Impact on SMEs of the spike in commodities prices

Subject: Impact on SMEs of the spike in commodities prices

According to a study by the Spanish SME association PIMEC, 83% of SMEs have seen increases, of an average of 119%1, in the prices of their raw materials, components and supplies over the past year.

In addition to natural gas, there have been notable rises in such commodities and services as metals, plastics, wood and freight. Eighty-nine per cent of SMEs have thus seen their profit margins shrink, affecting their future viability.

The Commission has itself already criticised, in document SWD(2021)0352 of May 20212, Europe’s dependence on foreign imports of critical components for the green and digital transitions. It thus demonstrated the need to foster the EU’s ‘strategic autonomy’.

Sixty per cent of the SMEs surveyed by PIMEC were of the opinion that the EU should promote manufacturing in Europe and the pooled purchasing of materials and components, as proved successful for COVID-19 vaccines.

1. What specific measures does the Commission intend to take to address this challenge, particularly with a view to helping SMEs?

2. How does it intend to pass these measures on to the Member States?

1 https://www.pimec.org/sites/default/files/documents_pagines/informe_primeres_materies_29_09_2.pdf

2 https://ec.europa.eu/info/sites/default/files/strategic-dependencies-capacities.pdf

Answer given by Mr Breton on behalf of the European Commission

(28 January 2022)

The EU, like many other regions in the world, is currently facing a sharp spike in energy and raw materials prices.

While the market expectations on energy commodities indicate that the current price increases are likely to be temporary, the global economic development as well as green and digital transition will likely lead to long-term increase in demand for the raw materials.

Importance of raw materials for the EU’s economy is fully reflected in the EU’s New Industrial Strategy and its update (3) and most relevant actions are emphasised in the EU’s Critical Raw Materials Action Plan (4).

Higher energy prices have an impact on the prices of raw materials. A list of measures to be taken on the EU and Member States’ level to reduce energy price increases is presented in the communication on ‘Tackling rising energy prices: a toolbox for action and support’ (5).

These include direct support and aid to companies or industries (in line with EU State aid rules), levy and tax reductions, or prevention from grid disconnection.

When it comes to raw materials, Member States can improve the granting of permits to production/extraction facilities, removing obstacles to production and logistics, and providing guidance to Small and Medium-sized Enterprises.

Through the Raw Materials Supply Group, the Commission is working with the Member States on identifying mining and processing projects and investment needs and financing opportunities for critical raw materials in the EU that can be operational by 2025.

The Commission is also working on diversifying supply with sustainable and responsible sourcing from third countries to the benefit of all Member States.

⋅1∙ https://www.pimec.org/sites/default/files/documents_pagines/informe_primeres_materies_29_09_2.pdf

⋅2∙ https://ec.europa.eu/info/sites/default/files/strategic-dependencies-capacities.pdf

⋅3∙ https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/european-industrial-strategy_en#relatedlinks

⋅4∙ https://ec.europa.eu/docsroom/documents/42849

⋅5∙ Adopted by the Commission on 13 October 2021. Available here:

https://ec.europa.eu/energy/sites/default/files/tackling_rising_energy_prices_a_toolbox_for_action_and_support.pdf