Alessandro Barberis is president of Eurochambres.
He was speaking to Gary Finnegan.
To read a shortened version of this interview, please click here.
What would you like to see prioritised by the new European Commission?
Policymakers' reaction is crucial and the old adage that 'every challenge is an opportunity' has never been more pertinent. The EU must demonstrate its ability to lead the response to these monumental challenges. The goal for Europe has to be sustainable growth. Chambers are looking to the EU institutions to set an important precedent by putting in place priorities, structures, procedures and resources that are fit for this purpose.
There are four areas in particular I think the Commission and Parliament should focus on:
Firstly there's markets. Capitalising on market opportunities is fundamental to business growth. Europe's position in the global market needs promotion. For this to happen, free trade and public-private partnerships need to be at the top of the agenda.
The EU must also provide SMEs with favourable framework conditions to reflect their importance as employers and innovators. A couple of examples of the things which could be targeted are the simplification of procedures for business start-ups. Businesses shouldn't be penalised for complying with legislation. The costs for implementing legislation need to come down.
The issue of skills is another area with room for improvement. Entrepreneurship must be stimulated both in schools and throughout people's working life. For Europe's youth, this means improving their mobility opportunities. Improving employment regulations and social security systems to encourage businesses to create new opportunities holds benefits for the whole population.
And finally, as I stated at the start of my answer, sustainability is crucial. Business must be recognised as part of the climate change solution and Eurochambres calls for an international climate change agreement that effectively engages the world's major emissions producers, while not impairing European competitiveness.
In all of these areas, Eurochambres is committed to engaging ever more effectively with EU decision-makers to ensure that their policies reflect the needs of the business community.
Which commissioner will have the most influential role in helping your members?
All of the new commissioners will have a substantial effect on businesses around Europe. It is vitally important that all commissioners keep in mind the business perspective in their dossiers. The economy should be a horizontal concern and as such needs to be taken into account in all areas tackled by the new College.
How can the EU help businesses make better use of the internal market?
This can be done, first and foremost, by pulling down existing barriers. I refer specifically to barriers in certain sectors, such as services. In this case, the full and correct implementation of the Services Directive by all member states bears the potential to eliminate barriers and thus for companies to cut costs and save time when willing to provide services in another EU/EEA country.
While this is a sectoral, though relevant, example, the EU should also act horizontally to help businesses make better use of the internal market. The EU should, for example, push forward the Better Regulation agenda, enhance the usability and efficiency of currently underexploited networks, such as SOLVIT, and push member states to properly implement the principles and actions of the Small Business Act (SBA). On the SBA, a recent Eurochambres survey shows that its implementation is rather disappointing in several member states.
We are also eager to see the Monti report on the relaunch of the internal market to be published later in spring – and hope that business needs will be properly addressed there.
Progress on the modernisation of the European patent system is long overdue. We have supported the efforts of the Swedish Presidency to get a political agreement during the last Competitiveness Council in December. However when there is no agreement on everything, there is agreement on nothing. And this is particularly true of this issue. There is a lot still to be solved, such as the legality of the litigation system, the language and money issues. We believe it is high time to reach compromises and offer an answer to business needs. Eurochambres will definitely participate in this effort.
What needs to be done to open up opportunities for European business in foreign markets?
We need to conclude the Doha round of multilateral trade negotiations as soon as possible. This round can bring demonstrable benefits to EU companies and especially SMEs in terms of rule-making. More transparent and predictable rules reduce the risks for SMEs doing business abroad. Trade facilitation, for example faster customs clearance, can reduce costs. SMEs also stand to benefit from changes to market access, investment and services. All of this however requires the Doha talks to conclude.
Bilateral/regional free trade and association agreements could serve as useful tools for European businesses operating in foreign markets, but any trade liberalisation in those markets must also reinforce the agreements reached within the World Trade Organisation (WTO) umbrella. Another step which should be taken is to intensify the negotiations on mutual recognition of provisions and international standardisation, because these are increasingly being used by third countries as non-tariff barriers.
What practical steps can be taken to solve the problems SMEs and start-ups face in accessing finance?
Businesses, particularly SMEs, have been suffering considerably because of reduced and more difficult access to finance over the past year. Moreover, reduced access to finance has (and partly still is) been coupled by increased payment delays: this created a 'liquidity trap' for businesses, particularly small and medium. A survey conducted by Eurochambres among 200 European businesses during October and November 2009 shows that bank lending conditions over that period have become tighter for over 60% of respondents. At the same time, businesses have a responsibility to make the strongest case possible when requesting credit from banks.
To help SMEs accessing finance, the role and activities of the European Investment Fund (EIF), the main source of EU 'risk financing' for SMEs, could be further enhanced. Moreover, a stronger focus on the provision of risk and venture capital for innovative start-ups could be envisaged.
At national level, while most member states have put in place guarantee funds as well as measures to facilitate access to finance for SMEs, their impact is not yet adequately felt by businesses on the ground. There is thus a need to fill the existing gap between the availability of measures to encourage credit institutions not to restrict the availability of credit and the real tangible effect of these measures.
In this respect, governments could make available further risk-sharing guarantees (with the EIB/EIF) and act decisively to stimulate innovative businesses, for example by implementing temporary tax reductions for highly innovative companies. Member states should be emphasising the need to encourage the consumption of goods by their citizens. If people buy more, businesses will produce more. This knock-on effect will give businesses a more solid footing when showing the banks that they will be able to pay back any credit they are asking to be granted.
How can the EU help address the skills mismatch in the European labour force?
The mismatch between the skills available on the labour market and those actually needed by enterprises has been a very complex and serious problem in Europe for many years and is currently the number one challenge to small businesses' competitiveness.
A study conducted by the German Chambers of Commerce in 2009 has even shown that the lack of access to appropriately skilled labour in Germany is the main reason for the 'innovation gap' that many SMEs perceive.
So far the European Commission has contented itself by reporting on future skills requirements in Europe up to 2020 through the 'New Skills for New Jobs Initiative' without going beyond a purely descriptive analysis.
Surveys and studies will not remedy the problem. What we need is a set of different tools and policy approaches for identifying and addressing different forms of skills mismatch. The EU 2020 strategy must provide clear and definitive plans of how to finance lifelong learning systems intelligently and provide incentives for companies and individuals alike to invest in skills development on a sustainable basis. Those points are entirely missing from the current document.
In general, it is crucial that member states do not cut public spending on education and research. It is also important that accurate 'skills forecasting' is pursued: this means investment in relevant teacher education at primary and secondary level. A modern and flexible tax system is one way to give people outside of education a means to invest in their own skills portfolio, thus enlarging the number of participants in lifelong learning.
Do you think there are reforms that can be carried out which would set Europe on a road to sustainable recovery?
There are reforms which should be carried out if Europe wants to regain the road to sustainable recovery.
Firstly, Europe needs to regain competitiveness. Not only has the Lisbon Strategy failed, but the economic and financial crisis has highlighted the 'competitive problems' of specific countries, such as Ireland, Spain and Greece. Only labour market reforms which address the challenge of demographic change through enhanced flexibility and increased productivity can give Europe the push it needs to regain competitiveness and take a decisive step to the road to long-term, sustainable recovery.
The EU also needs increased and better targeted investments in innovation and Research & Development. EU countries spent on average, as a percentage of GDP, less on R&D in 2007 than they did in 2000, before the launch of the Lisbon Strategy! In comparison with the US and Japan for example, Europe lacks particularly private investment in innovation and R&D. In this respect, we have high expectations with regard to the Commission 'Innovation Act', to be presented shortly, as well as the Commission proposals in the framework of the EU 2020 Strategy.
Lastly, the fiscal situation in many EU member states (and particularly within the euro area) will make a sustainable recovery even more challenging. The budgetary situation is perilous in several member states: no recovery will be fully sustainable as long as the strong fiscal deterioration caused by the recent crisis is not brought to a halt through balanced, but bold, welfare and fiscal reforms.
