SMEs business confidence fades out

14 March 2019
by smeunited -- last modified 14 March 2019

Today, ahead of next week's Tripartite Social Summit and European Council, SMEunited President Ulrike Rabmer-Koller presented the latest EU SME Barometer.

The results for Autumn 2018 are below previous expectations. As a result, SMEs reported a less favourable outlook compared to the last semester. The SME Climate Index for Spring 2019 plunged by 5.1pts to 76.6 points – the lowest score since 2017. This is also attributable to uncertainties caused by Brexit and the trade conflicts weakening European exports and investments. Both risks are affecting the North more so than the South and this narrowed the regional gap. At the same time, internal demand in Europe remains stable and the construction sector remarkably bucked the downward trend. Finally, SMEs still expect positive employment trends for the current semester.

"Our latest SME Barometer shows that SMEs in Europe were overly confident last semester and they have now started to hint growing uncertainty," stated SMEunited President Ulrike Rabmer-Koller in her presentation of the SME Barometer for Spring 2019. "Their expectations for the overall situation dropped back to the level of 2014 due to external factors and a worse-than-expected performance in the last semester."

Ms Rabmer-Koller underlined that "trade tensions and Brexit are especially holding back the sectors most relying on external demand, while those depending on internal demand show a more stable development." This is especially the case for construction, the only sector with an increase in expectations for investments, caused by spillover effects from last semester. "As an entrepreneur active in the construction sector, I know that it takes time from starting a project until its implementation. This is why our business cycle often shows a time lag compared to the whole economy", she explained.

With an eye on positive employment expectations, "it is remarkable how the SMEs' outlook is in line with labour trends in the EU", she concluded. "Higher employment levels with low record unemployment rates will have a big impact on SME hiring decisions in the future. However, our figures also confirm an overhang regarding labour demand and that shortages and skills mismatches are existing problems that must be addressed".

For these reasons, Ms Rabmer-Koller stressed that the next generation of European programmes should focus on skills developed and growth and competitiveness, where "SMEs especially need support to catch up." In addition, she underlined the need for further improvements in the regulatory environment, and called on the "European leaders to ensure legal and regulatory clarity on Brexit to ensure stability in the way of doing business after March 2019".

SMEunited is the association of Crafts and SMEs in Europe with around 70 member organisations from over 30 European countries. SMEunited represents national cross-sectoral Craft and SME federations, European SME branch organisations and associate members. Combined, it represents more than 12 million enterprises with around 55 million employees across Europe. SMEunited is also a recognised employers' organisation and European Social Partner. SMEunited was formally known as UEAPME.

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