Mr President, small and medium-sized enterprises and very small enterprises are the bedrock of the economy of the European Community. For this reason I want to welcome the thrust of these reports on the Commission proposal on the improvement of the fiscal environment of SMEs. SMEs play an important role in providing many young people with their first jobs and in helping in the recruitment of large numbers of women and unskilled labour.
However, the considerable rate of failure among SMEs is a cause for serious concern throughout the Union. Positive actions are needed to ensure a better environment for survival and prosperity, and particularly to promote and sustain small businesses in the areas on both sides of the border of the island of Ireland.
30% of all jobs in the Union come from the self-employment area or micro-enterprises with less than ten workers. A further 55% of employment is created by small firms with less than 100 workers. They are the numbers according to the 1994 Employment in Europe report. Self-employment necessitates long hours of work in order to ensure business success or even a decent level of income. The self-employed are more likely to fall below the poverty line than wage earners. The Community must move quickly to underpin the dynamism of SMEs and to secure jobs. The Community initiative on SMEs is a move in the right direction but its pre-eminent role in economic growth and job creation it is badly underfunded. SMEs face common problems, whether in relation to access to finance, improving their relations with financial institutions, the complexity of the administrative and legislative environment, managing a firm or developing strategic policies.
Some SMEs can finance investment out of their own net profits. Others can try to seek financing through the banks. But this is not the only option and I am particularly interested in the Commission's plans to hold detailed discussions this autumn with the Member States on venture capital. When equity financing is hard to obtain, venture capital can provide an alternative means of securing external financial resources. It is risk finance, but when it pays off, as in the case of Silicon Valley in the United States, its benefits can be enormous. We need to look carefully at the special instruments for venture capital operating in the Member States, particularly in those with the largest venture capital investments.
In 1992 the UK and France invested almost ECU 300m on venture capital, compared with only ECU 26m in my own country. We need to consider in detail the possibility of having access to international venture funds. The fact that there are no practical structures in some Member States for international funds creates a major obstacle to cross-border investment and venture capital funds. The whole question of tax needs to be urgently looked at. The creation of a suitable structure could lend to capital inflow by venture capital investments within the Community and from third countries, to the benefit of growth and employment.
This debate marks an important step forward in relation to the approaches which the Member States can take to improve the fiscal environment of SMEs.
