Our 2019 SMЕ Business Climate Index (SMEB) assesses the business еnvirоnmеnt for SMEs in 13 selected economies. SMEB is based on six components: red tape, tax policy, labor market flexibility, financing, export opportunities and competition.
We find that it is the most favorable in Canada, followed by Hong Kong, the U.S., the Netherlands and Singapore. These five economies have in common a flexible labor market in terms of hiring and firing procedures and a low level of red tape. The top three also enjoy favorable tax policies and relatively good financing conditions.
The other eight economies are ranked as follows: Belgium, UK, Germany, Poland, Ireland, France, Slovakia and Czechia. In the UK, Germany and France, SMEs experience a below average business climate (within our sample). While in the UK and Germany, tax policy is the main constraint, in France, the lack of labor market flexibility, the lack of enough financial information on SMEs and red tape are the main drags.