The Commission has no regard for small businesses

14 January 2018

The Commission has no regard for small businesses

The European umbrella group for organisations of small and medium-sized enterprises (SMEs), known by its French acronym UEAPME, is sounding a warning: the European Commission wants to change the definition of 'SME' to allow bigger firms to come under it. The EU support which SMEs can access could, the Commission argues, lead to too many of them deliberately remaining small, not seeking to grow beyond the size at which they would fail to qualify for aid. UEAPME has not noticed any such thing, but is of the opinion that small firms have an important social and cultural function which would be undermined by growth. I completely agree with this. CEOs of multinationals get enough support already, but small independent firms need protection.

As things stand there are three kinds of SME: those with ten employees or fewer, and a maximum turnover of €2 million, are defined as 'micro-enterprises' and treated with as much flexibility as possible. 'Small enterprises' are those with up to fifty employees and a turnover below €10 million. Lastly, the 'middle-sized enterprise' has 250 employees or fewer, and a maximum turnover of  €50 million. New legislation is subjected by the Commission to a feasibility test to see whether it would damage the interests of SMEs. In practice this SME test is no longer all that straightforward, but what's good legislation from the point of view of a multinational is not necessarily so for a small or medium-sized company. You can demand more of multinationals which, for example, have legal departments which help with interpretation, and are in any case less vulnerable.
Not all big corporations, to say the least, find this to their taste. The exceptions in legislation which apply to micro-enterprises and the special loans made to SMEs are seen by them as unjustifiable. As one lobbyist told me, what's valid for small firms is valid for multinationals too. Well yes, I wouldn't mind getting my own way more often myself. But once again, the Commission is giving way to pressure from big capital, this time against the interests of SMEs. If you, as the Commission is considering, increase the threshold below which a firm can call itself an SME to 500. some 99.9% of companies would immediately qualify, meaning that the special rules would apply to almost all firms.  This would make it much easier for really big corporations to argue that they should be included too. In effect, no more SMEs. That's why I'm completely in favour of small companies being treated differently. In my view they should not have to grow any bigger than they want to. It's a fine thing that not all companies operate everywhere in the EU and that we can still see a difference between member states, and a difference between regions. So I stand squarely behind UEAPME's demand: don't mess with the definition.

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