Europe launches $700m support initiative for SMEs

THE European Commission has launched a new euro700m (GBP521.3m) support initiative for small and medium-sized businesses as part of its strategy to help bolster economic growth and safeguard member states from future threats of turmoil in the global financial markets.

The EC's new SME support system, called the Enterprise Europe Network, aims to offer a "one-stop-shop", where entrepreneurs across Europe can seek advice and benefit from a range of business support services on offer by the EC.

Its launch is a direct response to the region's darkening growth prospects, acknowledged last week by Jean-Claude Trichet, the European Central Bank's president, who at the same time opened the door to interest rate cuts in the coming months.

Trichet's comments, which noted that growth in the 15 countries that share the euro will likely slow more than expected, make it clear that policymakers are now far more concerned about economic growth than inflation.

The vice-president of the EC, GunterVerhaugen, speaking to journalists in Brussels after the launch of the initiative, said: "Without a doubt, a strong SME structure is the most important element in the future of European economic and social stability.

"There are around 23 million SMEs in the European Union, making up more than 99per cent of all Europe's businesses.

"What's crucial here is that SMEs have not been affected by the global financial crisis. Recent studies have shown their growth rate has not stopped amid all this turmoil.

"As a rule, SMEs do not invest in risky financial products and they are less vulnerable in a globalised economy."

Indeed, rising fears of a US recession and slow European growth have gripped European financial markets for almost six months, driving down equities, sending credit spreads to record level.

Recent weak service sector data and the plethora of lacklustre corporate earnings in Europe have exacerbated the gloom.

The Enterprise Europe Network is made up of around 500 partner organisations in more than 40 countries, and aims to promote competitiveness and innovation at the local level in Europe and beyond.

A number of recent studies have revealed that small businesses, especially those in their early stages, are often unaware of the many different kinds of assistance EU programmes can provide.

Nor are they always able to fully assess the European market potential of their products and services or explore the business opportunities outside the areas they know best.

The EC said only around one in 10 SMEs in Europe do business outside their own country, in spite of the abolition of trade borders and the opportunities firms with comparative advantages can find in niche markets.

In its push to bolster the European SME sector, the new network offers support and advice to businesses across region and aims to help them make the most of the opportunities in the European Union.

The new service gives SMEs access to massive database and services that provide information on how to negotiate EU legislation and European funding opportunities, and will also enable them to find business partners outside their home countries, transfer innovation.

Verhaugen said: "This is the world's biggest business network and aims to make small companies in Europe more competitive and successful.

"In the middle of all this financial market turmoil, it is the larger corporations that are suffering the most. SME growth is critical. It also fits with our economic objective to a have market economy with a social face. We have seen that being put at risk in recent, and now we want to reverse that.

"SMEs are also the biggest employers in Europe - around 80per cent of European jobs are in the SME sector - and corporate social responsibility is part of their culture. It is more than clear that this is what we need embrace."

The new network, which employs 4000 advisers, is funded by around euro320m of European Commission funding and some euro380m from individual member states.