There are two particularly important measures in the Budget for next year that could further help in the effort to boost more economic activity: the setting up of a fund aimed at helping very small firms and the allocation of more funds to Malta Enterprise. Both fit well into the government's work to help generate new jobs in today's recessionary times.

Very often, when people talk about manufacturing industry they tend to think only in terms of firms employing hundreds of workers. Very important, too, however, is the ever-growing cluster of small firms. A number of companies that are today in the forefront of Maltese industry started out as one-man operations at a time when the country was still heavily relying on defence spending and when Malta had not yet started its industrialisation programme.

Funds of the type that helps people start up new businesses could well serve as a spark that fires greater entrepreneurship. In Europe, as in other parts of the developed world, small businesses are considered as the lifeblood of the economy. They are estimated to provide over two-thirds of all private sector jobs.

Although the European Union defines SMEs as having fewer than 250 employees, over 90 per cent of all EU businesses in fact have only between one and nine employees. According to Eurostat figures compiled some three years ago, seven per cent have between 10 and 49 workers and only one per cent have between 50 and 250 employees. Just one per cent are defined as large enterprises. Small firms in Europe provide 75 million jobs.

The government is launching its new micro-credit fund just over four months after the European Commission announced a €100 million finance facility to help unemployed people start small businesses. At its launching, Employment and Social Affairs Commissioner Vladimir Spidla said that the economic crisis was expected to lead to 3.5 million job losses this year.

He explained: "The financial crisis has dried up credit to those wishing to start or develop their own businesses. In the current recession, we want to offer a new start to the unemployed through easier access to credit to set up or develop new businesses. And we want to help small businesses to develop further despite the crisis. This will help create new jobs. The EU can provide real added value by maximising leverage in cooperation with the EIB Group, giving more people a chance to realise their dreams as entrepreneurs."

The Maltese government is setting aside €10 million for the fund it decided to set up but Finance Minister Tonio Fenech said that, if the demand justified the investment, the EIB was prepared to provide a further €10 million to the fund. According to the minister, 1,500 small businesses could benefit through the new fund.

In addition, small businesses will benefit further from a 40 per cent tax credit up to a maximum of €25,000 if, over the next two years, they invest in upgrading their premises, machinery, technology and energy-efficient systems. The maximum figure has been considered low in some quarters, something that could possibly be looked into as the scheme is put into force.

Budding entrepreneurs would, no doubt, welcome easier loan drawing facilities but this would also need to be backed up by a serious commitment to reduce any bureaucracy that small firms could come up against as this may sniff out their entrepreneurial spirit before it has any chance to develop.