust  hierarchy  of  logically  interdependent  objectives  with  a  corresponding  set  of  relevant 
indicators, and would adopt a holistic approach to monitoring and assessing the performance 
of the activities envisaged. Compared to the current programme, the following improvements 
would  be  made  to  the  data  collection  and  analysis  system,  as  well  as  to  the  evaluation  and 
monitoring approach: 

• 

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  from  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  until  2013.  Moreover,  the  recommendations  of  a  recent  IAS 
Performance  Audit  of  the  EIP  will  also  be  taken  into  account  in  the  implementation  of  the 
current programme and in the design of the monitoring system and of the indicators for the 
next  programme.  To  this  end,  a  Performance  Report  of  the  current  programme  is  currently 
being drawn up. 

The new programme will be subject to both an interim and an ex-post evaluation, in order 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  successor  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  collected  by  the  financial 
intermediaries and intermittent sample-based surveys that will cover some elements in more 
detail. Additional analyses will be carried out in the context of evaluations of the programme. 
In particular, such evaluations will compare the development of the beneficiaries with groups 
of  enterprises  that  do  not  use  the  instruments  provided.  The  latter  will  require  detailed 
analysis,  since  there  are  naturally  a  number  of  factors  that  influence  the  development  of  an 
individual enterprise which need to be distinguished from the impact of the programme. The 

12

 
 
most  important  aspects  to  be  assessed  in  such  an  exercise  are  actually  the  growth  and 
employment  foregone  because  a  guarantee  was  denied  or  a  venture  capital  application  was 
turned down. The scope of the evaluations will also be extended by considering impacts on 
the  internationalisation  of  enterprises.  Data  required  for  this  purpose  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 intermediaries and final beneficiaries. 

13