A number of recent studies from the Kauffman Foundation have suggested that America’s entrepreneurial engines are slowing. Firms started since the Great Recession began in 2008 are growing slower, creating fewer jobs, and facing higher failure rates. A new study for the European Union (EU) shows that we are not alone. The EU’s annual report on the state of small and medium-sized enterprises (SME) was recently released and it makes for some sobering reading. SME performance has been abysmal in France, Belgium, Finland, and Luxemborg, and, in nearly every other EU nation, SME employment levels are at or below those of 2008. Only Austria and Germany have seen positive growth among SMEs. Like the US, many EU states appear to be stuck in a state of “jobless growth.”
In terms of looking ahead, EU leaders are placing their bets on expanding support for high-technology and knowledge-intensive SMEs, which have performed relatively better during the downturn. Most of the report’s policy recommendations will sound familiar: expand university spin-offs, invest more in incubators, and improve access to finance. For me, this list sounds a little like “been there, done that.” While these suggestions are all sensible, I’m not sure that they are sufficient to reverse the dire situation facing many European SMEs. EU leaders are promising a November release of “the most ambitious action plan to boost entrepreneurship Europe has ever seen.” That’s a high bar for action, and it will be interesting to see what transpires. Watch this space for more details next month.