Governments stalling on Small Business Act, say business groups

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A coalition of business lobbies has slammed national parliaments for failing to implement the EU’s Small Business Act (SBA) one year after its adoption by enterprise ministers. However, the EU executive is taking a less hardline approach.

Three business organisations – BusinessEurope, Eurochambres and UEAPME – came together yesterday (2 December) to demand concrete action from national and regional leaders at a conference hosted by the European Economic and Social Committee. 

Success to date has been limited and there is a growing sense of disappointment on the ground, according to industry groups who placed the blame squarely at the door of governments. 

Ben Butters, director of European Affairs at Eurochambres, said quite a lot had been done in Brussels but there had been “a lack of engagement by member states”. 

“It’s surprising, in the context of the economic crisis, that measures such as cutting the regulatory burden on business and speeding up payments have not been taken. Simple action in these areas would be a quick fix for businesses but very little has been done,” he said. 

Butters called on the European institutions to put pressure on national governments to take the SBA more seriously. 

This assessment was echoed by Eric Sonntag, advisor for entrepreneurship and SMEs at BusinessEurope. He said SMEs had moved centre-stage in policymaking in Brussels, but not at national and regional level, where SMEs operate. 

He stressed the need for greater access to finance, particularly to fund innovation and research. “Banks remain risk averse and there is less money for R&D. Tax incentives could help to make investment more attractive, but again this is a matter for national agencies,” Sonntag said. 

Andrea Benassi, secretary-general of UEAPME, the small business lobby, said the Act had not brought the changes he had hoped for. 

“Some of the legislative proposals contained in the SBA package, such as the state-aid reform and reduced VAT rates, have been finalised and approved. However, they must be put to full use by member states to bring about concrete improvements,” he said. 

Benassi said the most significant shortcoming has been “the lack of respect” for the ‘Think Small First’ principle contained in the Act. 

Commission taking a softer stance 

However, Françoise Le Bail, the European Commission’s SME envoy, took a more conciliatory view. 

She said that just one year after the adoption of the SBA, a lot has been achieved. She pointed to the implementation of the ‘SME Test’, which ensures that EU legislation is business-friendly, the revamping of the Late Payments Directive and a major drive towards reducing red tape. 

Le Bail accepted that action has been mixed across the EU, with some national and regional governments performing better than others. Nonetheless she said there had been an important “change in mentality” towards SMEs. 

“Implementation is not complete but there is a growing awareness of the importance of SMEs and the trend is moving in the right direction,” she said. 

The Commission will give its own assessment of how the SBA is being implemented across Europe when it publishes a report on the issue on 15 December. 

This document will point to the crucial role of the European Investment Bank (EIB) in improving access to finance for small businesses and highlight countries and regions making most progess. 

To date, Italy and Belgium are the only two EU countries to incorporate the SBA into national policy programmes, while the Irish government has set up a working group to monitor implementation. The regions of Catalonia in Spain and Nordrhein-Westfalen in Germany have also been ahead of the pack in embracing the Act. 

The Commission believes implementation of the SBA is progressing well, but will continue to press for vigorous implementation at national level. 

Hungarian Socialist MEP Edit Herczog said the European Parliament is far more favourable to SME issue than it was five years ago. She said business organisations are not questioning the framework put in place by the European Commission and the European Parliament but are looking to national governments for action. 

"MEPs hope to use the Lisbon Treaty to work more closely with national parliaments to get satisfaction at the local level," she said. 

Herczog added that SMEs need access to staff with the right skills to prepare for the economy of the future which, she said, will focus on ICT and low-carbon industries. 

Henri Malosse, president of the Employers' Group at the European Economic and Social Committee, said it is essential that the Competitiveness Council adopts the European Private Company Statute in order to give SMEs access to the entire European market. 

The European Commission proposed the text of the Small Business Act (SBA) in June 2008 and it was adopted by the European Council in December that year (EURACTIV 02/12/08). 

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, amid fears that competition from low-wage countries in 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 small businesses, which have been severely hit by the collapse of banks and decreasing liquidity in the market. 

An estimated 99% of EU companies are SMEs, accounting for roughly 70% of EU jobs and GDP, and their flexibility is seen as a major motor of future innovation and job creation. 

The EU executive has already revised the Late Payments Directive in line with the commitments given in the SBA (EURACTIV 09/04/09), although business groups continue to complain of delays. 

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