De-railed by Le Crunch

Small businesses are feeling the squeeze.

Industry commissioner Günter Verheugen has made cutting red tape his mantra. He described the SBA as, “The most ambitious project the Commission has ever proposed.” Indeed, the political agreement reached by the industry ministers is welcome and as Verheugen urged, national governments should implement the SBA without delay.

For the Act is intended to make the lives of Europe’s vast band of small and medium enterprises (SMEs) easier. For example, it calls for the introduction of a single date for the entry into force any EU legislation that is relevant to SMEs. This could help businesses that do not have the time or resources to devote to monitoring EU political developments throughout the year, to be on top of policy and legislation that affects them.

With their eyes very much on the financial crisis, ministers advocated several initiatives designed to work hand-in-hand with the SBA to give some short-term support to struggling entrepreneurs.

They all backed an action plan to make life easier for small firms to get access to finance and to the market, although details of the plan were thin on the ground. Another popular idea is to lighten up on state aid controls designed to stop governments from giving their companies an unfair competitive advantage over rivals.

A little ray of sunshine

A ray of hope beamed specifically on the scientific community was the support ministers gave to the Commission’s strategy for nurturing innovation clusters around the EU, with the agreement that industry and academia should work closer together to foster technology transfer.

UEAPME, (Union européenne de l’artisanat et des petites et moyennes entreprises), the trade group representing small businesses, welcomed the outcome of the ministers’ meeting. The conclusions adopted are a positive signal for European SMEs, believes the body’s secretary general Andrea Benassi.

Ministers, “have fully embraced the think small first,” principle and showed a clear understanding on what must be done to improve SMEs’ access to finance, reduce administrative burdens and tear down barriers to the completion of the internal market,” said Benassi. “The action plan shows that member states are aware of the difficulties SMEs are facing and of the positive role that the Small Business Act can play to tackle the current economic downturn,” she said.

The European Parliament must give its opinion about the SBA before it can be taken up by national governments. Expect little resistance. The Parliament should give its backing by next spring.

That should be music to the ears of anyone who’s experienced the labyrinthine and enervating processes that go with accessing any EU assistance to small businesses.

However, it was the only significant achievement by the Union’s 27 industry ministers, who were presented with an ambitious agenda by France, holder of the six month rotating EU presidency.

So, there was no breakthrough in agreeing to create a single community patent, as was hoped six months ago. No agreement either on the European Private Company Statute that would allow small firms to expand beyond national borders.

For once a lack of progress could not be blamed on national infighting and factionalism. The French Presidency has witnessed the unravelling of the global financial system and ministers were right to focus their minds on the ongoing economic turmoil, and on measures that could work hand-in-hand with the SBA to give short-term support to struggling entrepreneurs.

After all, without entrepreneurs there would be no patents, Single European, or otherwise.