Small- and medium-sized enterprises across the EU are being stymied by a lack of access to affordable finance, MEP Marlene Mizzi has said. 

MEP Marlene Mizzi.

"Current instruments are insufficient," Mrs Mizzi told her European Parliament colleagues during a plenary session in Strasbourg.

"Many SMEs find themselves in a Catch-22 situation - they cannot grow or start because they do not have the funds, and funds are not given to them because they are not established. Such a situation is a damper on entrepreneurial talent and job creation possibilities." 

Mrs Mizzi argued that the EU needed to pay greater attention to SMEs and micro enterprises, which she said accounted for 99 per cent all of EU businesses and provided about two-thirds of employment across the 28-nation union. 

"They are the backbone of the EU economy and are responsible for 85 per cent of newly-created jobs. Creating the right environment and protecting them is a must," the MEP said. 

Aside from simplifying their access to finance, the European Commission and member states could help SMEs by cutting red tape, better informing entrepreneurs about training and procedures and improving the system by which EU funds were used, she added. 

Earlier this year, Prime Minister Joseph Muscat openly attacked local banks, saying the economy was growing in spite of their reluctance to lend. The government has also said that it intends on using a newly-established development bank to provide access to finance for SMEs.