The Annual Report on European SMEs 2024/2025, part of the SME Performance Review, provides a comprehensive assessment of the performance, trends, and prospects of SMEs across the European Union. Representing 99.8% of all EU enterprises, SMEs remain the cornerstone of the EU economy. In 2024, real value added dipped by 0.2% while employment rose by 1.1%. Projections for 2025 indicate a rebound, with real value added expected to rise by 1.6% and employment by 0.9%. Micro-SMEs, in particular, are forecast to outperform other size classes.

The report dissects performance across 14 industrial ecosystems, revealing dominant roles for SMEs in sectors like construction, retail, and tourism. Growth is strongest in digital, cultural and creative industries, and tourism. Knowledge-intensive sectors also show promise, though high-tech industries remain a challenge. Regional disparities persist, with Southern and Eastern Member States showing high employment growth, while countries like Germany and Finland face declines.

Key strategic areas, including aerospace and defence, energy-intensive industries, and digital, are highlighted as crucial for the EU’s industrial resilience and competitiveness. The report also analyses the role of scale-ups and midcaps, noting the growing importance of firms transitioning beyond traditional SME definitions.

The report concludes with the urgent need to reduce regulatory burdens and enhance access to finance, while promoting internationalisation and full participation in the Single Market to unlock SMEs’ growth potential and support the green and digital transitions.