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The importance of Business Services should be adequately reflected in the Europe 2020 Strategy according to a report which the High Level Group on Business Services delivered this week. The group was launched by Vice-President Tajani and Commissioner Barnier in March 2013 to help define a European policy agenda for this important sector. Business services are services provided by businesses to other businesses. Typical examples include: management consultancies and legal services, design, engineering and technical maintenance services, recruitment, security and industrial cleaning. Business services are an integrated part of our industrial value chains and essential for European competitiveness, a strong Single Market and an industrial renaissance. The High level Group chaired by Professor Carlo Secchi of the Bocconi University was set up in order to study the shortcomings existing in this sector and help policy makers better understand the current challenges.

The Group recommends actions along several lines. In addition to prioritising business services in the Europe 2020 strategy, these include the completion of the Single Market for services, seizing the international opportunities and developing the right skills and technological infrastructure needed by European companies. The recommendations are issued to the Commission, but also to Member States and industry (for the full recommendations, please see MEMO/14/265).

European Commission Vice President Antonio Tajani responsible for Enterprise and Industry policy said: "Business services in Europe have a significant untapped growth potential, especially in terms of productivity and innovation uptake. The Group's Report has put the spotlight on the important role that business services play for the European economy. It demonstrates that high performing business services are crucial for our economic value chains and hence European competitiveness. Business services will be essential for achieving an industrial renaissance."

Commissioner Barnier said: "I thank the High Level Group for having drawn renewed attention to the importance of business services. We have made substantial progress with regards to the implementation of the Single Market for services. These efforts must continue. As policy makers, we need to provide the best framework that will allow Europe's companies, and in particular SMEs, to benefit from these transformative changes whilst continuing to contribute to jobs and growth."

Global business services market becomes more important

Business services are the most relevant service sector covered by the Services Directive in economic terms (GDP share, employment, growth) and in terms of the impact of the Services Directive as underlined in the June 2012 Communication on the Services Directive (IP/12/587). They have been a net generator of jobs for the last decade, but productivity has recently been stagnating.

The global business services market is estimated at more than €3.5 trillion and is believed to have doubled in size in the last decade. In Europe, business services account for 11.7% of our GDP and 12% of employment (1 in 8 jobs in Europe is in business services). Furthermore, since 1999, business services have been growing more than twice as fast (2.4% yearly average growth rate) as the average of all other EU sectors (1.1%). The numbers are even more impressive when looking at employment: employment in business services grew at a yearly rate of 3.5%, compared to 0.8% on average for all other sectors of the EU economy.

Probably one of the most important new business developments is the way the interaction between services and industry is changing. To some extent it is a trend which has been going on for years with, for example, increased outsourcing by industrial firms of certain “non-core” functions. This is an example of what is sometimes called the "servitization" of industry – in other words when industrial firms enhance their product with services.

The traditional distinction between manufacturing industries and business services is gradually becoming more and more blurred. The High Level Group analysed extensively the trends in the sector. New technologies, especially in the ICT sector, are underpinning the transformation of the way products and services are designed, manufactured and offered to customers. Europe needs to adapt rapidly to this new paradigm and seize the global opportunities that business services offer.

The Group set up five thematic sub-groups (innovation, internal market, skills, instruments and internationalisation) that provided concrete advice on the challenges faced by business services, based on sectoral evidence. Their work is summarised in thematic reports annexed to the High Level Group Report. Today's report concludes the mandate of the Group.

More information:

High Level Group on business services

Industrial Policy Communication 2014 - Industrial competitiveness - Enterprise and Industry

The Single Market Act

Public procurement reform