Do German, French, Italian or Spanish small businesses have it any better?
If our Simply Britain Pulse Check is anything to go by, the UK’s small businesses are having a tough time. Too much red tape is stifling you, and government support isn’t up to scratch – 56% of you believing that local and central government is out of touch with your needs.
How do we compare to other EU countries though? And are things really that bad? In an attempt to answer the question, we’re casting an eye across the continent to see how our European rivals fare…
Known colloquially as the ‘Mittelstand’, Germany’s small and medium-sized businesses are claimed to be the backbone of the country’s economy. Much like the UK’s smallest businesses, they provide the bulk of national employment, and their output is equally significant – they make up over half of the country’s GDP.
Financiers reportedly fight over them – in contrast to the UK – and the country’s smallest businesses benefit from collaborative apprenticeship schemes. Educators work with local businesses to give their students on-the-job experience, the result a skilled workforce that drives much of the Mittelstand’s success.
Essentially, small business life in Germany appears pretty rosy, however, there are still threats to the Mittelstand’s prosperity. A recent change to inheritance tax law is set to impact on family-run outfits, forcing them to pay significantly more tax when a new generation takes control. So at least we’re not the only ones worrying about tax…
Last year French entrepreneur Karine Charbonnier-Beck confronted the French president on TV, attacking Francois Hollande’s business policies. The owner of a medium-sized manufacturer, she poured scorn on current policy, claiming that by moving a few miles into Belgium she’d save £2.3million in taxes and charges.
Her rant was received pretty positively in France’s small business community, and just weeks after her outburst thousands marched demanding changes to business policy. In response the French government has put together the Small Business Act, which offers eighteen new measures designed to ease the strain on SMEs.
Ultimately then, life appears tricky, but the problems aren’t damaging French productivity. At least if you believe this research, conducted by the ONS.
Research conducted last year suggested that a staggering 96% of Italians believe that their government makes it difficult to start a business, these struggles best illustrated by record numbers going bust in 2013. As a result Italian entrepreneurs have been out on the streets just like their Gallic neighbours, President Renzi put under pressure to tackle their concerns.
Overregulation is a big issue and Renzi’s attempted to reform - rigid employment law amongst the issues the government has addressed. It’s now slightly easier to hire and fire but plenty of red tape still remains, whilst Italian businesses also face some of the highest energy bills within the EU.
Against this backdrop Italy recently came 56th in the World Bank’s Ease of Business survey 2015 – putting it below far less developed nations like Bahrain, Armenia and Rwanda. A staggering indictment, it’s safe to say Italy’s small businesses don’t have it too easy.
Spain’s well-documented economic woes haven’t been too kind on its smallest businesses, with credit hard to come by and the country’s consumers struggling to spend. To make matters worse rent controls were abolished last December, threatening an estimated 20,000 retailers with extinction. In one bleak case a shop in central Madrid saw its rent increase from €3,000 to €30,000 a month.
Despite this economists aren’t quite as concerned as they used to be, with green shoots of recovery evident in the Spanish economy. Similar to President Renzi, President Rajoy has made it simpler to hire and fire, whilst regulation around starting up has been simplified.
However, look to Spain’s two largest cities – Madrid and Barcelona – and you’ll now see radical mayors in place, signifying the strength of discontent. In short, the stats around a growing economy might not tell the full story…
Do you run a small business in any of these countries? How does it compare to the UK? Let us know in the comments below!