Competitiveness and simplification
Competitiveness is back at the centre of the European agenda. From an SME perspective, what are the most urgent measures the EU should take to strengthen companies’ competitiveness without increasing regulatory and administrative burdens?
We are happy to see competitiveness is high on the agenda of the European Union. However, you can’t simply speak competitiveness into existence. It will require concrete, far-reaching reforms.
The first, urgent measure concerns the way the EU approaches legislation. Right now, a lot of rules are designed around the characteristics of large companies. This “one size fits all” approach does not work for SMEs. The ‘Think Small First’ principle must guide policymaking from the start, with the specific characteristics of SMEs top of mind. What works for smaller companies works for all.
It all starts with trust. Policymakers can set targets and define a direction, but SMEs must have room to innovate and propose new solutions to consumers. Instead of direct control and reporting, an “advice first, sanction later” approach would allow SMEs to comply and adapt without facing immediate penalties when still figuring out what is required.
Furthermore, we have to continue on the simplification path. Policymakers must continue their efforts in this area through the Omnibus packages, but without undermining legal certainty or fair competition. They must also allow enough time for consultation and evidence gathering, in dialogue with SME organisations. And before proposing new legislation, they should thoroughly assess whether it is necessary and what will be the impact on SMEs.
The EU must also fully mobilise the Single Market, which remains fragmented. It must remove market barriers, in particular in energy, financial, and telecom markets. Proposals such as the EU Business Wallet and the EU.inc / 28th regime must be adopted quickly.
Finally, SMEs ask for measures to address energy resilience and affordability. High and volatile prices continue to undermine SMEs’ ability to invest, maintain production, and remain competitive globally. We call on EU leaders to deliver a real Energy Union with stronger interconnection capacity. The focus should be on efficiency, investment in energy systems, including grids and storage, and targeted support.
Think Small First
SMEunited often refers to the “Think Small First” principle, meaning that the impact on small businesses should be considered from the earliest stages of policymaking. Do you think this approach is now genuinely embedded in the EU decision-making process, or is there still a gap between intentions and implementation?
Unfortunately, there is still a large gap.
The ‘Think Small First’ principle was first introduced by the European Commission in 2008. In the Small Business Act, the Commission stated that “it is high time that an SME-friendly policy becomes mainstream policy in the EU”.
However, after all these years, that principle is still not a reality. That is why, last year, SMEunited published its ‘Think Small First’ Charter. We call for a mindset shift, instead of systemic exemptions. ‘Think Small First’ is not just something to keep in mind. It must be the basis for legislation.
The European Council acknowledged ‘Think Small First’ in its Council conclusions last March 2026. It is high time to put it into practice. The Commission’s recent communication on Better Regulation includes some positive elements. But we see a real risk of repeating past mistakes.
Policymaking still focuses on the characteristics of large enterprises, with exemptions put in place for the large group of SMEs. Consequently, 32.1 million micro companies1 (fewer than 10 employees) must navigate rules based on the characteristics of 55,000 large ones, hoping that mitigating measures will lighten the load.
Exemptions often fail in practice. SMEs remain exposed through supply chains and suffer from a trickle-down effect of legislation. That is why at SMEunited we ask, rather than create exemptions for smaller businesses, the EU should base legislation on the specific characteristics of SMEs.
To be effective, ‘Think Small First’ must apply throughout the legislative cycle, from design to implementation. The first step is regulatory discipline, which means that, before drafting new laws, policymakers should assessment if they are really needed and whether that is the best way to reach their objectives. If they are, rules must be clear, proportionate, and practical.
We also call for realistic implementation deadlines. The Commission must commit to including transition periods in proposals and not shy away from postponing dates of entry into force if their tools for compliance are not ready. We have seen examples of legislation, such as the Pay Transparency Directive, where this has been ignored, which increases uncertainty and costs for SMEs.
Furthermore, EU rules should be easy to implement and difficult to circumvent. This concept of “enforcement by design” is crucial to tackle unfair competition. Companies that follow the rules should not be disadvantaged. At the same time, it is important that the first step in cases of non-compliance is dialogue and guidance, rather than sanctions, especially towards small business owners who are actively trying to do the right thing.
Digital and green transition
SMEs are key players in the green and digital transitions, but they often face limited financial resources and skills. Which EU instruments have been most effective in supporting SMEs so far, and what additional measures would help turn these challenges into opportunities for growth and innovation?
Support so far has been uneven. While a wide range of EU instruments exist, access remains complex and their impact varies significantly across sectors and company sizes.
First, SMEs must have clear, simple, and proportionate rules to drive the green and digital transitions. Without this, both transitions become a burden rather than an opportunity. Initiatives such as the Omnibus packages are a step in the right direction, but simplification must go further and ensure legal clarity, predictability, and workable compliance in practice.
Second, funding remains a decisive factor. Instruments such as the European Competitiveness Fund have strong potential, but accessibility will remain a challenge. SMEs need dedicated guidance, including a clearly earmarked share of funding, simpler procedures, and better advice to navigate the available tools.
Third, fragmentation within the Single Market continues to limit progress. Both in the digital and green transitions, inconsistent rules and divergent national approaches create barriers that SMEs cannot absorb. A more harmonised framework would reduce administrative costs and allow SMEs to scale innovation across borders.
SMEs are not a homogenous group either. Some are ahead, while others are still determining how to use technology in their advantage. EU policy must reflect these differences and offer tailored guidance, especially in terms of skills, infrastructure, and access to technology.
Smart regulation plays a key role here. Tools such as the Business Wallet can create a stepping stone to simplify compliance and reduce reporting overlaps.
In the green transition, initiatives such as the Clean Industrial Deal and the Circular Economy Act can create real opportunities for SMEs. We see opportunities to improve energy efficiency and production, transition to circular business models, and adaptation to climate change. SMEs require access to finance, simplified sustainability assessment tools, and practical support to adapt to these demands.
Finally, both transitions require a strong partnership approach. Collaboration among policymakers, businesses, and stakeholders will be crucial, and social dialogue should remain the main tool to tackle the twin transition.
Skills and labour market
Skills shortages and the lack of qualified workers remain major challenges for European businesses. What initiatives should the EU promote to support training, attract talent and improve the matching of labour supply and demand?
Labour shortages are a serious constraint for SMEs across Europe. Many occupations requiring job-specific skills struggle to find workers. Surpluses coexist with shortages across regions.
An important step is to strengthen vocational education and training (VET). More youngsters should choose this professional training, as these match SMEs skills needs. Having academic and vocational education be seen as equally worthy career paths would facilitate this choice. Labour market policies must also consider low- and medium-skilled occupations, which are critical for SMEs.
Given the specificities of SMEs, up- and re-skilling should not disrupt business continuity, avoid additional burdens, and reflect national and sectoral realities. What works well in several Member States, are joint social partners training funds. Social partners in a specific sector identify the best training options for the sector and professions linked to it. The quality of training is higher, and so is the return on investment.
Policies must also encourage participation from underrepresented groups in specific education pathways. For example, there are significant gender imbalances in fields such as STEM, health, or education with only 17% of female professionals in the Information and Communication Technology (ICT) sector. And where shortages cannot be filled domestically, well-managed migration pathways can also help companies find the workers they need.
Overall, there is growing momentum with the EU’s Union of Skills and through our participation in the European Skills High-Level Board. What we need, is to see still more coordinated action at European, national, and sectoral levels to provide SMEs with the workforce they need to succeed.
Multiannual Financial Framework (MFF)
As discussions on the next EU budget get underway, SMEunited – like Unioncamere – has stressed the importance of ensuring that EU funding is genuinely accessible to SMEs and not only to larger or more experienced beneficiaries. What do you see as the main weaknesses of the current system, and what changes would be needed to ensure that investment, innovation and competitiveness reach the whole SME base?
The current proposal risks again to not sufficiently reach SMEs, despite increased ambition in the proposed EU budget.
The proposal for the next MFF is the largest ever at €2 trillion. It will introduce a new structure with more flexibility and more integrated funds instead of silos. This is an opportunity, although there are some areas of improvement to make sure it creates a stimulus for SMEs.
Two key programs are the European Competitiveness Fund (ECF) and the National and Regional Partnership Plans (NRPPs). The ECF would merge 14 funding instruments into one EU framework to boost competitiveness. The NRPPs group different instruments from different policy areas – such as the common agricultural policy or cohesion policy – into one program.
SMEunited nevertheless still fears SMEs will face barriers to participate in the EU programs, and merging funds into a larger programme will not fix this issue by itself.
Therefore, the ECF must include adequate funding tools for SMEs. To ensure this, a certain portion of the funds should be reserved for SME instruments and activities. For example, 30% of the InvestEU instrument should go to SMEs, as is currently the case.
SMEs must also be involved in the planning, design, and implementation of the ECF. They must take part in its governance at all levels, including an SME representative taking part in the proposed Strategic Stakeholder Board.
As for the NRPPs, greater integration of funds is positive. SMEs and farming must be developed in a coherent way to improve the situation in rural areas. However, the future Plans should respect the objectives of cohesion policy and support for rural areas.
A potential shortcoming of the proposal is a lack of involvement of regions and SMEs on the ground. NRPPs could sideline them by centralising power at a national level. They must have a say in how the funds are allocated.
Lastly, NRPPs must prioritise simplification and support projects that enhance SME competitiveness, such as infrastructure, skills, and local market development.
Overall, the ‘Think Small First’ principle should guide the proposal. The MFF must not create additional administrative or financial burdens for enterprises.