Small Business Act approved by EU

European Union

The Council of Ministers, the EU’s most important decision–making body, has approved the Small Business Act (SBA) for Europe, which includes a three–stage action plan to help small firms through the economic downturn.

European Union

The three priorities highlighted were to give all SMEs in the EU better access to finance, reduce their administrative burden and help them to benefit from European and international market opportunities.

Though not legally binding on EU member states, the action plan includes a mixture of legislative proposals, such as giving those that trade in more than one member state new status as a European Private Company, as well as non–legislative commitments. The latter including providing small firms with better access to loans and introducing an ‘SME test’ to ensure all new laws are cost–effective for small firms.

The British Chambers of Commerce (BCC) welcomed the agreement but said that it did not go far enough. BCC European adviser Karen Clements said:

“We strongly approve of the SME test. It will make a difference in the longer term, as the EU Commission will have to quantify the costs and benefits for SMEs of each piece of its legislation. Legislators will become more aware of the disproportionate regulatory burden that SMEs bear compared to larger companies. They might now consider a more systematic approach to giving small firms exemptions or transition periods for new regulation.

“However, the Act does not go far enough — it should require all national governments to implement an SME test for all legislation. But the EU cannot force member states — it can only suggest that they do that,” she added.

No timetable has been given for delivery of the action plan. It is likely to be implemented in stages as all 27 EU member states have not yet agreed to each proposal.

The Institute of Chartered Accountants in England and Wales (ICAEW) welcomed the SBA, but said it lacked a clear timetable. ICAEW head of medium–sector issues Clive Lewis said:

“In order to have an impact on the everyday life of enterprises, European and national governments need to take a more modernised approach to SMEs across all policy areas”

“The ICAEW’s wish–list for the SBA made clear the importance of a timetable for action and a progress review mechanism to ensure accountability at EU and national levels. However, while accountability will be ensured via an annual review process, the SBA action plan falls short by not providing a timetable for delivery against all activities.”

For more information about the Small Business Act proposals, visit the EU Commission’s website

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