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Small and medium-sized enterprises (SMEs) play a crucial role in the European Union (EU) economy, representing 99.8% of all businesses and employing over 88 million people. The Annual Report on European SMEs 2023/2024 offers an in-depth analysis of their performance in times of crisis, strategies for the future, and Portugal's positioning in relation to other Member States.
In 2023, SMEs accounted for 99.8% of businesses in the EU, employing 88.7 million people (65% of total employment) and contributing 53.1% of the value added in the non-financial sector. Micro-enterprises were predominant, constituting 93.6% of SMEs.
In recent years, SMEs have faced a complex economic landscape marked by consecutive crises. The pandemic, followed by supply chain disruptions and the war in Ukraine, exposed structural vulnerabilities and created challenges. Persistent inflation in 2023 affected SME performance, resulting in a 1.6% reduction in real value added. On the other hand, the skills shortage worsened, representing a barrier to sustainable growth.
However, there are signs of resilience. In 2023, employment in SMEs increased by 1.8%, with micro-enterprises standing out as the most resilient. They adapted more quickly to economic difficulties, managing to limit losses in value added to just 0.4%.
The report also highlights disparities between sectors. Industries with higher capital intensity, such as microelectronics and fertilisers, remained dominated by large companies, while SMEs led in market niches and innovation, such as digital technology and specialised services. SMEs are important pillars in the green and digital transition, with a focus on sectors such as tourism, renewable energy, and the circular economy. Conversely, the integration of SMEs into strategic global value chains, especially in high-tech sectors, is seen as an opportunity to improve competitiveness.
Looking to 2024, the EU strategy for SMEs is centred on the digital and green transformation. The European Commission proposes policies to promote innovation, expand productive capacities, and diversify value chains. Programmes like Horizon Europe and the Clean Hydrogen Partnership aim to support SMEs in adopting disruptive technologies and strengthening their competitiveness.
The report warns of the need to reinforce support for SME financing and skills. Simplifying access to funds, creating collaborative clusters, and increasing participation in large European projects are essential steps to integrate SMEs into strategic value chains and reduce their dependence on third countries.
Portugal emerges as an example of resilience in the report, being one of the seven Member States that registered growth in the real value added of SMEs in 2023 (+2.6%). This performance was driven by the recovery of tourism, as well as the construction and digital services sectors. Employment in SMEs also grew by 2.0%, reflecting the adaptability of Portuguese companies.
However, structural challenges persist. The productivity of Portuguese SMEs remains below the European average, hampered by barriers to financing and a shortage of digital skills. Despite this, the bet on the energy and digital transition places Portugal in a strategic position to lead in emerging niches. The good news is that, starting in March 2025, Portuguese companies will be able to benefit from the Incentive System for Climate and Energy Transition (SITCE), which offers incentive rates that can reach 100%, promoting decarbonisation, energy efficiency, and the circular economy.
This programme aims to promote the decarbonisation of economic activities, energy efficiency, the circular economy, and the diversification of energy production from renewable sources that are still not widely disseminated in the market.
It aims to support companies of different sizes (Large, SMEs, etc.), encouraging them to adopt more sustainable practices and technologies.
Under the scope of Decarbonisation of Companies, the system supports projects that reduce energy consumption and Greenhouse Gas (GHG) emissions by at least 30%. Eligible investments include interventions to improve energy efficiency, building renovation, and the acquisition of sustainable technologies. Incentive rates can reach 100%, depending on the type of intervention.
Another important pillar is the incentive for Green Productive Investment, which aims at the development of low-carbon products, processes, and services, as well as the introduction of recovered materials into production processes. This incentive can reach rates of up to 75%, with majorations depending on the company's size and geographical location.
Small and medium-sized enterprises (SMEs) can also benefit from Green Qualification Support, focusing on digitalisation projects, eco-design, certifications, and training for more sustainable practices. Incentives in this category can reach 50% of eligible costs, potentially reaching 75% in the case of joint applications. This incentive also includes Business Associations, Chambers of Commerce, and Regional Tourism Promotion Agencies when operations are joint or in partnership.
Regarding the Diversification of Renewable Energy Production, the system offers funding of up to 100% for projects that promote the installation of energy production and storage systems from emerging renewable sources that are still not widely disseminated.
Furthermore, the programme invests in the Circular Economy, encouraging the reconversion of production processes, the creation of new logistics chains, and the development of more sustainable products. Incentive rates for Research and Development (R&D) activities can go up to 80%.
With a significant budget allocation and covering various strategic areas and companies of different sizes, this system offers Portuguese SMEs an opportunity to lead the climate transition and strengthen their competitiveness in an increasingly sustainable global market.
The Annual Report on European SMEs 2023/2024 underscores the importance of policies directed at supporting SMEs in a challenging economic environment. In Portugal, despite the challenges, SMEs have demonstrated adaptability and resilience. The focus on innovation, skills, and integration into strategic value chains will be essential to ensure that these companies continue to be engines of sustainable growth and competitiveness in the EU.
In this context, the Incentive System for Climate and Energy Transition (SITCE) emerges as a strategic opportunity to boost the competitiveness of Portuguese companies. By supporting decarbonisation, energy efficiency, and the adoption of more sustainable practices, SITCE not only helps companies respond to the demands of the green transition but also improves their position in global value chains.
With incentive rates that can reach 100%, this programme allows companies to invest in innovation and sustainability, reducing operational costs and increasing their attractiveness to international markets. Thus, SITCE positions itself as a catalyst so that Portuguese SMEs not only overcome structural challenges but also lead in emerging niches and reinforce their long-term competitiveness.
You can access the full report and additional documents at: European Commission – SME Performance Review.
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Last update: 26 November 2024
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