Ministers give green light to Small Business Act

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EU industry ministers yesterday (1 December) approved the Small Business Act (SBA), accompanied by an action plan to alleviate the immediate effects of the current economic crisis.

The SBA should make it easier for SMEs to access funding and reduce their administrative burdens, while enabling them to fully benefit from the opportunities offered by European and international markets. 

Green light to Small Business Act 

Industry Commissioner Günter Verheugen described the SBA as “the most ambitious project the Commission has ever proposed,” saying it now had to be quickly implemented. The complementary action plan identified better access to finance and the market among SMEs’ most urgent concerns. 

As already outlined in the Commission’s economic recovery plan presented last month (EURACTIV 27/11/08), the European Investment Bank (EIB) will increase its lending to SMEs to €30 billion by 2011, of which €15 billion shall be made available in 2009. 

Ministers also stressed the need to further reduce red tape, while Germany and others also suggested temporarily raising the state aid threshold, said French State Secretary for SME Policy Hervé Novelli. He added that discussions would continue at today’s meeting of finance ministers and at the European summit on 11-12 December. 

Discussions continue on European Private Company 

No agreement could be reached on the proposal for the European Private Company Statute, which should facilitate SMEs to set up and run business across EU borders. However, Novelli referred to the “great deal of progress” made and said he was confident that all obstacles could be removed under the incoming Czech Presidency. 

No agreement on Community Patent 

The French Presidency had also hoped to reach agreement on the Community Patent. The proposal would allow individuals and companies to obtain a single patent throughout the EU and is another key demand by small businesses, but in the end member states did not find a common position on how it should be set up. 

“Technically we are very close to an agreement,” but the “political obstacles” proved to be too high, Novelli said. 

Support for world-class innovation clusters 

Ministers also called for closer ties between industry and science in developing “world-class” innovation clusters, particularly aimed at helping innovative SMEs to promote technology transfer and support the sector’s internationalisation by removing barriers to trade, mobility and free movement of knowledge (EURACTIV 20/10/08). 

Positions

The Conservatives in the European Parliament welcomed the SBA's adoption, saying "in these difficult times, the best thing the EU can do is to get off entrepreneurs' backs". Internal market spokesman Malcolm Harbour said the SBA "could have been more ambitious" but "does lay the groundwork for less red tape, and legislation better tailored to micro-enterprises". 

He called upon the governments to act, saying: "There is now no excuse: whether in Brussels of Whitehall, we all have a duty to think small first". 

Philippe de Buck, Director General of BusinessEurope, the European business lobby group, criticised ministers for failing to agree on the European Private Company Statute. “We are very disappointed with this outcome. We never imagined that a tool that would have help SMEs to expand across borders would face so many difficulties. Member states have missed an opportunity to show commitment to implement one recommendation of the Commission’s recovery plan."

Background

The Small Business Act (SBA) is a flagship project of the current French Presidency and enjoys strong support from the European Commission, which proposed the text in June 2008.

The initial idea was to put SMEs at the forefront of decision-making and shift the focus of EU job creation policies from large to small businesses came amid fears that competition from low-wage countries like China and the relocation of heavy industry to Asia could cause major job losses. 

But the current financial and economic crisis has shifted the focus to measures aimed at securing the survival of a sector, which has been severely hit by the collapse of banks and decreasing liquidity in the market. 

99% of EU companies are SMEs, accounting for roughly 70% of EU jobs and GDP. In this context, the preparation of a Small Business Act (SBA) to help boost the competitiveness of those companies was one of the key measures announced in the Commission's package for the 2008-2010 cycle of the Lisbon Growth and Jobs Strategy, adopted last December. 

Timeline

  • 11-12 Dec 2008: EU summit set to approve the Council conclusions. 
  • Spring 2009: Parliament expected to give SBA the green light. 

Further Reading

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