Qonto, Europe’s leading business finance solution for SMEs and freelancers, today publishes its latest barometer on the state of Europe’s small and medium business landscape in 2024. The report was created in collaboration with YouGov, in a survey among +5,000 senior decision makers for SMEs across France, Germany, Italy, Spain and the UK. 

The survey reveals a resilient European SME landscape despite economic challenges. The findings highlight several key trends: widespread AI adoption across European SMEs but with the UK trailing behind its European counterparts; a large proportion of businesses claiming climate action, but very few considering it a top priority; and an evolving financial services landscape where digital banking solutions now surpass traditional banks in adoption rates. The report also shows significant progress in diversity initiatives, while talent acquisition strategies increasingly focus on competitive compensation and flexible working arrangements. 

Key findings 

British SMEs are resilient despite economic headwinds 

The findings reveal a robust business landscape across European markets, with 64% of companies meeting their 2024 targets, and 10% surpassing them, reflecting strong business resilience despite economic challenges. 

Globally, company size emerges as a critical success factor, with businesses turning over €100M+ being three times more likely to exceed targets than those under €100K (23% versus 7%). 

British businesses show promising results, with 64% on target, and 11% above target - one point above the European average. They maintain consistent performance in education (85% on or above target) and construction (83%), though their Media/Marketing sector faces challenges with 35% below target, contrasting sharply with France where this sector leads. 

Tech & AI 

British SMEs are falling behind Europe in the AI race 

The analysis confirmed widespread AI adoption, with 67% of European SMEs already implementing AI tools. Company characteristics significantly influence adoption rates: larger businesses show higher implementation, while companies of under 5 years lead with 75% adoption compared to 61% for businesses over 35 years old. Financial services and IT/Telecoms emerge as leading sectors. 

Despite the increased adoption of AI, data privacy remains the predominant concern, cited by 1 in 3 businesses. The Medical and Healthcare sector shows particularly acute data privacy concerns, with 38% citing challenges in balancing AI implementation with privacy considerations - the highest among all sectors studied.

SMEs in Britain have shown the lowest AI adoption rate among all markets studied, with only 58% currently using AI tools and 31% having no implementation plans for 2025. This is a stark contrast to German SMEs, who demonstrate the highest AI adoption rate at 78%. The resistance is particularly strong among smaller companies, with 36% of businesses with 2-49 employees having no AI adoption plans. 

Impact: carbon reduction & DEI 

1 in 10 UK SMEs make carbon reduction a top priority 

Qonto's findings demonstrate an interesting environmental approach globally among European SMEs, with 49% already implementing carbon reduction measures and 1 in 3 planning future action. However, only 9% consider it a top priority, and 21% have no carbon reduction plans. This being said, the total 79% commitment rate aligns with the European Commission's Green Deal objectives of achieving carbon neutrality by 2050 and 55% emission reduction by 2030. SMEs in the UK demonstrate strong practical engagement, with 53% already taking action - the second-highest implementation rate out of the analysed markets. While 78% are committed to carbon reduction and 11% consider it a top priority - the highest out of the European markets surveyed - 22% have no plans to act. 

Balance sheet: European SMEs tackle gender gap in diversity drive 

Qonto's study showcases that three-quarters of European SMEs are actively addressing at least one form of discriminatory bias. Gender parity leads DEI (Diversity, Equity, Inclusion) priorities, followed by age diversity and cultural diversity. Notably, 1 in 4 companies report no current DEI initiatives. 

British businesses present a paradoxical picture: while showing the highest rate of companies without formal DEI initiatives (39%), they lead in LGBTQ+ inclusion (25%) among all markets studied, suggesting focused rather than broad DEI implementation. 

Banking & accounting 

Digital banking tops traditional in adoption rates 

The results highlight a shift in business banking preferences, with online solutions (31%) now topping traditional banks (29%) in adoption rates. 1 in 3 opt for a hybrid approach, using both traditional and digital services. Company age emerges as a key factor: 38% of companies under 5 years old use exclusively online solutions, compared to 24% of businesses created over 35 years ago. The financial services sector leads digital adoption, with almost half using online-only solutions. 

SMEs in Germany, the UK and Spain are the biggest adopters of digital business banking solutions, with digital banking adoption rates of 37%, 35% & 33% respectively, which demonstrate strong preference for online financial services. 

SMEs turn to salary hikes as primary weapon in talent war 

The results show UK businesses adopting diverse strategies to combat talent shortages, with salary increases emerging as the leading approach at 35%. Companies are supplementing this with internship programmes (31%) and flexible working arrangements - remote work and flexible hours - at 28%, demonstrating a multi-faceted approach to talent acquisition and retention in an increasingly competitive market. 

"Our second European SMEs barometer reveals both encouraging trends and areas requiring attention as we look towards 2025," says Alexandre Prot, CEO and co-founder of Qonto. "While European businesses demonstrate remarkable resilience in the face of economic headwinds, we're seeing a significant digital transformation across markets, particularly in financial services where online solutions are now the preferred choice. 

The UK presents a fascinating picture - leading in sustainability commitments and showing strong business performance, yet lagging behind European counterparts in AI adoption. These type of insights are crucial for us at Qonto to understand the needs and challenges of European SMEs to help them thrive in an increasingly complex business environment and build a product that best answers their evolving needs.”