30 years of Single Market for small businesses in Europe

Published: 21/02/2023

As part of our #FoodFuture project we’re speaking to experts about how to best achieve more sustainable food systems. We spoke to Luc Hendrickx, Director General of SMEunited, to understand how the Single Market supports small businesses around Europe.

During the last 30 years, a lot has been achieved in the European Single Market. Now at least SMEs are receiving attention while in 1992 this certainly was not the case,

At the time 300 harmonisation measures and additional liberalisation directives were approved without the involvement or consultation of SMEs. That SMEs were not taken into account was also due to the fact that there was no strong SME representation at EU level. This has led to a huge liberalisation wave which abolished national legislations which ensured a level playing field for all businesses, big and small, with nothing to replace these legislations. In addition the abolishment of some “barriers” was often in the interest of only a minority.

Through trial and error, our SMEs had to adapt to this environment often paying a high price. This in contrast to some sectors which are considered international and cross-border by nature, but after all these years are still extremely nationally structured such as telecom, energy, banking and insurance sector.

Luckily, we are seeing the end of the liberal concept of the Single Market with recent proposals such as the Business to Platform Regulation, the DMA and DSA, the Data Act and the Late Payment Directive.

Nobody can deny that the European single market is also of great geopolitical value. It provides the strategic basis that ensures prosperity and makes us, Europeans, play in international forums. So there is certainly no intention to tamper with its functioning.

However SMEs often question the balance between costs and benefits stemming from the Single Market. Existing rules are not sufficiently implemented and enforced. Harmonised rules are put at the highest level, protecting consumers and the environment and turning Europe into an island at a global level. Furthermore, gold plating at national level creates unnecessary burdens for SMEs and adds to regulatory differences between Member States, which increase entry barriers for SMEs.

However the functioning of the Single market needs urgently to be improved by ensuring an enabling environment for SMEs. Legislation should be conceived with the smallest enterprises in mind and after a thorough SME test. The trickle down effect of legislations and the cumulative effect on SMEs must be taken into account. Also, e-government is still not well developed and could significantly reduce red tape, as well as the generalised introduction of the “once-only” and the “one in-X out” principles.  

The role of standards as the foundation of the Single market should not be forgotten. Harmonised standards are extremely important for SMEs as they rely on their availability to show the conformity of their products with EU legislation, as it is often too expensive to use alternatives. However, there is still room for improvement to ensure the effective representation of SMEs in the European and international standardisation process.

SOLVIT, the informal problem-solving mechanism, can quickly and easily help in 80% of cases where companies are prevented from carrying out their legitimate business activities in other Member States within the single market due to misapplication or failure to implement EU law by public authorities. SMEunited asks the European Commission to grant preferential treatment for the remaining 20% of unresolved SOLVIT cases.