Scroll to top

Small businesses are our economic engine – let’s look after them

When economies are struggling, we look to small businesses to do the heavy lifting in the process of recovery.

When times are better, they provide the innovation, enterprise and sheer energy which sees that growth stays on track. They ensure boundaries continue to be pushed, niches are filled and corporate complacency is never allowed to blunt competitiveness.

In other words, they keep our economy sharp and nimble and ensure we make the best of the boom.

So my message is that we must cherish our small businesses, especially our start-ups and fledgling enterprises. They are our economic engine. We must value them, give them a fair deal and protect them from the forces that would overwhelm them before they even get going.

As a member of the European Parliament’s Employment Committee, I try to be constantly on the look-out for ways of boosting the prospects of small and medium-sized enterprises (SMEs) – as well as eternally vigilant against the potential legislative measures that might damage them and hold them back.

I fear that many politicians, particularly on the left of the parliament, simply do not understand that nearly every element of workers’ rights or piece of social engineeering which they try to supercharge or gold plate is just another hurdle to bring down new enterprise – a further barrier to jobs and growth.

Over-regulation never protects jobs – it merely stops them being created in the first place. For big businesses, red tape is a nuisance and drain on resources – but for small businesses it can be deadly.

Pleasingly, though, I can say that gradually this message about the Importance of smaller business is getting through. Whatever you make of climate change in terms of global weather, in Brussels the atmosphere is warming for SMEs and the permafrost is starting to thaw.

Of course not everything is suddenly perfect, but increasing numbers of MEPs and certainly many leading figures in the EU Commission now seem to “get it” when it comes to SMEs.

They realise how even a little regulatory interference can have a hugely disproportionate effect on smaller enterprises. They are even starting to understand the law of unintended consequences –  how SMEs bear the brunt when seemingly-benign legislation brings out nasty side-effects once enacted.

What evidence is there for this shift in mindset?

Once example is this. When I recently helped negotiate a new “Inter-institutional Agreement” for the EU – a blueprint for how the Commission, Parliament and Council should work together – not only did it include a section on better law-making, but we succeeded in introducing an Annual Burden Survey.

It means that every year a report will examine how legislation is effecting businesses and jobs. It will not only detail what the EU and member sates are doing to reduce legislative burdens, but also clearly identify where national governments are gold-plating regulations to make them even more onerous to business than necessary.

A second example: we are already receiving a lot of interest in a report on the so-called SME test, for which I am most grateful to Patrick Gibbels. He prepared the report for the policy group on better regulation which I chair for my political group the European Conservatives and Reformists. It covers the idea of standardising the SME test as a way forward for better regulation for small businesses.

The SME test is seen as a way of promoting the “Think Small First” principle and making sure new legislation does not impact upon small businesses disproportionately or inadvertently. However, the report finds the principle is not gaining sufficient ground because there is no standardised or EU-wide test.

It calls for a standard test across the EU – to include consultation with SME stakeholders, identification of affected businesses, impact measurement and an assessment of alternative mechanisms and mitigating measures.

To get such a radical shift in perception over SMEs even so far as the Commission’s in-tray is an achievement and a sign of the slow but real progress which we and the ESBA are making.

Many politicians think that what they do creates jobs. We realise that it is businesses which create jobs – while politicians have a bad habit of getting in the way. We just need to break it to them gently.

Related posts