Report of the Third Business Forum
Ramon Masià, president of the Plus Europe Association, started the event by thanking all the participants for their presence in the name of Plus Europe, also mentioning the organizations that have supported the creation of this forum. Afterwards, he introduced all the people present around the table putting special emphasis on Joanna Drake, presenter at the forum and director of Entrepreneurship and SMEs in the Directorate General at the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs of the European Commission.
Ms Drake dedicated a few words to explain that the most important thing for her is the contact with the audience and that she has brought a script in order not to get lost. After all, she said jokingly, we all are becoming increasingly lazy. She also thanked Ramon Masià for the invitation and the introduction. Ms Drake has visited Barcelona several times and assures how much she likes the city, as well as its people. In reference to the latter, making a comparison with the people of Malta, she said that she admires their sense of community, inspiration and the sense of achievement that she sees every time she visits Barcelona.
Ms Drake started her speech by expressing that, working for the SMEs on a European level, it is difficult to find ways to make a difference for them. What can the European authorities do for us? Europe needs to reinvent itself in accordance with the necessities that emanate from the European Union (EU). The European Commission thinks the following: in Europe we have to help one another – so what can we do for the SMEs? In order to tackle this question, the Small Business Act (SBA) was created in 2008, which served as line of action. After all, a point of reference was needed to create the cooperation that has been consolidated during those last years. The most important points were that companies should have access to funds, to their clients, but also that they should adopt a culture of working with the public authorities. Ms Drake a very important topic, which is to have a climate, a pleasant ecosystem, on a regional or state level, which leads companies to innovate, which provides incentives so that the ideas of individuals can sprout and grow. She emphasized that we compare ourselves a lot with the United States but that we are very distant from them in this sense. Our system scares entrepreneurs because it acts as a threat and not as a help.
In Drake‘s opinion, we have to concentrate on growth, which means to concentrate on Mr Juncker‘s priorities. Those priorities of the Commission’s President are based on the idea of letting the member states do what they can while the EU concentrates on what the former cannot. Another priority is the single digital market, which would help the companies to grow through digitalization. A lot of young people have great ideas because they’ve had high quality education, but they are unemployed and cannot get their ideas in the market. Digitalization could help in this sense. The third priority that was mentioned are the capital markets. Are we making sure that we have a free market that allows the capital to be accessible to those that need it? Ms Drake made a reference to a BBC documentary about China in which was shown that it is improbable that a similar level of innovation will be achieved because a democratic environment helps to incentivize free thought. The problem is that the current system holds back ideas and blocks the entry to the markets. Ms Drake expressed as well that the Action Plan launched in 2013, in combination with the recommendations the European institutions give to the member states, are helping SMEs to get easier access to funding.
Another aspect that was highlighted by the speaker is the concept of internationalization, congratulating Barcelona, a city highly developed in this sense. Furthermore, she spoke about the brand “Europe” which, in her opinion, should be promoted alongside the national brands. In relation to the free trade agreement that is being negotiated with the United States, Ms Drake assured that the Commission is trying to achieve possibilities for SMEs to enter the American market more easily. In this sense, she explained what the European Semester is and how is affects the recommendations the member states are receiving.
Questions and comments
After the initial speech a questions and comments session was opened. The first question was about the actual situation, the economic, political and industrial changes that happened during the economic crisis, and how the lines of action that have to be followed by the SMEs are handled by the European Union. Ms Drake replied that they are working on other regulation, but that they do not know yet if the same lines of action as the SBA will be followed or if another type of strategy will be introduced. At the moment, the next step is to achieve growth for SMEs and this, in her opinion, should happen through innovation and internationalization. An important step, according to Ms Drake, is that they can grow through cluster activity. American companies do not do that. So they are very interested in signing agreements in order to see how we do this in Europe. This would make the access to their markets more easy for our SMEs.
The second question was about the alternative funding routes that are being proposed by the Commission for SME projects. It was commented that the Spanish Government, for instance, does not seem to be very open to this type of financing as in this country, bank financing represents 85-90% of total financing. For the speaker the key word in this sense is alternatives. What seems to result from all these conversations is that the SMEs do not have access to the money they need. We need to complement this deficit through regulation that facilitates this access. From the European point of view it is thought that we need to raise awareness and create a feeling of comfort between the companies so there can be a bottom-up system.
The third question was directed to the actual situation of the SBA and to how it can be translated to reality. Furthermore, an assessment was made about the entrepreneurs, in favor of which should be acted so there are less obstacles for them. We should aim to change the reports showing that Spain is not doing well, such as those published by the World Bank. As this round’s last question, the border disputes inside the EU were mentioned, as well as ways to resolve them. In relation to the SBA the EU has to act strategically because at the moment companies are not paying the price and spending the energy they could to innovate. We need the member states to know what they have to do in this respect because the EU has no legal power to influence educational competences. Concerning the border disputes, a campaign has been carried out to raise awareness about this topic. However, the most important thing is the awareness that there is an atmosphere helping and incentivizing the they do not happen in the first place.
In a second round of questions, the law of second opportunity was tackled. It was not what was expected on a business level, which is why the businessman is ultimately the one who has to take care of his public debt – a big obstacle, especially for SMEs. Ms Drake apologized for not having much information in this respect, but advocated in favor of a system that favors those companies who try even though they fail. After all that is part of the learning cycle.
The second question was about the European competitiveness on a global level and about how the European project Horizon 2020 is the instrument that allows to see that the future is about knowledge and no longer about manual labor. This point lead to the question of why Horizon 2020 does not contain more instruments for SMEs, especially regarding funding and considering the high percentage of GDP they represent.
The third question was about the role of the chambers of commerce as foreign offices of trade and how they help SMEs. According to Ms Drake, the chambers need to be in contact with companies and have to serve as connection between the market and European institutions in order to take into account the European vision. In addition to serving as networks to create friendships, the chambers are very important for processing the vast amounts of data that companies receive on a daily basis.
Finally, a point about the law of second opportunity was clarified: this law seems to be directed to individuals instead of to companies since the debt is with the public administration. This is a very weak point and is left unsolved. There are many companies that had to close because of the economic crisis and that had many innovative ideas which they could not realize due to their debts.
Finishing, Ms Drake commented that one has to incentivize a bottom-up decission making system with the help of bridges. One suggestion is to make lobbying efforts to get to the structural funds for the companies with very good projects, which have not received any other kind of funding because they are not big projects. This is what Sweden has done.
The lunch ended with the president of Plus Europe thanking all the participants.