SMEunited has published its latest SME Barometer. SMEunited is the association of crafts and SMEs in Europe with around 65 member organisations from over 30 European countries. SMEunited is a recognised employers’ organisation and European Social Partner and acts on behalf of crafts and SMEs in the European Social Dialogue and in discussions with the EU institutions.
The recently-published SME Business Climate Index is an economic sentiment indicator that measures the business environment for small and medium-sized enterprises in the European Union. The SME BCI rose to 74.1 in Autumn 2025, marking its highest level since 2022. This improvement reflects growing optimism among SMES across the EU, driven by stabilising energy markets, easing inflation, and falling interest rates. Labour market tensions have also softened, with vacancy rates at a four-year low, helping SMEs manage hiring and wage pressures more effectively.
Northern European countries outperformed their southern counterparts, widening the regional gap in business sentiment. While both regions remain above the confidence threshold, northern SMEs are benefiting faster from global trade stabilisation and cheaper financing. Southern SMEs continue to perform well, particularly in services and tourism, supported by EU recovery funds and structural reforms.
Compared to broader economic indicators, the BCI shows stronger performance than both the Purchasing Managers Index (PMI) and the Economic Sentiment Indicator (ESI). This suggests that SMEs are recovering more quickly than larger firms and consumer sentiment, which remains subdued due to lingering uncertainty.
The EU Craft and SME Barometer confirms this trend. In Spring 2025, SMEs exceeded expectations across nearly all business indicators. The overall situation turned positive, with turnover, employment, and investment improving significantly. Prices rose less than anticipated, reflecting stabilised inflation and restrained demand.
Looking ahead to the second semester of 2025, expectations are mixed. While the overall situation is forecast to decline slightly, indicators like orders, employment, and turnover show signs of momentum. The share of neutral responses in the survey remain high, indicating persistent uncertainty about the overall situation.
Sectoral dynamics show diverging trends. The manufacturing sector, despite some relief from energy costs, continues to lag behind due to weak demand. However, expectations for the second half of 2025 suggest a cautious recovery may be underway. In contrast, the service sector remains resilient, but faces wage-driven inflation. Construction SMEs are showing signs of recovery as well, supported by falling interest rates, and may become a key driver of SME growth in 2025– 2026.
Medium-sized enterprises are leading job creation, thanks to better access to finance and greater resilience to cost pressures. Small firms are gradually catching up, while micro enterprises remain vulnerable to external shocks.
The report is available here.
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