EU auditors look at EU funding for boosting SME competitiveness
Friday, 16 October 2020
The European Court of Auditors (ECA) announced this week the launch of a new audit to examine whether EU funding for small and medium sized enterprises (SMEs) is helping to make them more competitive.
The auditors will assess whether the European Commission’s support from the European regional development fund (ERDF) is ensuring lasting competitive gains for start-ups and scale-ups. In addition, they will check whether member states funnel this funding to relevant recipients, address the most pertinent needs, and whether the projects funded are delivering results.
Information on the upcoming audit is found in a so-called audit preview which reads as a text book on establishing and running an SME but does not identify the problems or suspected shortcomings to be examined in the audit. The final report is expected in autumn 2021.
“Our audit is aimed at helping the Commission and the Member States make better use of the ERDF to make EU SMEs more competitive, resilient and fit for the future,” said Pietro Russo, the ECA Member leading the audit (14 October).“
There are different sources available for funding of SMES, some of which are managed directly by the Commission. The budget for SMEs under the ERDF for the 2014-20 period is, however, of such magnitude (€ 54.6 billion) that it justifies a focus on this fund. The main beneficiary is Poland (around €11 billion), followed by Italy, Spain and Portugal (between €4.5 billion and €5.5 billion each).
Public health circumstance permitting, the auditors plan to visit a sample of member states, including Poland and Portugal.
The audit comes against the backdrop of the COVID-19 pandemic and its ensuing global economic crisis, which demands extra effort from EU companies to survive on the market.
The audit team assures that the support to SMEs following the COVID-19 crisis will be covered by the audit. “The auditors will assess the way in which ERDF operational programmes and other support mechanisms were deployed following the COVID-19 outbreak and the resulting support provided to SMEs.”
The SME definition is very wide and comprise micro, small and medium-sized businesses with up to 250 employees and a total annual turnover of up to €50 million. Asked whether the audit will lump them all together without any differentiation, the audit team replied that the audit is not going to draw its conclusions exclusively from a sample of SMEs.
“There will be a number of substantive tests, for which we are going to concentrate on few relevant sectors and the selection of SMEs will take due consideration of the different sizes and characteristics of SMEs.”
SMEs are described as the backbone of the EU’s economy, accounting for 99 % of all businesses in the EU and providing a significant source of jobs, economic growth and innovation. In 2018, SMEs in the EU numbered over 25 million, employed around 98 million people and generated around 56 % of total added value.