Leveling the playing field: How Europe can champion small business growth

Europe’s economic backbone is built on the strength of its 24 million small and medium-sized enterprises (SMEs), which constitute 99% of the European Union’s (EU) businesses and power two-thirds of private-sector jobs. But these statistics don’t capture the full impact of Europe’s entrepreneurs. They drive innovation, adopt transformative technologies, and anchor local communities. 

Europe’s entrepreneurs represent resilience and progress; they don’t just contribute to the economy—they are its heartbeat.

Yet, as highlighted in the recent Draghi Report, SMEs face a mounting storm of challenges, from inflation and supply chain constraints to a regulatory environment that is increasingly complex and costly. More than 55% of European SMEs cite regulatory burdens as their greatest hurdle, and EU companies invest around €270 billion less in research and innovation than their US counterparts, placing them at a disadvantage in global markets. 

These obstacles are not just slowing growth, they are also barriers to Europe’s competitiveness. Empowering entrepreneurs to break through these barriers is essential for Europe to lead in economic recovery, global competitiveness and innovation.

A call to action for policymakers

Europe is at a crossroads. We can either stay on a path that limits growth or choose a future where smart policies help SMEs thrive. The Draghi Report makes it clear: we need targeted, data-driven strategies to support SMEs and strengthen Europe’s position on the global stage.

• Cutting through the regulatory jungle: SMEs shouldn’t be bogged down by excessive red tape. Regulatory burdens cost millions, slowing growth and driving entrepreneurs to seek opportunities elsewhere. Consistent, EU-wide regulations would allow SMEs to scale seamlessly across borders, reducing friction and unlocking billions in growth by letting them focus on innovation and expansion rather than compliance.
• Future-proof, technology-neutral policies: AI drives growth and innovation. To stay competitive, Europe needs open, accessible policies that empower SMEs to harness AI for automation and smarter decisions—without restrictive regulations that hinder progress.
• Leveraging data for business growth: Data fuels innovation, yet outdated privacy rules and rigid cookie requirements limit SMEs’ advertising reach. Shopify advocates for data policies that protect users while enabling SMEs to stay competitive, balancing user rights with the flexibility SMEs need to remain competitive. 

Now is the time for the EU to empower entrepreneurs

Europe’s competitiveness depends on creating an ecosystem that empowers businesses big and small. By closing productivity gaps and facilitating access to global opportunities, Europe can ensure that SMEs are positioned for growth. Harmonizing economic policies and minimizing regulatory obstacles will help create an environment where these enterprises can thrive.

Europe’s entrepreneurs are ready to lead. By embracing policies that champion SME growth, policymakers can unlock a future where entrepreneurship drives prosperity, resilience, and Europe’s standing on the world stage.