In anticipation of the G7 summit taking place in Cornwall this weekend, small and medium-sized enterprises (SMEs) across member states have put together a wish list for the G7 leaders. SME7, an organisation composed of representatives of the leading small business and craft organisations from across the G7, met on 20 May and agreed on collective actions that are needed to boost the economic performance for SMEs.
The four requests are neither novel nor controversial but a reiteration of a few basic principles that should stand on the basis of the national and supranational economic strategies of the 99% of the small and medium-sized business community in the context of COVID-19.
The first request of the SME7 is for the G7 to place small businesses at the heart of economic recovery plans. This has been the centrepiece of the NextGenerationEU recovery fund, the motto of the German Presidency of the EU Council in 2020 and the subject matter of numerous conferences and events throughout the past two years. The OECD has recently published an analysis of the range of SME and entrepreneurship policy measures implemented during the course of a year since the start of the COVID-19 crisis and found that governments acted swiftly to put in place ambitious support for SMEs and entrepreneurs, but right now they are facing a dilemma that emergency liquidity support remains essential but is not sustainable and will have negative effects that need to be addressed to support the recovery.
Supporting small businesses on their journeys to reduce carbon emissions is the second ask of the SME7 group. Carbon neutrality has become a global mission across sectors, and legislation on ESG reporting is developing globally. The EU has recently launched the Corporate sustainability reporting proposal, and the US is facing increased pressures to formalise rules in this area. The reporting and compliance costs of small businesses need to be taken into account by legislators, and proportional requirements need to be put forward.
When addressing the digital divide, the third SME7 request, the EU has included special provisions for SMEs in its most recent important initiatives that form the Digital Single Market (Artificial Intelligence, Digital Services Act) as well as the Industrial Strategy. Just a few days ago, the G7 agreed on a landmark digital tax of 15% for big companies. The devil will be in the details and, more precisely, in the definitions, but most importantly, once the tax is in place, it’s important that a slice of what will be a significant sum of money goes to smaller businesses and supports innovation.
Finally, in asking the leaders of the G7 to champion a small business-friendly international trading framework, SME7 is addressing an important issue that has taken a backseat in the wake of the pandemic. In the context of the new EU-UK relationship and newer trade agreements with Japan and the US, smaller businesses are under-represented. The UK Federation for Small Businesses (FSB) has been very vocal about the need for special provisions in trade treaties that protect small businesses. In its own recommendations to the G7, it goes further in its ask and proposes a World Trade Organisation (WTO) committee dedicated to the trading needs of micro, small and medium-sized enterprises, as outlined in its ‘Trading Forward’ study.
The four requests of SME7 will most likely be embraced by the leaders of the G7. However, with digital giants at the forefront of public scrutiny, most of which have a vested interest in the survival and thriving of small businesses, it would be a significant step forward to establish a framework in which, beyond the antagonistic relationship between governments and multinational players, there is a real possibility for collaboration and for public officials to rely more on the digital tools, market knowledge and resources of large companies to implement specific policies that help small business recovery and sustainable growth.