Enterprise and Industry SBA Fact Sheet 2012

EN Enterprise and Industry SBA Fact Sheet 2012 ITALY In a nutshell: - Italy s SME sector the largest in the EU by number of firms is dominated by 3.6 million micro-firms with less than 10 employees - Italian SMEs have trailed their EU peers in recovering from the crisis, and this is set to continue - In most SBA policy areas Italy has yet to catch up with the EU average - Some important policy measures introduced over the last year may prove vital in starting a sustained turn-around of Italy s SME sector About the SBA Fact Sheets 1 : The Small Business Act for Europe (SBA) is the EU s flagship policy initiative to support small and medium-sized enterprises (SMEs). The aim of the annually updated Fact-Sheets is to improve understanding of recent trends and national policies affecting SMEs. Since 2011, each EU Member State has appointed a high-ranking government official as its national SME envoy. SME envoys spearhead the implementation of the SBA agenda in their countries. 1. SMEs in Italy basic figures Number of Enterprises Employment Value added Italy EU27 Italy EU27 Italy EU27 Number Share Share Number Share Share Billion Share Share Micro 3.610.090 94,6% 92,2% 7.087.214 46,6% 29,6% 180 29,4% 21,2% Small 184.345 4,8% 6,5% 3.250.491 21,4% 20,6% 139 22,7% 18,5% Medium-sized 19.370 0,5% 1,1% 1.875.598 12,3% 17,2% 99 16,2% 18,4% SMEs 3.813.805 99,9% 99,8% 12.213.303 80,3% 67,4% 418 68,3% 58,1% Large 3.253 0,1% 0,2% 2.998.619 19,7% 32,6% 194 31,7% 41,9% Total 3.817.058 100,0% 100,0% 15.211.922 100,0% 100,0% 612 100,0% 100,0% Estimates for 2011, based on 2005-2009 figures from the Structural Business Statistics Database (Eurostat). The estimates have been produced by Cambridge Econometrics.The data cover the 'business economy' which includes industry, construction, trade, and services (NACE Rev. 2 Sections B to J, L, M and N). The data does not cover the enterprises in agriculture, forestry, fishing or the largely nonmarket services such as education and health. The advantage of using Eurostat data is that the statistics from different countries have been harmonised and are comparable across countries. The disadvantage is that for some countries these data may be different from data published by national authorities. In terms of the number of SMEs, Italy has the largest SME sector in the EU. With 3.813 million SMEs Italy has almost twice as many as Germany (2.066 million). However, this figure is misleading as the vast majority of Italy s SMEs are micro-firms with less than 10 employees. In fact, Italy s share of micro-firms in all businesses, at 94.6 %, exceeds even the EU-average (92.2 %). The downside of this is that those micro-firms contribute relatively little to employment and value-added due to their limited size. For instance, Italy has some 1.7 million more SMEs than Germany. Yet they provide 3 million fewer jobs (12.2 million persons employed as opposed to 15.2 million) and produce only 56 % of the total value-added of their German counterparts. Italian SMEs are disproportionately common in manufacturing. Manufacturing SMEs account for 31 % of value-added (compared with 21 % for the EU) and 25 % of SME employment (EU-27: 20 %). But the proportion of these manufacturing SMEs engaged in high- or mid-to-high-tech activities is the same as in the EU as a whole. Hence, the 11 % of Italian SMEs which are in high- and high/mid-tech industries (EU-27: 12 %) account for every fifth SME job (21 %, EU: 24 %) and even 29 % of the total value-added of all SMEs (EU: 30 %). On the services side, the picture looks slightly bleaker: although Italy s proportion of knowledge-intensive services is slightly higher than the EU average (29 to 28 %), Italian knowledge-intensive firms generate much 1

SME trends in Italy 3 110 100 90 Number of enterprises (Index: 2005=100, estimations as from 2010 onwards) 2005 2006 2007 2008 2009 2010e 2011e 2012e SMEs in Italy SMEs in the EU Employment in enterprises (Index: 2005=100, estimations as from 2010 onwards) less employment and value-added than their EU peers (21 to 25 % and 27 to 31 % respectively) 2. Since 2005, trends in the Italian SMEs sector in terms of the number of firms, employment and value-added creation have been disappointing. Recovery from the initial shock at the beginning of the financial crisis has been much weaker than in the EU as a whole. On all three indicators, the Italian SME sector appears to have fallen back to the levels of around 2005, i.e. long before the current crisis began. Microfirms are the hardest hit with the least dynamic recovery, while large firms appear to have ridden out the crisis so far fairly well. The forecasts to the end of 2012 point to a continuation of the overall, rather stagnant, trend. 110 100 Value added of SMEs Outer circle: Inner circle: EU27 Italy 90 2005 2006 2007 2008 2009 2010e 2011e 2012e 31% 28% SMEs in Italy SMEs in the EU 72% 69% High-tech manufacturing and knowledge-intensive services Value added of enterprises (Index: 2005=100, estimations as from 2010 onwards) Low tech manufacturing and less knowledge-intensive services 130 120 110 100 90 2005 2006 2007 2008 2009 2010e 2011e 2012e SMEs in Italy SMEs in the EU 2

2. Italy s SBA profile 10. Internationalization 9. Environment 8. Skills and Innovation EU average +/- 0,5 standard deviations Italy 7. Single market 1. Entrepreneurship 1,0 0,8 0,6 0,4 0,2 0 6. Access to finance 2. Second chance 3. Think small first 4. Responsive administration 5. State aid & public procurement Like last year s, Italy s SBA profile reveals many weaknesses. Italy trails the EU average in 7 out of 10 policy areas, with only Think small first, Environment and Public Procurement and State Aid being in line with its EU peers. In key areas such as Skills and innovation, Access to finance, Single market and Second Chance conditions in Italy need to improve by a considerable margin to catch up with most other EU countries. There is good news, though: the trends for the majority of policy areas as expressed in the compound growth rates for the period 2005-2012 are upward. It is difficult to say to what extent policy measures to improve the situation of SMEs introduced by both the previous and current governments have contributed this. But considerable improvements may materialise in future as a great number of measures were introduced in late 2011 or have been announced for 2012. For example, in December 2011 the new Government led by Mario Monti adopted the so-called Save Italy Decree No 201 a package designed to rebalance the public fiscal deficit, in particular through by reintroducing property taxes, fine-tuning the pension reform by extending the contribution-based method to all members as of 1 January 2012, and increasing VAT by two percentage points by September 2012. In addition to these restrictive measures, the Save Italy Decree introduced measures designed to overhaul Italy s production system and, more generally, its economic growth. The aim is to minimise, at least partially, some structural problems affecting SMEs: low capitalisation, limited liquidity and borrowing constraints, and limited exposure to international markets, especially outside the EU. In tandem with this initiative, Italy took policy initiatives in all SBA areas, except the Single market. The greatest achievement may be the introduction of the Statute of Enterprises, which makes many operations easier for SMEs and may result in improved results in different SBA policy areas. So on the policy side the overall performance of Italian governments in implementing the SBA in 2011 and the first quarter of 2012 may be considered satisfactory and promising, provided the determination to see through the structural reforms they have announced is maintained 4. In this context, it is encouraging that a comprehensive three-year strategy to implement the SBA was adopted on 4 May 2010. The SME Envoy, appointed in March 2011, is seen to be effective in guiding the technical and permanent consulting forums for SMEs, listening to and collecting entrepreneurs requests and collaborating with the Ministry of Economic Development in policy-making. 3

Italy s SBA performance: status quo and development over 2007-2012 5 Progress over time (Compound annual growth rate 2007-2012) Low Performance, Progress 2 Low performance, Deterioration 8 6 7 14 9 10 3 5 High Performance, Progress High Performance, Deterioration -2,5-1,5-0,5 0,5 1,5 2,5 Performance (Distance fromthe EUaverage, in standard deviations, EUavg.=0) 15% 10% 5% 0% -5% -10% -15% Legend: 1. Entrepreneurship 2. Second chance 3. Think small first 4. Responsive administration 5. State aid & public procurement 6. Access to finance 7. Single market 8. Skills and innovation 9. Environment 10. Internationalization Note: Due to a lack of data, it is not possible to calculate the progress rate for Area 9 - Environment. In the graph to the left, the progress rate was set to 0% by default, for all countries. 4

I. Entrepreneurship Overall, Italy performs below the EU average in the SBA area of Entrepreneurship. There has been little change in this segment since last year. In part, this is simply because there were no updated figures available for some key indicators in this area. For the two core indicators measuring the level of entrepreneurial activity most directly the entrepreneurship rate and the rate of opportunity entrepreneurship (those for whom running their own business was the first career choice), Italy s performance is close to the EU average (both indicators remained the same as last year). The weak performance is mainly due to the indicators measuring the entrepreneurial environment. These generally trail the EU average. The most extreme cases are the survey results on the role of school education in developing an entrepreneurial mindset (unchanged from last year). With only 37 % of respondents in Italy (against the EU average of 49 %) saying that school played a role, Italy had the second-worst performance in the EU. On the policy front, in September 2011, the Italian Network of Women Entrepreneurs was set up by the Association of Chambers of Commerce (Unioncamere) and the Presidency of the Council of Ministers. The objective of this project, which involves 16 regions (out of 20), is to promote female entrepreneurship, by favouring the transfer of know-how and experience on how to set up a successful business. Thirty-two female entrepreneurs with long and significant business experience were selected as mentors to train 64 newcomers selected through a public recruitment process. In January 2012 (Decree Law No 1 of 24 January 2012, converted by Law No 27/2012), the Italian Government introduced a new form of limited liability company that is open only to entrepreneurs under 35 years old. Given the simplified procedures required to start up this kind of company (e.g. company capital can be as little as EUR 1), this policy measure is expected to encourage entrepreneurship among young people. 5

II. Second chance Distance from the EU-average (measured in standard deviations, EU-average=0) Time to close a business (in years); 2012; Italy: 1,8; EU-avg: 1,94 Cost to close a business (cost to recover debt as % of the debtor's estate); 2012; Italy: 22; EU-avg: 10,64 Degree of support for a second chance (%); 2009; Italy: 74; EU-avg: 81-2,0-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance. There were no updated values available for the three indicators shown in the graph, so the assessment of last year s fact sheet still holds, i.e. that Italy s overall performance in this area is below the EU average and that this is mainly driven by one indicator, the cost of recovering debt, which is particularly high in Italy. At 22 % of the debtor s estate, this is the highest in the EU and more than double the EU average of 10 %. As for policy measures, The Court s judgment No 18600 of 10 May 2011 envisages complete discharge of the entrepreneur s debts in the event of non-fraudulent bankruptcy, even if the company is still in debt, under four conditions: (i) all the personal debts have been paid; (ii) the entrepreneur s economic health is poor; (iii) three years have passed since the bankruptcy penalty was paid; (iv) the entrepreneur has been of good behaviour in those three years. III. Think Small First Distance from the EU-average (measured in standard deviations, EU-average=0) Communication and simplification of rules and procedures (0=maximum, 6=minimum); 2008; Italy: 0; EU-avg: 0,3 Burden of government regulations (1=burdensome, 7=not burdensome); 2011; Italy: 2,1; EU-avg: 3,09 Licenses and permits systems (0=maximum, 6=minimum); 2008; Italy: 0; EU-avg: 1,59-2,0-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance. Thinks small first remains one of the few areas in which Italy is generally performing in line with the EU average. The results for the individual indicators in this section continue to point in different directions: in terms of the World Economic Forum (WEF) survey data on the burden of government regulation, Italy comes last in the EU. On the other hand, OECD data on more specific questions such as the Communication and simplification of rules and regimes and the licences and permits system are more favourable to Italy than the EU on average (the latter are based on the country s self-reported answers from 2008). Policy-wise, since 11 November 2011, the State, regional and local public bodies have been required to assess the impact of legislation and regulations before they are adopted and to ensure that they comply with the criterion of proportionality. In other words, new obligations and burdens on business must take into account the company s size, number of employees and business sector of activity. This measure aims to minimise the administrative costs and burdens on SMEs.. 6

IV. Responsive Administration This year, Italy scored just below the EU average for this SBA measure, slipping out of the EU average position it still held last year. However, last year it already verged on a below-average score, so the effective change is minimal. The relative decline is largely due to improvements in the situation of other countries and, hence, of the EU average as a whole rather than a deterioration in Italy. As in the previous year, individual indicators show considerable differences. Generally speaking, administrative costs are more of a burden on businesses than administration time, although the time needed to comply with tax requirements is an exception to that rule (286 days, as opposed to an EU average of 205 days). The indicators with the most negative scores are for costs, including the cost of enforcing contracts and, especially, start-up 6 costs (18.2 % of income per capita versus 4.9 % for the EU) which, like last year, were the second highest in the EU after Greece. Curiously, the start-up time is less than half the EU average (6 days versus 14 for the EU overall), 7 Also, Italy is in the top group of EU Member States in terms of online availability of administrative services. Policy-wise, as of 11 November 2011, the Statute of Enterprises allows enterprises to substitute certificates granted by professional and accredited bodies for checks carried out by the public administration. This measure is intended to slim down bureaucratic procedures. From 1 January 2012 to 31 December 2013 zero-bureaucracy areas, so far envisaged only in the South of Italy, may be applied throughout the country. In zero-bureaucracy areas all administrative procedures must be concluded within 30 days. Through this temporary measure, yet to be put in practice, the Government hopes to foster entrepreneurship in Italy. 7

V. State aid and public procurement Distance from the EU-average (measured in standard deviations, EU-average=0) SMEs' share in the total value of public contracts awarded (%); 2008; Italy: 44; EU-avg: 38 State aid for SMEs (% of total aid earmarked for SMEs); 2010; Italy: 18; EU-avg: 4 Average delay in payments from public authorities (in days); 2011; Italy: 66; EU-avg: 25 e-procurement availability (pre-award); 2010; Italy: 87; EU-avg: 73 EU Regional Funds for entrepreneurship and SMEs in 2007-2013 (% of total allocation); 2011; Italy: 9,7; EU-avg: 9,5 EU funds for business creation and development in 2007-2013 (% of EAFRD total allocation); 2011; Italy: 0,6; EU-avg: 2,1-2,0-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance. This area is Italy s strongest among all SBA areas, though it is still only in line with the EU average. There are a number of individual indicators in which Italy does better than many of its EU peers. In particular, the share of state aid resources dedicated to SMEs is highest in Italy, even though it dropped slightly compared to last year (23.8 %). Also, SMEs share of all public contracts awarded is above the EU average, as is the degree of availability of EU procurement services. Like last year, the positive performance on those indicators is undermined by a substantial and persistent problem with average waiting times for payment by public authorities; Italy trails all other EU countries by far on this measure. It takes Italian SMEs on average more than twice as long to obtain payment from public authorities as their peers in other EU countries (55 compares with 25 days in the EU on average). On the policy front, in November 2011, the Statute of Enterprises proposed that contracts be split into lots, in order to simplify contracting and encourage access for microenterprises and small enterprises. The Statute also required every form of future national and local incentive to reserve 60% of the allocated subsidies for SMEs (including at least 25% for microentreprises and small enterprises). 8

VI. Access to finance Distance from the EU-average (measured in standard deviations, EU-average=0) Rejected loan applications and unacceptable loan offers (% of loan applications by SMEs); 2011; Italy: 13; EU-avg: 15 Access to public financial support including guarantees (% of respondents that indicated a deterioration); 2011; Italy: 13; EU-avg: 22 Willingness of banks to provide a loan (% of respondentd that indicated a deterioration); 2011; Italy: 28; EU-avg: 27 Relative difference in interest rate levels between loans up to EUR 1 million and loans over EUR 1 million; 2011; Italy: 24; EU-avg: 19 Total duration to get paid (no. of days); 2011; Italy: 121; EU-avg: 53 Lost payments (% of total turnover); 2011; Italy: 2,6; EU-avg: 2,91 Venture capital investments - early stage (% of GDP); 2009; Italy: 0,003; EU-avg: 0,02 Strength of legal rights; 2012; Italy: 3; EU-avg: 7 Depth of credit information index; 2012; Italy: 5; EU-avg: 4-2,0-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance. Access to finance remains one of the most problematic areas for Italian SMEs. Like last year, Italy performed well below the EU average. Nonetheless, the problems are limited to specific financing domains because in four out of nine specific areas, Italy actually scored above the EU average. For example, slightly fewer SMEs than the EU average saw their loan requests rejected or tied to unacceptable conditions (13 % to 15 %). Also, far fewer Italian SMEs reported a deterioration in access to public financial support instruments (13 % to 22 %). These positive performances are, however, wiped out by the weak performance on other indicators. In line with the long payment times for public authorities discussed in the previous section, the total invoice payment time is longest in Italy. The fact that it takes on average almost four months (121 days) to receive due payments, while EU SMEs in general have to wait less than two months (53 days) for their money, may saddle many SMEs with serious cash-flow problems. Other areas in which problems persist are the larger interest-rate spreads between small and larger loans (implying that Italian SMEs have to pay relatively more for loans of up to 1 million than their EU peers) and the relatively weak legal rights that creditors in Italy enjoy when trying to claim back funds they have lent. The lack of rights tends to discourage lending, especially to smaller firms. Finally, the availability of venture capital (for early stage investment) is also much more limited for promising Italian SMEs than those of other EU countries. A number of measures have been taken lately to improve the situation in this policy area. In October 2011, an agreement was signed between the European Investment Fund (set up in March 2010) and the Italian Investment Fund. 200 million was allocated to increase the financial resources available to support the capitalisation and development of SMEs. In December 2011 the Ministry of Economy and Finance introduced a tax benefit to reward honest entrepreneurs that decide to capitalise themselves through equity capital. In October 2011, Cassa Depositi e Prestiti (a company owned by the State and a number of bank foundations) made 10 billion available to the Italian banks to finance SMEs. In particular, 8 billion is supposed to be used to finance SMEs investments and working capital and 2 billion to repay the public 9

administration s debts to enterprises. Also in 2011, the Government refinanced the existing Central Guarantee Fund for SMEs. During the crisis the fund turned out to be the main financial support instrument for SMEs and the December 2011 decision ensured the continuation of the fund for the period 2012-2014. VII. Single market Distance from the EU-average (measured in standard deviations, EU-average=0) SMEs with intra-eu imports (%); 2009; Italy: 6; EU-avg: 17 SMEs with intra-eu exports (%); 2009; Italy: 3; EU-avg: 7 Single market directives not transposed or notified (%); 2011; Italy: 1,6; EU-avg: 1,17 Number of directives overdue by 2+ yrs.; 2011; Italy: 0; EU-avg: 0,15 Average transposition delay for overdue directives (in months); 2011; Italy: 5; EU-avg: 5,47-2,0-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance. Italy s performance is largely unchanged compared to last year and this is still one of the few policy areas in which the country is performing in line with the EU average. This position is mainly supported by the relative speed with which Italy transposes internal market legislation into national law. On the downside, Italy has more single market directives pending that have not yet been transposed or notified (Italy: 1.1; EU-average: 0.9). More importantly, though, Italian SMEs still trade less within the single market than do EU SMEs in general: as regards imports, only 6 % of Italian SMEs buy products from other EU countries (EU average: 17 %), while only 3 % export to the rest of the EU, compared with 7 % for EU SMEs on average. One reason for these low scores may be that Italy has a very high proportion of micro-firms among its SMEs, and these tend to be less international than small or medium-sized SMEs. On the policy side, there were no major initiatives in 2011. 10

VIII. Skills and innovation Distance from the EU-average (measured in standard deviations, EU-average=0) SMEs introducing product or process innovations (% of SMEs); 2008; Italy: 37; EU-avg: 34 SMEs introducing marketing or organizational innovations (% of SMEs); 2008; Italy: 41; EU-avg: 39 SMEs innovating in-house (% of SMEs); 2008; Italy: 34; EU-avg: 30 Innovative SMEs collaborating with others (% of SMEs); 2008; Italy: 6; EU-avg: 11 Sales of new-to-market and new-to-firm innovations (% of turnover); 2008; Italy: 12; EU-avg: 13 SMEs participating in EU funded research (number per 100.000 SMEs); 2011; Italy: 10; EU-avg: 23 SMEs selling online (% of SMEs); 2011; Italy: 4; EU-avg: 13 SMEs purchasing online (% of SMEs); 2010; Italy: 17; EU-avg: 28 Enteprises providing training to their employees (% of all enterprises); 2005; Italy: 32; EU-avg: 58 Employees' participation rate in education and training (% of total no of employees in microfirms) ; 2010; Italy: 5; EU-avg: 11-2,0-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance. Italy s performance trails the EU average in this area, in both skills and innovation. In some of the core indicators measuring firms innovation performance (share of SMEs innovating in-house, SMEs introducing product or process innovations or marketing and organisational innovations), Italy scores better than many other EU Member States, revealing robust innovation potential, especially in the proportion of SMEs innovating in-house (34 % to 30 %). One cause for particular concern is the indicators measuring the internet capacity of SMEs. Italian SMEs are much less present online than their EU peers. This may put them at a disadvantage as electronic media become ever more important distribution channels. The indicator for training also reveals some problems. Italy is behind its EU peers in this area, as only 5 % (EU: 11 %) of microfirms employees participate in education and training. Given the extraordinary importance of micro-firms in Italy, this low level of training participation represents a far larger problem of a lack of development of skills in the workforce which in turn may pose a serious strategic threat to the competitiveness of Italy s businesses. On the policy side, starting from July 2011 a tax credit has been granted to enterprises assigning research projects to Italian universities and research centres. The budget for this measure is 484 million and its objective is to support R&D activities among enterprises. On 2 November 2011 the Ministry of Economic Development launched a programme to incentivise SMEs to register patents and designs. The objective is to strengthen the firms' innovative capacity and competitiveness. The total budget is 45.5 million. 11

IX. Environment Italy is just inside the boundaries of the performance band representing the EU average. Looking at individual indicators, though, an interesting story emerges: while the share of Italian SMEs that have taken resource-efficiency measures (94 %), offer green products (26 %) or derive at least 50 % of their total turnover from green products (25 %) is at least equal to if not higher than the EU average, this seems to be achieved with less public support than in other countries. Only 5 % of Italian firms (EU: 9 %) claim to have received public support for their resource-efficiency measures and even fewer (3 %) say the same for the production of green products and services (EU: 8 %). On the policy front, in December 2011 EUR 100 million was allocated to finance investment projects in the Convergence regions which promote the production of energy from renewable resources, in particular biomass. In compliance with the reserve incentive set up by the Statute of Enterprises, 60 per cent of the total budget will be allocated to SMEs.. 12

X. Internationalisation Italy continues to trail the EU average in this area. The available data do not reveal any significant progress since last year, either on Italy s overall position or as regards any of the individual indicators on which it is based. Fewer Italian SMEs trade with partners outside the EU. This may be explained partly by the above-average share of micro firms, which tend to be less international due to their size and to a certain lack of internet-savvyness (see good practice text box and section XIII). Partly, however, this is also down to the less conducive administrative environment, marked by above-eu-average import and export costs and much longer delays (for instance, the time required to export, at 20 days, is almost twice as long as the EU average of 11 days). The number of documents required for both imports and exports (in both cases four) is the only exception to the rule. Given the rather modest difference with the EU average, its importance is rather slight. Policy wise, there was only one significant initiative: since 8 November 2011 an interactive platform has been available to help Italian companies promote and sell their products around the world. The Made in Italy portal (http://www.madeinitaly.gov.it/), available in Italian, English, Chinese and Russian, aims to promote the internationalisation of Italian enterprises. 13

3. Good practice To show what the government does to promote SMEs, we include an example of good practice. The Portal for the promotion and sale of Made in Italy products throughout the world (under the Internationalisation SBA sector). The Made in Italy portal is an interactive platform aimed at helping Italian companies to promote and sell their products around the world. The portal is available in English, Chinese and Russian. The services provided, which are all free, are: Shopping mall Made in Italy: Buy now Find your Italian partner E-commerce service This measure can be considered best practice as it directly addresses one of the main problems of Italian enterprises, i.e. their difficulties with selling online. About the SBA Fact Sheets The Small Business Act (SBA) Fact Sheets are produced by DG Enterprise as part of the SME Performance Review (SPR), which is its main vehicle providing an economic analysis of SME issues. They combine the latest available statistical and policy information for the 27 EU Member States and another 10 non-member States which also contribute to the EU s Competitiveness and Innovation Framework Programme (CIP). The Fact Sheets produced annually help to organise the available information to facilitate SME policy assessments and monitor SBA implementation. They document the status quo and progress. They are not an assessment of Member State policies but should be regarded as an additional source of information designed to improve evidence-based policy making. For example, the Fact Sheets cite only those policy measures deemed relevant by local SME policy experts. They do not, and cannot, reflect all measures taken by the government over the reference period. More policy information can be found on a database accessible from the SPR website. Please also see the end notes overleaf. For more information SME Performance Review: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm Small Business Act: http://ec.europa.eu/enterprise/policies/sme/small-business-act/index_en.htm The European Small Business Portal: http://ec.europa.eu/small-business/index_en.htm Entr-SPR@ec.europa.eu 14

1 The SBA Fact Sheets 2012 benefited substantially from input by the European Commission s Joint Research Centre (JRC) in Ispra, Italy. The JRC made major improvements to the methodological approach, statistical work on the dataset and the visual presentation of the data. 2 The indicators measuring the number and contribution to employment and value added of high-technology SMEs in manufacturing and knowledge-intensive SMEs in service sectors were calculated following the Eurostat definition of high-technology and knowledge-based services aggregations based on NACE Rev. 2. For more information see: http://epp.eurostat.ec.europa.eu/cache/ity_sdds/annexes/htec_esms_an3.pdf. 3 The three graphs below describe the trend over time for the variables. They consist of index values for the years since 2003, with the base year 2003 set at a value of 100. As from 2008, the graphs show estimates of the development over time, based on 2003-2007 figures from the Structural Business Statistics Database (Eurostat). The estimates were produced by Cambridge Econometrics. The data cover the business economy, which includes industry, construction, trade, and services (NACE Rev. 1.1 Sections C to I, K). The data do not cover enterprises in agriculture, forestry, fishing or largely non-market services, such as education and health. A detailed methodology can be consulted at: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm. 4 The policy measures presented in this SBA Fact Sheet may only be a selection of the measures taken by the Government in 2011 and the first three months of 2012. The selection was made by the SME policy country expert contracted by Ecorys (DG Enterprise s lead contractor for the 2012 Fact Sheets). The experts were asked only to select those measures that, in their view, were the most important, i.e. were expected to have the highest impact in the specific SBA area. The complete range of measures that the experts compiled in the framework of producing this years Fact Sheets will be published in the form of a policy database on the DG Enterprise website alongside the Fact Sheets. 5 The quadrant chart combines two sets of information: firstly it shows the status quo performance based on data for the latest available years. This information is plotted along the X-axis measured in standard deviations of the simple, nonweighted arithmetical average for EU-27. The vertical corridor marked by the dotted lines defines the EU average. Secondly, it reveals progress over time, i.e. the average annual growth rates for the period 2005-2011. The growth rates are those of the individual indicators which make up the SBA area averages. Hence, the location of a particular SBA area average in any of the 4 quadrants, provides not only status quo information about where the country is located in this SBA area relative to the rest of the EU at a given point in time, but also to the extent of progress made in the period 2005-2011. 6 These figures are based on World Bank data. For methodological details on the start-up indicators please consult the Doing Business 2011 report at http://www.doingbusiness.org/. It should be noted that these findings differ from corresponding figures obtained directly from Member States, through a self reporting exercise according to which, in 2010, it took 1 day and a cost of 2 673 to start a business in Italy. For more details please see: http://ec.europa.eu/enterprise/policies/sme/business-environment/start-up-procedures/index_en.htm. 15