EU efforts to cut red tape not enough, leading experts warn
EU plans to cut red tape are unlikely to bring major benefits to most small firms, an EU legal expert has warned.
The EU’s Small Business Act for Europe (SBA) sets out a range of guiding principles and measures designed to simplify life for small businesses.
These include streamlining state aid rules so small to medium sized businesses (SMBs) can access funding easier and making it simpler to operate a business across different countries in the EU.
However, Angelo Basu, head of EU and Competition Law at law firm Ward Hadaway’s Leeds office, believes that the changes are unlikely to improve the red tape burden of Yorkshire’s small businesses.
“While the measures in the SBA all contain good things, they’re small things for small businesses,” he said.
“The Act simply isn’t bold enough and there are a lot more things that could be done for small businesses that would have made a larger impact.”
Mr Basu added that while the SBA may make it easier to access public funding, it will have no impact on the amount of aid available.
Even proposed measures to enable firms to establish operations across Europe more easily through the creation of a single European private company – or “Societe privee europeene” (SPE) – are predicted to have little impact.
“If you are a company set up and ready to do lots of cross-border work, it may save you a bit of effort, but the biggest costs associated with such activity are unlikely to be company formation costs,” said Mr Basu.
And while the SBA will offer EU countries to cut VAT rates for locally supplied services often provided by small businesses, the UK government has yet to decide whether to do so.
Despite the SBA’s shortcomings, Mr Basu believes the Act does demonstrate progress in putting the needs of small businesses on the EU agenda.
He said: “It has taken a lot of negotiation to get these modest proposals agreed by the European Commission and they still need the European Parliament and the Council of Ministers to approve them before they become law.”
Moreover, small firms could benefit from a crackdown on late payment practice, which will give businesses a legal right to payments within 30 days.
