The discussions on the new EU budget covering the period from 2014 to 2020 have commenced and Malta is eagerly awaiting the outcome.

For a small member state like Malta, the EU’s global budget of €971.5 billion spread over a seven-year period is indeed a staggering figure.

The new (EU) budget for 2014-2020 presents a window of opportunity for Malta’s competitiveness- John A. Huber

To put things into perspective, the figures related to cohesion policy and the future financing of the EU’s structural funds are indeed extremely important from an investment point of view.

From a Maltese business perspective, economic operators seeking financial aid to improve and expand their commercial set-ups are anxious to learn the fate of Malta’s share of the new budget. Experience over the past recent years has amply demonstrated the vital contribution that EU funding has had in maintaining a steady rhythm of economic growth.

Capital expenditure has contributed to the modernisation of the country’s infrastructure while the assistance and grant schemes administered by Malta Enterprise and the Malta Tourism Authority, among other bodies, have secured a leverage impact on several local businesses that, in turn, financed additional investment.

Maltese business should, however, keep in mind that the EU budget is not simply a matter of financial disbursements and the distributive allotment of funds via cohesion policy. It would be a short-sighted and over-simplistic understanding of what is at stake for the EU’s future economic development post-2013.

Clearly, Malta needs an informed national debate on the shape, scope and implications of the new EU budget for all stakeholders. The Malta Business Bureau shall take the initiative on such a debate on behalf of the private sector.

We believe that the debate should not be reduced exclusively to an accounting exercise pitting the winners against the losers in the eventual cohesion-related financial allotments to be obtained by the respective countries once the final budgetary package is approved. It is our conviction that the EU budget must be harnessed for enhancing the competitiveness of our industries and help them generate sustainable jobs.

The new budget for 2014-2020 presents a window of opportunity for Malta’s competitiveness. It also offers an array of innovative developments, novel concepts for the organisation of EU funds and, above all, an overall clear linkage between expenditure and the competitiveness-related objectives of the Europe 2020 strategy.

Competitiveness is the keyword that should underpin the 2014-2020 EU budget for it to deliver the necessary reforms implicit within the Europe 2020 strategy. Some of the proposed changes in the EU budget are decidedly welcome by business, particularly the increase in funds for research and innovation and the inception of a connecting Europe facility. This is an initiative conceived to finance the missing infrastructural links in the energy, transport and information technology within the EU’s internal market. The proposed part-financing of the underwater electricity inter-connector between Malta and Sicily within the draft proposals is indeed encouraging.

Equally important is the earmarked support for SMEs, with a new instrument, entitled Competitiveness and SMEs Programme, which, for the first time, also integrates tourism-related activities within its financing remits.

Nonetheless, this represents a small percentage of the overall budgetary package post-2013. We acknowledge that money is not the solution to all competitiveness-related ills, however, more can be done for ensuring the success of small businesses in the EU. Much more needs to be done to address, for instance, the EU regulatory overburden on small business.

The fine-tuning and further simplification of the EU structural funds programmes is a case in point.

On cohesion policy, the major development of interest to Maltese business is the proposal to introduce a new category of region – transition regions – to replace the current phasing-out and phasing-in system. This category will include all regions with a GDP per capita of between 75 per cent and 90 per cent of the EU-27 average. Malta will most likely fall within this new category given its present GDP per capita, now standing at 81/82 per cent of the EU average.

The launch of the Commission proposals marks the start of what is likely to be a long, drawn-out debate in-between the EU institutions and the member states represented in the Council. Malta has to be actively present in this debate and not least the local private sector.

Now that the substantive details, along with the official proposals on the new programmes and regulations concerning the diverse funding programmes, are being progressively unveiled, it is the MBB’s intention to stand up and be counted in this critical debate for the long-term development of the country.

www.mbb.org.mt

The author is president of the Malta Business Bureau.