The backbone of EU’s economy

Many people get the impression that Europe’s economy is dominated by large, multinational corporations because the business pages of newspapers tend to be usurped by news of their triumphs and failings, sometimes involving sums that rival Malta’s national economic output. The fact that these mammoth companies account for less than one per cent of all businesses in Europe is less well-known. Small- and medium-sized enterprises in Europe are truly the backbone of its economy. Few people are aware that two out of every three workers in the private sector are, in fact, employed by SMEs.

Add the fact that more than 90 per cent of these businesses employ fewer than 10 workers and it becomes clear that the building blocks of Europe’s economy are not only small but micro businesses. It is therefore of utmost importance that we give these businesses the necessary tools to enable them to be more productive and to be able to carry out their activities without unnecessary red tape and bureaucracy, which, despite the best efforts of policymakers, has mushroomed over the last few years.

Fortunately, the European Union has long been following this issue and had stepped up its efforts to support SMEs at the start of the credit crunch, such as credit support for small businesses through the micro-financing facility, which will be extended beyond 2013. The micro-financing facility, managed by the European Investment Fund on behalf of the Commission, is an innovative scheme designed to help see SMEs through the recent economic turmoil. It provides funds that are made available to national financial institutions, which, in turn, act as a guarantee on loans to small businesses.

In Malta, as reported in The Times last Tuesday, access by SMEs to finance from banks is only easier in Finland, out of all the 27 EU member states. The scheme is therefore only likely to really be exploited by SMEs in other member states, where credit is tight, but if the economic climate in Malta changes our small businesses can rely on the scheme to step in and provide support. Further, the facility also provides loans of up to €25,000 to entrepreneurs who seek to start up or develop their businesses. Given the entrepreneurial culture of the Maltese, I am confident that this will come as a huge boon to our economy.

As I have always stated, the ease of access by SMEs to finance is fundamental because any investment in SMEs translates into a direct investment in the economic growth of the country and in job creation. Notwithstanding the adverse conditions Europe is going through, our businesses have managed to keep going. We now have to step up the pace to try and recuperate lost ground.

The EU is aware of the undeniable fact that a good chunk of today’s students will be the businessmen and entrepreneurs of tomorrow and, with this in mind, it has already started focusing on specialised training to give these young men and women a head start. A good example of this is the Erasmus programme for young entrepreneurs, which gives young people the opportunity to be hosted within a business environment, giving them first-hand experience on the running of a business.

We need to create an atmosphere where small firms can expand and be successful. We need to instil this entrepreneurship mentality in the minds of the new generation. But it goes without saying that in order to do so we must also provide assistance and support, whether financial or technical, to those who intend to embark on a career in business.

Knowledge-sharing is also very important and is given a lot of prominence by the EU. Cross-border exchanges are encouraged and it has been proven that the exchange of ideas has been beneficial to businessmen across Europe.

We must also give due importance to business support organisations as these facilitate the work of SMEs and provide them with guidance, contacts and professional advice. All this activity will most definitely lead to the economic growth that every country yearns for. A strong, stable economy will produce a better business environment and a better future for our citizens.

Mr Casa is a Nationalist member of the European Parliament.