Key Notes

Entrepreneurship

Competition in free and open markets is the basis of the social market economy. It improves allocation of resources, fosters innovation and provides positive social results. The distinctive element of such an economic framework is entrepreneurship through companies competing in the market, to offer to citizens goods and services under the best conditions. The role of public authorities should be to create a stable and predictable environment favourable to entrepreneurial activity.


I. Background

From the Treaty of Rome onwards, the guiding principles of the European Union have been those of the social market economy: freedom, democracy, competition, monetary stability and private property. The operational objective of the Treaty of Rome in 1957 was to do away with Member States' barriers to the free flow of goods, services, people and capital. In the ensuing economic entity, the Commission would be empowered to take action against state aids, cartels and monopolies.

During the 1960s and early 1970s much was achieved, but with the onset of recession, some industries in difficulty turned, often successfully, to their national governments for subsidies and protection. By the 1980s, many companies, including Small- and Medium-Sized Enterprises (SMEs) were complaining loudly about the costs of trying to do business across frontiers - the cost of "non-Europe". Industry's message got through to the European Council, which requested the Commission to produce its 1985 White Paper on the Completion of the Single Market. The larger part of the original programme has now been successfully implemented.

Other uncertainties facing business were addressed by the introduction of the euro in 12 Member States. However, during the 1990s the US economy still grew 60% faster than western Europe's, and its unemployment rate was nearly twice as low.


II. What does the European Union do?

The European Council meeting in Lisbon in the spring of 2000 accepted that fundamental reforms were needed, and set the European Union on a modernising path to 2010:

"to become the most competitive and dynamic knowledge-based economy in the world, capable of sustained economic growth with more and better jobs and greater social cohesion".

Central to progress is the implementation of the single market programme in sectors which had remained largely untouched, notably financial services, transport and energy, all crucial to connecting Member States' economies. At the same time, the internal market programme is being modernised, for example, to facilitate e-commerce. Economic and legal reforms, and research programmes, are being established to encourage innovation and new business start-ups, creating new jobs. Reforms in matters which are the responsibility of Member States, such as pensions and education systems, and industry policy, are being conducted through "open co-ordination" between Member States.

The pace and direction of the strategy is not in the hands of the Commission, but in those of the successive Presidencies of the European Council, and in the Council of Ministers, where some have been more reformist than others.


III. What has the EPP-ED Group achieved?

From the outset, the Group backed the strategic goal agreed in Lisbon, and took the lead in ensuring that the European Parliament played its part in meeting the various deadlines for the modernising legislation which have been laid down by the European Council. In the parliamentary debates before subsequent Spring European Councils, which review progress in the Lisbon strategy, Group speakers have criticised delays by the Council of Ministers in adopting legislation, and by national governments in implementation. The Group want the Commission to be more vigorous in naming and shaming recalcitrant Member States, and taking infringements to the Court of Justice.

To restore credibility to the Lisbon goal, the Group has called on the European Council to review the strategy, so that it fully recognises that the business, education and research sectors must be the driving forces for innovation and employment.

The Group therefore welcomed the Commission's publication in January 2003 of its Green Paper on entrepreneurship in Europe as an important contribution by the Commission to promoting growth, employment and entrepreneurial spirit. The Group successfully put across the message in the European Parliament resolution that Europe must promote entrepreneurial activity more effectively if it is to have any chance of achieving the Lisbon objectives.


III. Our goals for the next legislative period

To make it easy to do business and set up a new business in Europe the EPP-ED Group wants to

eliminate subsidies and regulatory arrangements that create distortions in the market and discourage private initiatives;
• systematically assess the impact of legislation in terms of costs to companies and employment;
• minimise red tape and excessive administrative requirements;
• encourage company start-ups and facilitate access to various modes of venture capital financing;
• guarantee proper access to financing for SMEs, under the Basle II agreement;
• finalise a new Community patent that is less costly, more accessible and legally more secure;
• see Member States exchanging 'best practice' in tax and accounting rules designed to encourage the job-creation potential of SMEs.

In this way, the Lisbon strategy should become more focussed on employment and competitiveness, by backing entrepreneurship.

Alan Reid, Advisor