Europe Day Special: Big ambitions for Europe’s small businesses

As Europe Day approaches, it’s a good moment to ask: what does European cooperation really deliver for businesses on the ground? For small and medium-sized enterprises, the answer is crucial – it can mean the difference between staying local and scaling across borders.

Our Communications Director, Sofiya Yevchuk, is joined by Ema Paulino, Chair of BusinessEurope’s Entrepreneurship and SME Committee and an entrepreneur in Portugal’s pharmaceutical sector. Together, they explore what’s holding Europe’s small businesses back, what needs to change, and what it really takes to scale up in Europe and beyond.

Transcript

SPEAKER_01 0:03

Welcome to Espresso Briefings by Business Europe. Timely insights and expert perspectives served in short, sharp episodes to fuel your thinking. As Europe Day approaches, it's the perfect moment to ask a simple question. What is European cooperation really delivering for businesses? Not just in theory, but in practice. For small and medium-sized companies, it can be the difference between staying local and scaling across borders. I'm Sofia Yevchuk, Communications Director at Business Europe. Welcome back to Espresso Briefings. Today we're looking at what's holding Europe's small businesses back, what needs to change and what it really takes to scale up in Europe and beyond. I'm joined by Emma Paulino, chair of the Entrepreneurship and SME committee at Business Europe. And she's an entrepreneur in the pharmaceutical sector in Portugal. Emma, welcome. It is great to have you with us today. Let's start with Business Europe's SME Roadshow. So the sixth edition is taking place in Porto, organized with our Portuguese member, CAP. Emma, could you please tell us about this initiative? What's the goal behind it?

SPEAKER_00 1:10

Yes, so uh thank you for this opportunity again. Business Europe actually launched this uh SME Roadshow initiative back in 2023 with the goal of bringing Brussels closer to EU member states. So this initiative is essentially a tour of capitals with strong participation from our member federations. Specifically, as you rightfully said, in Portugal, we are organizing it in cooperation with the member federation from Portugal CIP, all of whom uh are obviously very committed to engaging with their national ecosystem. So this is really an opportunity. This roadshow brings together European and local SMEs, policy makers, representatives from EU and national institutions and other stakeholders to discuss key issues that are affecting SMEs. So the concept is basically twofold. On the one hand, we aim to explain what the European Union does for SMEs. On the other hand, we seek to better understand how these efforts are perceived, identify areas for improvement, and also listen directly to stakeholders in order to inform our own work. As chair of the Entrepreneurship and SME committee and as a Portuguese national, I am particularly pleased to be hosting this meeting in Portugal so early on in my mandate and engage directly with the local business community.

SPEAKER_01 2:28

So, what's on the agenda of the Porto Edition? What are the main issues discussed?

SPEAKER_00 2:32

So, in this edition of the roadshow, we are actually uh currently focusing our discussions on some of the most pressing uh challenges for SMEs today. We are discussing how companies can scale from local to global markets, we are examining what is still holding SMEs back uh in Europe, and we are also addressing the persistent financing gap. We are exploring how SMEs can better access funding in a changing economic landscape and how European and national stakeholders can work together to create a more supportive environment for growth and internationalization. So we are having great discussions and we are hopeful that we can draw uh good conclusions from our discussions.

SPEAKER_01 3:13

It sounds like a valuable way to hear directly from small and micro companies. What are they telling you? What concerns come up most often?

SPEAKER_00 3:22

Across the European Union, SMEs share many of the same concerns. Several obstacles to growth uh stand out. First, we always talk about high levels of complex legislation that continue to hinder investment and innovation. Secondly, there is a significant energy cost gap compared to major global competitors, and we have to bring this to the table for discussion. And thirdly, barriers within the single market that still limit the ability of SMEs to grow and operate across borders. Finally, we also have to mention the deterioration of international relations and the geopolitical circumstances we currently face, which uh combined with an intensifying technological race and increasing labor market challenges, adds further pressure. And these are all matters that are being currently discussed at the roadshow, but also in our ordinary meetings for the SME committee.

SPEAKER_01 4:17

Emma, given the challenges you have just outlined, from high energy costs to access to finance, SMEs are clearly under pressure. Do you think policymakers should be taking a more tailored approach when designing rules for smaller businesses?

SPEAKER_00 4:31

In the European Union, we have around 25 million SMEs. And SMEs actually represent 99% of all companies. So I think it's very important that we highlight this issue. This accounts really for a major part of the EU economy. We can basically conclude that the European Union economy is largely composed of very small firms. Often they are family businesses, which account for more than 90% of all companies. So there is a clear link between a company's size and its need for targeted support and the legislation that takes into account these uh small units.

SPEAKER_01 5:16

Let's come back to one of the key issues you've mentioned: regulatory complexity. The European Commission has launched several initiatives to simplify rules, to reduce burdensome companies. Is this the right direction in your view? Is it already making a difference for companies on the ground?

SPEAKER_00 5:31

According to analysis from the Danish presidency, the cost of regulation that has already been adopted or is still under negotiation but not yet implemented is estimated at at least 71 billion annually for companies. So there is a lot of work to be done, and it's a long road to simplification and really reduce this regulatory burden. To achieve the target that has been announced of reducing regulatory burdens by 25% for all companies and 35% specifically for SMEs, we need much more effort. This will be uh obviously required, including the use of innovative solutions and alternative approaches. So we believe that this is the moment to review, to reduce and restrain regulation with a clear focus of making rules simpler, more efficient, and more effective. Uh, obviously, while still maintaining policy objectives, standards, and the integrity of the single market. Let's zoom in on Portugal, the country you know best.

SPEAKER_01 6:36

How do these broader EU trends translate on the ground in Portugal?

SPEAKER_00 6:41

We still have uh companies facing a high regulatory burden. So uh, especially when they are dealing with licensing uh procedures, compliance requirements, reporting obligations. So all of this has to be taken into account from the outset when we are designing not only the legislation but also projects or financing opportunities for SMEs. Also, uh obviously, and I've uh mentioned this access to finance is another structural issue.

SPEAKER_01 7:10

So we've talked about the challenges SMEs face in Portugal, but let's look on the bright side of the story. Portugal is often seen as a very attractive place to do business. Do you know some examples or success stories that could inspire others across Europe?

SPEAKER_00 7:27

We've had a lot of success stories in technology, in pharmaceuticals, uh, which are we have been expanding and increasing substantially the our exporting of uh pharmaceuticals for instance, and also specialized manufacturing. And we have in Portugal a very traditional historic market of producing a lot of textiles uh and uh uh other types of um uh materials like cork, uh etc. Uh and um we have seen these success uh stories coming from companies that have demonstrated strong adaptability, a focus on innovation, and an ability to integrate into global value chains. So there is a positive dynamic, and uh, in short, I do think that Portugal reflects uh both the challenges that we've already talked about, but also the opportunities that we have in the European uh SME landscape, uh strong entrepreneurial capacity, uh which we have seen cross-cutting uh all different countries, but still constrained in a way by structural barriers that limit scale and growth, and uh that this committee in particular uh would like to address and is addressing.

SPEAKER_01 8:36

You've mentioned that some companies are successfully competing on global markets, which brings us back to the roadshows focus on scaling up. Is the EU doing enough to support SMEs growth beyond their home markets?

SPEAKER_00 8:50

We have seen in recent years uh some European Union initiatives to support SMEs through programs and debt innovation, internationalization, and investment instruments. We can talk about uh, for instance, Horizon Europe, InvestEU, uh, various national recovery plans. We've had also some in Portugal and so coming from the pandemic uh uh situation. However, I do believe that the key issue today is not necessarily the of instruments, uh it is um the overall effectiveness, accessibility, and coherence of these instruments and being able to communicate them uh clearly uh to the market and how these are attainable by SMEs. And we have to create an environment for SMEs where they are motivated to take advantage of these uh instruments and that they have the capacity to really access them and implement them. The real test is always implementation, not uh having the instruments available. So, our key expectation is that uh this new framework that is being built genuinely can simplify access uh to funding and also means that uh we have to decrease the administrative steps, we have to have clear eligibility criteria, faster decision making. This is important because sometimes we just overstay in terms of uh missed opportunities, uh, and we have to ensure more transparency throughout the entire process.

SPEAKER_01 10:19

Do you think these financial tools for SMEs could be better tailored in the programs of the upcoming budget?

SPEAKER_00 10:26

Uh many SMEs are still not fully informed about the support that exists. So, this is a challenge also for our confederations and member organizations to be able to convey and communicate more effectively and have systems in place to support SMEs to really take advantage of these uh new instruments and this new framework that is being designed in Europe.

SPEAKER_01 10:48

With the roadshow happening on the eve of Europe Day, it is a good moment to step back and look at the bigger picture. Emma, why are SMEs central to the European project?

SPEAKER_00 10:59

They create millions of jobs, they drive innovation, and they play a crucial role in value chains across Europe. They are also essential to delivering the green transition in practice that we aim to achieve. What we do have to take into account is that for SMEs to succeed, uh, entrepreneurs need time and clarity to understand uh and implement the existing rules rather than being overwhelmed by a constant flow of new requirements.

SPEAKER_01 11:27

To sum up for our listeners, what is your vision for the future of European SMEs?

SPEAKER_00 11:32

My vision is of a Europe where SMEs are not constrained by complexity or fragmentation, but are instead enabled uh to operate seamlessly across borders, to complete globally, not only within the European Union, uh, and contribute fully to economic growth and societal progress.

SPEAKER_01 11:50

As we mark Europe Day, it is worth remembering that the EU started as a project for economic cooperation. And that mission is just as relevant today to help people and businesses to grow, connect, and succeed across borders. For Europe's SMEs, scaling up is where that promise becomes real. But it doesn't happen automatically. It takes the right policies and constant dialogue with businesses on the ground. If you enjoyed this episode of Espresso Briefings, don't forget to subscribe whenever you get your podcast. Thank you for listening and see you next time.