The Spring 2026 edition of the SMEunited Craft and SME Barometer reports a stagnating business environment for small and medium-sized enterprises across the European Union. The Business Climate Index stabilised at 73.9 pp, not diverting significantly from its previous level. It must be specified that data were collected before the start of the war in Iran.
At the presentation of the new EU SME Barometer, Gerhard Huemer, Economic Policy Director, explained that “this stagnation is driven by decreasing exports, geopolitical and trade tensions and higher savings rate from consumers. Furthermore, the more negative development in Northern countries (72.6 pp) can be attributed to the ongoing war in Ukraine and the indirect effect of US tariffs, which both impact them more. On the other side, the Southern economies (75.7 pp) benefit from private demand supported by a rebound in tourism and ongoing positive impacts from the RRF”.
The EU Craft and SME Barometer shows clear signs of stagnation, with most business indicators falling short of expectations for the second semester of 2025. These results suggest that earlier optimism may have overstated the impact of temporary favourable conditions. The cautious outlook for the first semester of 2026 shows still a high degree of uncertainty, but also first positive signs, at least before the start of the war in the Middle-East.
Concerning the performance by sectors, manufacturing continues to be under pressure, due to low demand and weak competitiveness, which trickles down from large companies. Construction suffers from high costs for materials and mortgages, while the services sector has an overall positive dynamic despite wage driven price increases.
Mr Huemer concluded that future growth needs improvements in the regulatory environment, the avoidance of wage increases which exceed productivity growth and increasing investments in skills and infrastructure.
