The study, which was co-published by the European Policy Center and the European Investment Bank, highlights the unrealized potential of mid-sized companies and the necessity of providing them with focused assistance in order to maximize their influence throughout Europe. Mid-cap companies, defined as those with 250–3,000 people, significantly contribute to value creation and employment in the European economy. In the EU27 business sector, they make up 21% of turnover and more than 17% of total employment. Additionally, they are essential parts of the main industrial ecosystems that support Europe’s competitiveness, such as electronics, health, energy, renewables, aerospace, and military.
Understanding Hidden Champions
With 87% of mid-caps having made investments in skills and training between 2018 and 2023 and 65% likely to do so, these companies are investing more than average. Nevertheless, mid-caps’ analysis and the creation of focused strategies are hampered by the absence of a clear statistical description and definition. To realize mid-caps’ full potential, the paper suggests standardizing the definition and improving knowledge of the requirements that are unique to them. “Mid-caps are the unsung heroes of the European economy, driving innovation, productivity, and the transition to a sustainable future,” stated Gelsomina Vigliotti, vice president of the European Investment Bank. Although they have a considerable impact on employment and value generation, their development potential is still unrealized. We must prioritize focused assistance and provide a supportive atmosphere so that mid-cap companies may prosper and further contribute to Europe’s economic transformation.
The Missed Opportunities
“Mid-caps have proven their resilience and ability to drive Europe’s transitions,” stated Debora Revoltella, Chief Economist of the EIB. They do, however, confront formidable obstacles, including restricted access to financing markets and a dearth of coherent governmental assistance strategies. In order for mid-cap companies to reach their full potential, we must support their scale-up efforts, give them focused funding, and establish regulations that are in their favor. Because of this, mid-cap companies will be able to take advantage of fresh market possibilities and support a robust and sustainable European economy. When it comes to investment and production metrics, mid-caps are reliable performers who are essential in helping the European Union tackle its problems with digital and green transitions, productivity, and competitiveness. They outperform both large and small businesses in terms of productivity and job growth, and they have a great commitment to invest in the future.
Job Creation and Regional Prosperity
This suggests, at least on the surface, that policies have to be more focused and gradually implemented in order to support mid-cap companies’ capacity to expand and enter new markets. The positive performance of mid-caps with respect to the primary transitional difficulties that the European Union is experiencing makes these findings even more concerning. The potential for beneficial spillover effects of EU mid-caps’ involvement in innovation, digitalization, and climate change adaptation might be increased if these businesses were subject to the right regulations and provided with the resources and incentives to continue along their own transformation route. Upskilling employees and providing them with effective training are essential for businesses to meet obstacles and maintain their competitiveness in the long run. Mid-cap companies excel in this area as well since they spend in training at a higher rate than both SMEs and big companies. Small mid-caps in particular (65%) are probably going to spend money on training. Moreover, compared to SMEs and XLs, tiny mid-cap companies often invest more in staff training. Taking into account the possible disparities in skills throughout the European Union resulting from structural changes, this is an essential type of intangible investment that boosts total output and promotes creativity.
The Bottom Line
More policy recommendations to optimize the role of mid-caps in the triple green, digital, and economic security transitions and address market and policy failures can be found here. The European Investment Bank Group (EIB Group) collaborates closely with public and private sector partners to support sustainable investment, job creation, economic growth, and innovation throughout Europe.
Mid-caps are crucial to the European economy, but their definition is not clear in most large statistical sources, and country definitions differ widely. The definition and statistical clarity of mid-caps are lacking, which makes it difficult to analyze their economic impact and to devise policies that would encourage their expansion. A sea change has occurred with the announcement by the European Commission that it will examine the present. It will need a consistent and methodical approach to policies and regulations at the EU and member state levels in order to fully realize the potential of mid-caps in the EU economy.