UK and France urge EU to do more to help small businesses | Business News | News - Expertise in Open Source Business Development

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UK and France urge EU to do more to help small businesses

The leaders of Britain and France urged the European Union on Wednesday to do more to help small businesses and to boost firms' access to finance at a time when funds are scarce because of the credit crunch. "We are writing to you to express the high priority that we attach to Europe promoting the growth of small and medium-sized enterprises (SMEs)," Prime Minister Gordon Brown and French President Nicolas Sarkozy wrote in a letter to European Commission President Jose Manuel Barroso and other EU leaders.

"Their continued success is key to the future prosperity of the European economy," they wrote.

The letter is the latest joint initiative by Brown and Sarkozy, who won backing from EU leaders last month to study if sales tax on green products could be cut.

Brown and Sarkozy, joined by the leaders of Germany and Italy, also proposed measures in January to tackle global financial turmoil, including backing closer economic cooperation.

France's partnership with Germany has been the traditional engine of the EU, but Sarkozy said during a visit to London last month he wanted a new "Franco-British brotherhood".

In their latest letter, released by Brown's office, Brown and Sarkozy said they supported plans by the EU's executive Commission to propose a Small Business Act later this year.

They said they were concerned that there were areas where SMEs' access to commercial loan finance and venture capital was not ideal.

"The market alone does not provide sufficient finance for the start-up or expansion of innovative high growth businesses. This difficulty in accessing commercial finance has been made worse by recent developments in the financial markets," they said, referring to the global credit crunch.

COMPELLING CASE

They said there was a "compelling case" for action by the European Investment Bank (EIB) to improve the flow of finance to SMEs which were "finding it more difficult and more expensive to access the credit they need to finance their longer term strategic investment plans."

EIB President Philippe Maystadt has already said he will make proposals to the bank's board in June to "modernise and diversify" the way in which the EIB provides loans to SMEs.

Brown and Sarkozy said it was vital for the EU to create a policy framework for small and medium-sized businesses that:

improves SMEs' access to the EU's single market and to export markets
takes better account of the disproportionate impact regulation can have on SMEs
enhances the competitiveness of European SMEs, in the face of challenges from emerging economies, by improving the skills of their workforce
helps SMEs compete for public contracts
encourages entrepreneurship throughout European societies, beginning in primary school.

Brown and Sarkozy promised to take forward the Commission's proposals for a Small Business Act during the French presidency of the EU that starts on July 1.

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