EU to cut red tape for small firms

Europe’s 23 million small businesses were today promised “less red tape and more red carpet” to help them thrive.

Small and medium-sized firms are crucial to Europe’s development, said the European Commission, but they face “enormous” bureaucratic obstacles.

Now a new plan – the Small Business Act for Europe – is designed to cut the headaches and boost the benefits for entrepreneurs.

SMEs – firms with fewer than 250 workers – make up 92% of all EU businesses. And their success is seen as central to the success of long-term EU jobs and growth plans.

However, the complexities of small business life are now seen as such a threat that the Commission has set out new pledges in the Act.

Commission President Jose Manuel Barroso commented: “This is a step towards a Europe of entrepreneurs with less red tape and more red carpet for SMEs.

“The Small Business Act will mean more responsive public administrations, less late payment of invoices, access to more help with finance, innovation and training, lower VAT for services supplied locally and better access to public procurement contracts.”

Industry Commissioner Gunter Verheugen said the idea behind the Act was the principle of “Think small first”, adding: “The Act brings the full weight of the EU and its member states behind small companies. Together we can deliver.”

The Commission is now urging EU governments and Euro-MPs to give the package of measures swift approval, to get it up and running as soon as possible.

The UK’s Federation of Small Businesses welcomed any moves to ease the “disproportionate” burden that red tape often places on small firms.

The FSB has called for the Act to contain four “quick hit” actions that would improve the environment for small businesses.

Tina Sommer, FSB EU and International affairs chairman, said: “Small businesses will make a vital contribution to bringing Europe out of its economic gloom, but the EU must release them from their administrative shackles and allow them to fulfil their potential.

“The Small Business Act provides a critical opportunity to give Europe’s entrepreneurs a better deal. The Commission’s proposals are a good place to start, but national governments must significantly beef up this document for it to offer tangible benefits to all small businesses.

“This may be an act for small businesses, but it must have bigger ambitions and concrete actions to be considered worthwhile by Europe’s entrepreneurs.”

The FSB wants to see special measures particularly to help “micro” firms - those employing fewer than 10 people.

David Frost, director general of the British Chambers of Commerce, said: “The desire to think small first is a welcome development but this publication is unlikely to produce the shift in policy we were led to expect.

“This is a mish-mash of watered down proposals and initiatives with a questionable amount of political will attached to it from the member states. There are some useful aspects here, such as a dedicated test for small firms in all EU impact assessments, but there’s very little else.”