EU Summit: Reform the OJEU regulations and help Europe grow
Over the next 24 hours EU Prime Ministers gather for the latest Summit trying yet again to solve the EUs debt problems. They will also be considering how to boost growth through measures to help SMEs.
The Summit should look no further than abandoning requirements of the Official Journal of the European Union (OJEU) that significantly reduce the opportunities for smaller innovative companies and thereby severely impede growth and employment opportunities across the EU.
SMEs account for more than 99% of EU private sector companies and employ almost 70% of the European workforce while producing close to 60% of the overall turnover from manufacturing and services (SMEs and the environment in the European Union, European Commission). Meanwhile Government spending continues to be the single largest element in all economies (averaging close to 44% of GDP across the EU (Eurostat, Statistics in Focus, 13/2011). But innovative SMEs do not have the resources to jump through the hoops of OJEU regulations. These massively inhibit innovative SME growth in domestic economies which, in turn, severely limits such companies developing internationally.
Fundamental growth comes from innovation and often it is SME's that have the technologies, mindset and solutions; even more so when big companies are cutting back. However, while barriers to new entrants have fallen massively in the private sector, OJEU rules remain a fundamental break on innovation. Without an urgent root and branch overhaul of OJEU rules as regards innovative SMEs, significant growth will not occur.
Immediate policy changes should include taking all companies with sales of less than E50m out of the requirement to comply with OJEU regulations, This would apply to contracts worth under E2m annually with Governments enabled to fund cash flow requirements of such companies directly as the banking system is often unable to lend to SMEs due to strained Bank balance sheets.
