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European Commission says small business vital for European jobs recovery

On the 9th of January 2013 the European Commission unveiled an action plan to “revolutionise entrepreneurial culture in Europe”.

In launching the plan EU Commissioner Antonio Tajani said:

"Above all we are talking about getting across a strong political message on the part of the EU Commission. As part of the re-launch of the industrial policy we want to focus on entrepreneurs, come up with new ideas and new ways of looking at entrepreneurship,"
"We have tried to come up with a proposal to remove obstacles to allow our economy to grow and therefore to effectively fight the crisis..."

The focus is on small and medium sized businesses to improve access to finance, reduce bureaucracy, and encourage second chances for bankruptcies that occur due to late payments.

The EU plan is available here.

We’ve extracted relevant parts of the report below to provide an overview summary

Brief ICA comment: It’s pleasing to see the EU formally recognise the importance of small business entrepreneurs to economic and jobs growth. We agree with the Commission that, without small business entrepreneurs, European economic jobs growth prospects are grim. The policy proposals look fine as they stand but unfortunately, typically of SME growth policies across the globe, the emphasis we see is on medium-sized businesses, not truly small business and there is certainly no recognition of the role of self-employed people. We don’t see the Commission taking as strong a cultural and policy shift as is needed to really ignite self-employed entrepreneurship.

Further, probably the most important policy is the reduction of small business regulation, particularly in the area of employment regulation. But given the history and culture of the EU, and in particular the European Commission, the prospects for the necessary scale of change, to make a difference, is probably remote.

Summary EU Entrepreneurship Plan

Extracts from the European Commission Plan, January 2013. (Headings by ICA)

The European Problem and fine ideals

Since 2008 Europe has been suffering the effects of the most severe economic crisis it has seen in 50 years: for the first time in Europe there are over 25 million unemployed and in the majority of Member States small and medium-sized enterprises (SMEs) have not yet been able to bounce back to their pre-crisis levels.

To bring Europe back to growth and higher levels of employment, Europe needs more entrepreneurs. It is based on three pillars:
  • developing entrepreneurial education and training;
  • creating the right business environment;
  • role models and reaching out to specific groups.
To make entrepreneurship the growth engine of our economy, Europe needs a thorough, far-reaching cultural change.

The principle of "think small first" must become the touchstone of European and national policies.

We must work on ensuring that being an entrepreneur is an attractive prospect for Europeans.


The specifics

New businesses need specific care. There are six key areas where action is needed to remove existing obstacles impeding their creation and growth:
  • Access to finance
  • Support for entrepreneurs in the crucial phases of the business lifecycle and their growth
  • Unleashing new business opportunities in the digital age
  • Transfers of businesses
  • Bankruptcy procedures and second chance for honest entrepreneurs
  • Regulatory burden reduction.
The Commission will:
  • Finance programmes aimed at developing a market for microfinance in Europe,
  • Facilitate the direct access of SMEs to the capital market through the development of an EU regime for venues specialised in the trading of shares and bonds issued by SMEs)
The Commission will:
  • Revise the rules prohibiting certain misleading marketing practices40 to make them more robust and strengthen enforcement against such practices in cross-border cases.
  • Unlock the full potential of the Digital Single Market for SMEs by tackling existing barriers to cross-border online business.41
  • Continue the development of the Erasmus for Young Entrepreneurs programme to meet the increased demand for participation from new entrepreneurs across the Single Market42
  • Encourage exchanges of young entrepreneurs between the EU and third countries
  • Help Member States develop integrated support schemes through capacity building seminars financed by ESF technical assistance, involving relevant stakeholders including education and training providers to develop integrated strategies and setting up of specific actions, notably for young entrepreneurs.
The Commission will:
  • Foster the knowledge base on major market trends and innovative business models, by establishing an online Market Monitoring Mechanisms and a Scoreboard,
  • Raise awareness through a Europe-wide information campaign for entrepreneurs and SMEs on the benefits from the new digital evolutions;
  • Facilitate networking to sparkle and support new business ideas,
  • Launch specific actions for Web entrepreneurs
  • Strengthen competences and skills by intensifying its E-skills actions to improve e- leadership skills, scientific and creative disciplines, and managerial and entrepreneurial skills to address new technological and markets.
The Commission will:
  • Continue to vigorously pursue the reduction of regulatory burden in EU proposed legislation especially in areas where such burdens are the highest.
  • Indicate how it will go about reviewing and revising EU regulation to reduce the unnecessary or excessive burden in areas identified in the' top ten most burdensome'.
  • Propose legislation abolishing burdensome authentication requirements for public documents which SMEs have to produce to conduct cross-border business within the Single Market.
  • Set up a working group to assess the specific needs of liberal profession entrepreneurs in relation to issues such as simplification, internationalization or access to finance.
The Member States are invited to:
  • Reduce time for licensing and other authorisations necessary to start a business activity to one month by the end of 2015.
  • Fully implement the ‘European Code of Best Practices facilitating SMEs’ access to public procurement’ by 2013.
  • Continue modernising labour markets by simplifying employment legislation and developing flexible working arrangements, including short-time working arrangements.71
  • Extend the Points of Single Contact to more economic activities and make them more user-friendly.

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