ECA: Small companies’ competitiveness barely improved by EU support

Small and medium-sized enterprises (SMEs) are key to the EU’s economy. But they have not really benefited from EU action aimed at enhancing their competitiveness. That is the conclusion reached by the European Court of Auditors in a special report published today. EU funds stimulated SMEs’ willingness to invest, but their impact and effectiveness on competitiveness were rather limited, to the extent that most supported SMEs did simply not derive any real benefit from the EU support. The auditors urge the European Commission and the Member States to make better use of EU funding so that it effectively helps SMEs.

Small and medium-sized enterprises are a mainstay of the EU economy, employing almost two thirds (63%) of the EU’s workforce and generating half (52%) of EU added value. But they sometimes struggle when they attempt to compete with larger companies. The EU has policies aimed at supporting SMEs, in particular through the European Regional and Development Fund (ERDF). During the 2014-2020 period, ERDF-funded programmes allocated over €40 billion to improve the competitiveness of SMEs, and further EU funds were released in response to the COVID-19 pandemic. But the EU auditors have concluded that this did not make SMEs significantly more competitive.

As the backbone of the EU’s economy, SMEs need and deserve to be backed as they start and scale up their activities”, said Pietro Russo, the ECA member responsible for the audit. “However, ERDF support in recent years has not made a noticeable difference to SMEs’ overall competitiveness, which casts some doubt on the benefits of EU action in this field.” 

Read the Special report of The European Court of Auditors in its entirety here.