BY SIMON BELL - Global Lead for SME Finance, Finance & Markets - World Bank Group

At a recent European Commission SME Envoy meeting in Ljubljana, Slovenia, the European group responsible for advising on policy and strategic directions for SME support in the EU discussed options for the way forward. 

Battered by continued anemic growth since the 2008 global financial crisis, hit with a flood of Middle Eastern refugees, and (in early June) facing the possibility of Brexit, the mood was anything but upbeat and the future of “Project Europe” seemed to hang in the balance.

SMEs in most Western European countries represent over 95% of all registered firms, account for 60% of jobs in many countries, and supply as much as 50% to national income. All of this makes SMEs’ contribution to the economy crucial.  Yet, since the financial crisis, banks in many countries haven’t managed to bring their SME lending portfolios back up to pre-crisis levels. Many are deleveraging out of riskier lending such as SME loans. Venture capital in Europe remains well below its levels of 8 years ago. And SME capital markets and SME securitization of loans continue to be severely battered by the continent’s ongoing economic malaise.

I was struck by how much this most developed part of the world was grappling with exactly the same problems that we face in our emerging economies – supporting stronger growth, increasing employment opportunities, and fostering innovation.  Which is precisely why the World Bank Group was invited to attend this event so that the EC’s SME Envoy members could hear how we are dealing with similar issues in our client countries.