Local concerns about fragmented market for services and uncertainties linked to Brexit highlighted in recommendations by European Committee of the Regions
The European Committee of the Regions (CoR) has called on the European Union to ensure that its plans to create a new single-market programme in 2021 have "the flexibility to respond quickly and proactively to any disturbance in the functioning of the internal market or disruption in trade for SMEs that could, for example, result from the possible adverse impacts of Brexit".
The call for flexibility was one of a set of recommendations adopted on 5 December by the EU's assembly for local and regional politicians in an opinion on the future of the single market. The opinion was underpinned by the belief that opening up the services sector and digital economy across Europe could "considerably" strengthen growth in local and regional economies. The CoR's opinion also emphasised that it is particularly difficult at present for small and medium-sized enterprises (SMEs) to expand their business and customer base into other countries in the EU.
The rapporteur on the single market programme, Deirdre Forde (IE/EPP), said: "In my role as a local representative in Cork County I am very aware that SMEs operate with many handicaps – getting funding is harder for them, administration is a heavier burden for them, and many of them work in the services sector, which is not yet truly European. Despite all that, SMEs are the motor of the EU's economy, creating 85% of new jobs over the past five years. We need to remove the handicaps on SMEs and enlarge the market for them. This is even more important because of the uncertainties of Brexit and because, at some point, regardless of Brexit, there will be shocks to the economy. It is good that the European Commission recognises the need for a market that is less fragmented, we support its plans to encourage the formation of clusters of businesses and we think its revisions could bring efficiencies and cost-savings. It is critical that we protect consumer interests – this has been a central concern of mine and of the CoR in debating the Commission's proposals."
She continued: "We think the EU should be 'thinking small first' as it pursues its ambition of a truly single market. However, there are some warning signs that the European Commission was not always thinking small first when it drafted this proposal. We regret that there is no specific mention of the Small Business Act. Similarly, we want clarification about guaranteed funding for SMEs, we want to know more about how the EU plans to adapt the European Enterprise Network to the age of digitalisation and globalisation, and we would like the Erasmus for Young Entrepreneurs programme to be continued. Similarly, we want SMEs to be properly involved in the development of standards, in order to reduce the risk of large companies dominating the process."
Ms Forde added: "We also need to harness powerful new dynamics in the economy, so there should be more focus on providing a good European framework for the collaborative economy. And we must always be conscious of the special challenges faced by remote rural regions of Europe and on European islands beyond our continent."
Among other recommendations, the opinion highlighted ways of ensuring the EU's efforts to support SMEs complement action by national governments and urges particular attention to ensuring that SMEs have access to funding under the EU's future InvestEU programme. (InvestEU was the subject of a separate opinion adopted by the CoR on 5 December as part of its review of proposals for the EU's post-2021 budget.) The CoR supported continued efforts to replace national standards with European standards, welcomed extra investment in market-governance tools, and praised the plan's special attention to the food and drinks industry, "the largest manufacturing sector in the EU". Among the continued challenges that the CoR wants addressed is the inadequacy of data about developments at the local and regional level.
The implications of Brexit for local and regional communities across the EU were addressed on 6 December by Michel Barnier when the chief negotiator for the EU27 in talks on the United Kingdom's withdrawal from the EU addressed members of the CoR. In all, 33 CoR members highlighted issues thrown up for their communities by the planned departure of the UK, ranging from problems for ordinary citizens to manufacturers and fishermen.
Over the past 18 months, the CoR has conducted a mapping exercise to ascertain the possible impact of the UK's withdrawal on regions and cities. It has also conducted an economic survey of local and regional authorities and local chambers of commerce, and commissioned a study assessing the impact of Brexit on specific regions (in Belgium, Germany, France, Poland, and Spain) and on sectors across the EU (transport, machinery, electronics, food, chemicals, textile and furniture). In May 2018, the CoR adopted a political resolution calling for the EU to ensure that local and regional authorities are not "left to deal on their own" with challenges created by Brexit.
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