Fabian Demicoli

SMEs in Europe lagging behind in recovery – no signs for jobs or growth


European SMEs' confidence has
increased over the last six months by almost two percentages points and now
reaches 67.9 for the entire European Union. However, the difference between
South & Periphery and North and Core Europe does not decrease and remains
at about 15 percentage points.

In particular, SMEs in the construction and
personal services sector are negatively affected by the low level of household
demand, which had already hindered SMEs exiting the recession last semester.
The slightly better outlook for the first half of 2014 may bring SMEs out of
recession but it will not be enough to grow or to create jobs.

"The UEAPME SME Business
Climate index increased by 1.8 during the last semester. However, it is still
clearly below 70, which we see as a neutral stance We therefore cannot yet
speak of a recovery and will see no growth and no new jobs in the first half of
2014", said Gerhard Huemer, Director of the UEAPME Study Unit, which issues the
"Craft and SME Barometer" prior to the EU summits in spring and in autumn. SMEs
are mainly lagging behind the slight overall recovery because of their larger
dependence on household demand and of their difficulties in accessing finance
for in-vestments. Furthermore, the huge difference between North & Core and
South & Periphery still exists and keeps confidence down.

The SME Barometer shows
slightly improved results for the second half of 2013 in most of the economic
indicators except investments, but the figures are much worse than expected six
months ago. "This clearly proves that the recession did not come to an end in
the last months of 2013, at least for SMEs," explained Mr Huemer, "the
situation was at its worst for investments, where we saw for the first time
that SMEs have even less investments accomplished than they had originally
planned."

The figures for the first
half of 2014 show only limited improvements and are not strong enough to turn
the recession into a recovery. "According to our figures, we will see some
growth in central and northern Europe, but without significant effects on employment. However, the SME
sector in southern and peripheral Europe may remain in recession and further
job reductions cannot be excluded", said Mr Huemer. He continued to say that
"the only positive fact is that many SMEs expect higher sale prices, proving
that SMEs do not foresee any risks of deflation in Europe".

"A more positive future
development will depend on the materialisation of the risks coming from
geo-political instabilities or unsolved problems in the financial sector and is
only feasible if needed reforms continue and access to finance is improved",
concluded Mr Huemer.

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