Untapped Potential: Mid-Caps Vital for Europe’s Economic Transition, Says New Report

Untapped Potential: Mid-Caps Vital for Europe’s Economic Transition, Says New Report

(IN BRIEF) A new report emphasizes the significant role of mid-sized enterprises, known as mid-caps (firms with 250 to 3,000 employees), in driving Europe’s economic transition. Published jointly by the European Investment Bank and the European Policy Centre, the report highlights that mid-caps contribute significantly to employment, value creation, and competitiveness in the European economy. Despite their potential, the lack of a consistent definition and statistical clarity hinders their analysis and targeted policy formulation. The report calls for standardized definitions and better understanding of mid-caps’ specific needs to fully unlock their potential and facilitate their growth.

(PRESS RELEASE) LUXEMBOURG, 11-Jan-2024 — /EuropaWire/ — The report Hidden champions, missed opportunities: Mid-Caps’ crucial roles in Europe’s economic transition released today highlights the significant role of mid-sized enterprises in driving Europe’s economic transition.

Jointly published by the European Investment Bank and the European Policy Centre, the report sheds light on the untapped potential of mid-sized businesses and the need for targeted support to maximise their impact across Europe.

According to the report, mid-caps — firms with 250 to 3 000 employees — make a substantial contribution to employment and value creation in the European economy. They account for over 17% of overall employment and 21% of turnover in the EU27 business sector. They are also vital components of key industrial ecosystems, including electronics, health, energy, renewables, and aerospace and defence, underpinning Europe’s competitiveness. Mid-caps are investing more than average, with 87% of them having invested in training and skills between 2018 and 2023, and 65% of them being likely to do so.

However, the lack of a consistent definition and statistical clarity surrounding mid-caps hinders their analysis and the formulation of targeted policies. The report calls for a standardised definition and better understanding of mid-caps’ specific needs to unlock their full potential.

European Investment Bank Vice-President Gelsomina Vigliotti said, “Mid-caps are the hidden champions of the European economy, driving innovation, productivity and the transition to a sustainable future. Their contribution to employment and value creation is significant, but their growth potential remains untapped. It is crucial that we prioritise targeted support and create an enabling environment for mid-caps to thrive and contribute even more to Europe’s economic transition.”

EIB Chief Economist Debora Revoltella said, “Mid-caps have proven their resilience and ability to drive Europe’s transitions. However, they face significant challenges, such as limited access to capital markets and a lack of consistent approaches in terms of public support. To fully harness the potential of mid-caps, we need to facilitate their scaleup process, provide targeted financing, and create a supportive regulatory framework. This will enable mid-caps to seize new market opportunities and contribute to a sustainable and prosperous European economy.”

Mid-caps are steady performers in terms of investment and output indicators, playing a key role in addressing the challenges faced by the European Union in the green and digital transitions, competitiveness and productivity. They express a strong willingness to invest in the future and outperform small and large firms in terms of productivity and employment growth.

More policy recommendations to address market and policy failures and optimise the role of mid-caps in the triple green, digital and economic security transitions can be found here.

The EIB Group works closely with public and private sector partners to support sustainable investment, job creation, economic growth and innovation across Europe.

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SOURCE: European Investment Bank