EU association of SMEs calls for aid

Belgium, (Brussels Morning Newspaper) SMEunited, EU association of small and medium-sized enterprises (SMEs), stressed the importance of aid to prevent small businesses from going under.

The association warned that rising energy prices are threatening a growing number of SMEs in the EU, expressing belief that proposed price caps would help the companies to stay afloat, according to Reuters reporting on Wednesday.

Russia cut natural gas supply to the bloc, stressing that Nord Stream 1 gas pipeline will stay closed until faulty equipment is repaired and blaming Western sanctions for supply disruptions.

Some EU officials see the supply cut as Russia’s response to sanctions, expressing belief that faulty pipeline equipment is just a pretence.

SMEunited head Petri Salminen warned that Finnish retailers he spoke to reported tenfold increase in energy bills, stressing that growth of energy prices is jeopardising the companies.

“This is a fear that is rising among entrepreneurs across Europe… the problem has been there since spring but now it is getting worse,” he noted.

Rising prices threaten businesses

Gerhard Huemer, SMEunited economic policy director, pointed out that roughly 5% of companies go under each year and warned that percentage of companies at risk stands at 11% in Finland and 16% in Spain this year.

At the same time, roughly 24% of Belgian companies are already operating with losses. “These are companies that may not survive the next period,” he stressed.

SMEs account for roughly 99% of businesses in the EU, employ about two thirds of all employed in the bloc or approximately 100 million people, and generate roughly 53% of EU’s GDP.

The EC proposed a price cap on Russian gas imports on Wednesday and a mandatory cut in electricity use in the bloc as part of its package of measures aimed at cushioning the blow of the crisis.

According to Salminen, EU-wide solutions would be the most efficient to help businesses and national solutions would best help households.

Huemer warned that EU or national aid will be necessary if Russia stops natural gas deliveries altogether.

“One idea would be to compensate companies for 80% of their average energy consumption at prices from before the war and let them pay the rest at market prices as an incentive to cut energy consumption and increase efficiency,” he concluded.