The EU recovery fund: how it will affect southern SMEs

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EU recovery fund

The EU recovery fund will allocate 750bn to countries. Most of them will go to southern Europe, a hard-hit region by Corona’s economic impact. How governments manage the money will determine the countries’ startup future.

COVID-19 has had a tremendous impact on the EU’s economy. The epidemic is likely to trigger one of the worst recessions in the bloc’s history. The region’s economic output is expected to register a fall of 7.7%. This will include a rise in youth unemployment, especially in sectors like tourism. Entrepreneurship will also suffer since several startups are likely to close.

To face this, an EU recovery fund of €750bn has been approved. Most of it will go to southern Europe, one of the hardest-hit regions. This, of course, means good to news to the area’s entrepreneurs. Yet, there’s a danger of fund mismanagement. Such could obliterate any benefits that funds might bring.

What the above in mind, what should guide southern entrepreneurship investments? Guidelines vary depending on the country. Below, we’ll make quick analyses of different countries.

 

Quick Country Analyses

The first country which will receive a stimulus is Greece. Where should funds focus, here? Most likely, in the pre-seed investment stage. Several entrepreneurs note that it’s difficult to find small investments there. Thus, recovery money should focus on small VC’s, and accelerators.

In Italy, the dilemma is different. According to an interview with Francesco Cerruti to Sifted, the country has plenty of startups. What is lacking is the capacity to scale-up existing businesses. He also thinks that accelerating southern Italian digital transition is key.

In Spain, using the money to digitally upskill the population might be smart. This seems a pillar of the country’s digital transition plan. Spain is planning to invest €15bn, of the corona funds it will receive, in the latter roadmap.

Focus should also be the watchword for Portugal’s deployment of the recovery fund. This is an opportunity to look at areas where Portugal can be one of the top players in Europe. Ocean economy could be a top priority, as well as healthcare and education.

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