Commission expects bankruptcy surge in 2009

Arndt Kirchhoff, chair of the  BusinessEurope 's SME committee, said the revamped directive is badly needed to inject cash into the system and keep companies in business, adding that the credit crunch will ruin thousands of sound companies. 

"Adequate access to finance must be secured to stop viable SMEs going bankrupt. The rapid adoption of the Late Payments Directive is essential as governments are delaying the release of money and this is making matters even worse," he said. 

Kirchhoff said the Small Business Act has good answers to many of the problems facing SMEs, but its implementation is crucial if companies are to feel its impact quickly. 

Valia Chilova, managing partner at marketing consultancy company  Marketor and a candidate in the forthcoming Bulgarian national elections, described SMEs as "the blood of the economy," but said the government in her country has failed to adopt around half of the measures proposed by business organisations. 

She was also critical of what she described as a lack of information on the precise impact of the crisis and the slow pace of response from politicians. "Up to the end of last year, we were told there would be no crisis in Bulgaria, that we were in a strong position, which turned out not to be the case. Over the past four or five years, more than €30 billion in foreign direct investment has entered Bulgaria, but it was invested in the construction sector, and now there is no cash in the market."

Chilova added that EU funds are no longer flowing to Bulgaria, and SMEs in South Eastern Europe face particular difficulties in attracting investors due to a lack of trust. 

Luuk Borg, director of the secretariat of  EUREKA , a pan-European network for R&D, said the ongoing crisis is not the only reason to tackle bureaucracy, and all administrators have an obligation to cut red tape. However, he said some procedures are necessary in order to guarantee that public money is spent properly. 

Borg said the Commission has been working to deal with bureaucracy and to make R&D more accessible to SMEs. "However, a high success rate for applications is important. You cannot ask people in small companies to spend time and money on research applications if only 8% of them will ultimately be successful," he said. 

The session was moderated by the founder and publisher of EurActiv.com, Christophe Leclercq, who noted that SMEs as well as EU representatives are calling for changes in public policy to address the ongoing crisis. 

"Typically, businesses fight against intervention but now they are engaging with policymakers. This could lay the groundwork for a greater consensus of what public policy should be," he said.