Fabian Demicoli

UEAPME survey – Business confidence declines further as recession spreads

European SMEs' confidence declined for the fourth
semester in a row as a downturn due to a sluggish internal demand is feeding
through all Member States, according to a survey conducted by UEAPME, the
European craft and SME employers' organisation, and its members.

All economic indicators declined further in the second
half of 2012, with the recession striking SMEs even beyond their already
negative expectations.Smaller enterprises in the sectors most reliant on
internal demand, such as services and construction, were the hardest hit.
European SMEs predict a stable negative situation also for the first half of

Confirming a long-standing trend in the survey,
medium-sized enterprises' performance was superior, although still negative at
-4.7. These data show that the current recession is caused by internal demand
problems, which struck smaller SMEs in the services and construction sectors
harder than medium-sized SMEs more active in manufacturing and more exposed to
external shocks.

With no expectations of a real recovery, the outlook
is very gloomy", said Gerhard Huemer, Director of the UEAPME Study Unit, which
issues the "Craft and SME Barometer" prior to the EU summits in spring and

Prices also reached their lowest level since 2009, a
clear sign of the downward pressure applied by the crisis.

For the first half of 2013, SMEs anticipate a stabilised
negative situation. For the second half, expectations are subdued, particularly
on turnover and on investments.

Against this background, UEAPME called on policymakers
to stabilise financial markets, implement structural reforms and support
growth. Finally, on the ongoing fiscal consolidation, UEAPME recommended
allowing "automatic stabilisers" to come into play in the short run to avoid a
further economic contraction and more negative effects on consumption.

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