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News - 26 June 2008

Small businesses have a large footprint in Europe

The Federation of Small Businesses (FSB) believes that small businesses can help bring the European Union out of its economic malaise. But Brussels needs to work with them and not against them to make it happen.

The call came in advance of the publication of the long-awaited EU Small Business Act. The Act will set a framework for how the European Union deals with small businesses. It is intended to embed the EU's 'think small first' principle into future legislation to take account of the disproportionate burden that red tape often places on small enterprises.

Although it is made up of small entities the SME sector is huge in terms of numbers of businesses and people employed. The sector makes up 92% of all EU businesses and employs almost half of the UK workforce.

Professor Phil Whyman, senior economics academic has backed the FPB’s campaign saying that small businesses are the, "backbone of virtually all economies".

He adds, "Consequently, what happens in this sector matters greatly to the future of UK PLC," said Prof Whyman. "Small businesses also have the potential to be more customer-focused than their larger competitors, often operating in niche markets, identifying new opportunities and satisfying market demands that would otherwise remain unfulfilled."

The FSB has called for the Small Business Act to contain four 'quick hit' actions that would improve the environment for small businesses:

  • Regulatory exemptions for micro enterprises (ones employing fewer than 10 staff);
  • A small business element to impact assessments;
  • EU common commencement dates (single days when new regulations come into effect to give a clearer overview of the volume of legislation and allow businesses to plan ahead);
  • A consultation period of at least 12 weeks.

These four points are expected to feature in the European Commission's draft. But the FSB is concerned that the draft contains too many caveats and is demanding the better regulation agenda be firmly set in stone when the Act is negotiated in the Council of Ministers during the coming EU French Presidency.

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 European 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.

"As Europe's economy continues to slow down, our message to the EU is: help small businesses to help you.

"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."

Read related items on:
Federation of Small Businesses
Sommer, Tina

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