Address by the Minister of Energy, Commerce and Industry of the Republic of Cyprus, Mr Michael Da...

It is a pleasure and an honour to address you today in Lefkosia, at a moment when Europe is actively working to redefine the very foundations of its economic model.

"Autonomy through competitiveness: SMEs at the core of Europe's strategic preparedness." The theme of your discussion captures perfectly the direction in which the European Union (EU) must move. Strategic autonomy is no longer an abstract ambition. It is a practical necessity, shaped by geopolitical uncertainty, technological disruption and the urgency of the green transition. And at its core lies one fundamental condition: competitiveness.

We can all agree that competitiveness today encompasses far more than productivity or cost efficiency. It entails resilience, adaptability and the capacity to anticipate and absorb shocks. It also requires ensuring that our economies remain innovative, secure and socially cohesive, while continuing to be open and outward-looking.

In this context, small and medium-sized enterprises (SMEs) are not simply participants in the European economy. They are, in fact, its backbone.

In Cyprus, this reality is particularly evident. Out of approximately 125,000 businesses, around 99% are SMEs. They are the primary drivers of employment, innovation and growth, sustaining local communities, supporting regional development and contributing decisively to our economic vitality.

At the same time, SMEs are particularly exposed to structural challenges, including regulatory complexity, high energy costs, limited access to finance and persistent skills gaps. If we are serious about strengthening Europe's strategic preparedness, addressing these constraints must be at the centre of our policy approach.

Allow me, therefore, to outline how Cyprus is responding, both at national level and through its role in shaping the European agenda as it presides over the Council of the EU.

At national level, the Ministry of Energy, Commerce and Industry has placed SMEs at the heart of its comprehensive policy framework, implementing targeted measures to strengthen competitiveness and productivity, while enabling businesses to adapt to a rapidly changing environment.

First, we are actively investing in entrepreneurship. We promote the creation of new businesses, encourage the cultivation of entrepreneurial skills from an early stage and support start-ups and scale-ups in accessing new markets.

Second, we are improving access to finance. Through the effective utilisation of European funding instruments, we are channelling substantial resources into the real economy. Under the 2021-2027 programming period, €227.3 million have been secured through the Cohesion Policy Funds, complemented by €124.5 million from the Recovery and Resilience Fund and the new REPowerEU Plan.

These resources are translated into concrete support schemes, inter alia aimed at strengthening the competitiveness of the manufacturing sector, supporting the digital transformation of businesses, promoting investments in the circular economy, enhancing energy efficiency in enterprises and households and encouraging new entrepreneurship.

Third, we are focusing on industrial modernisation. Our objective is to build a robust, sustainable, smart and technologically advanced industrial base - one that increases its contribution to the Gross Domestic Product (GDP).

And fourth, we are working to reduce structural barriers, including production costs, skills mismatches and weak linkages between services and industry.

Dear friends,

National efforts alone are not sufficient.

This is why, under the Cyprus Presidency of the Council of the EU, we are actively contributing to shaping a coherent European response.

At the recent Informal Meeting of Competitiveness Ministers in Lefkosia, we emphasised that strengthening the Single Market remains the cornerstone of European competitiveness. A deeper, more integrated Single Market is essential to allow SMEs to scale, innovate and compete globally.

We also highlighted the need to reinforce Europe's industrial base, including in strategic sectors such as defence, where over 2,500 SMEs play a critical role. Supporting these enterprises requires not only financing tools, but also better coordination, standardisation and the removal of fragmentation across markets.

At the same time, we reviewed progress on the Competitiveness Compass one year after its launch. This ambitious strategic framework is expected to mobilise over €1 trillion in investment across innovation, clean technologies and security. Its effective implementation is crucial to addressing persistent gaps, including low uptake of artificial intelligence, regulatory burdens and limited access to capital.

Key initiatives such as the "AI Continent Action Plan", the "Clean Industrial Deal", the "Critical Raw Materials Act" and the "Omnibus" simplification packages, implemented alongside the 2023 SME Relief Package that focuses on streamlining administrative requirements, improving access to finance and fostering a more SME-friendly regulatory environment - are all steps in the right direction. Their success, however, depends above all on effective delivery.

Preparedness must, therefore, become an integral part of competitiveness policy.

This means designing policies that do not only respond to crises, but anticipate them. It means equipping SMEs with the tools to diversify supply chains, adopt new technologies, invest in skills and access reliable and affordable energy. It also means ensuring that regulation is not only robust but also predictable, proportionate and innovation-friendly.

Dear members of the Employers' Group,

Europe has all the necessary assets: a strong industrial base, a highly skilled workforce, world-class research and a unique social model. What is required now is alignment between European and national policies, between ambition and implementation, and between economic strength and societal resilience.

SMEs are central to this effort. If we succeed in empowering them, we will not only enhance competitiveness, but we will also secure Europe's autonomy, strengthen its preparedness and ensure sustainable prosperity for all.

Thank you.

(GA/GS/KA)