Commission publishes proposal for new support programme and guarantee facility for the arts sector – “Creative Europe”

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On 23 November 2011 the European Commission launched the new 'Creative Europe' programme which will provide support to artists and SMEs in the different arts sectors throughout Europe. The European cultural and creative sectors represent around 4.5% of European GDP and account for some 3.8% of the EU workforce (8.5 million people).

The new programme would allocate more than €900 million in support of the cinema and audiovisual sector (area covered by current MEDIA programme) and almost € 500 million for culture. The Commission is also proposing to allocate more than €210 million for a new financial guarantee facility, which would enable small operators to access up to €1 billion in bank loans, as well as around €60 million in support of policy cooperation and fostering innovative approaches to audience building and new business models.

The new financial facility will build on the experience with the MEDIA Production Guarantee Fund, which was launched in 2010. With a total budget of € 8 million for a four year duration, it is expected to generate over € 100 million in bank credits, thanks to the leverage effect of the guarantee mechanism. The Fund was opened to applications in May 2011 and has been accepted favourably by the film industry and banks, resulting in more than a dozen guarantees with a loan value of around €15 million in ten different member states.

The proposal identifies access to finance as a continuing priority for SMEs in the arts sectors, due to specific aspects inherent to their activities:

• Prevalence of intangible assets (copyrights, etc.)

• Longer period to provide for returns on investment.

• Low level of business and financial skills by since cultural and creative entrepreneurs

• Lack of understanding of the financial sector for projects from the arts sector.

The Commission estimates that a funding gap of some €2.8 billion to €4.8 billion in terms of bank loans results from these difficulties.

The new financial Facility for the cultural and creative sectors will be complementary to other EU facilities under the Structural Funds or the Competitiveness and Innovation Programme, which has a transversal approach and very limited impact on extending activities in sectors in which intermediaries (financial institutions) have little activity, such as the cultural and creative sectors. The Commission considers that this Facility will provide strong European added value and enable valuable networking and peer learning. It will seek to achieve a systemic impact by increasing the number of financial institutions with expertise in the cultural and creative sectors, broadening their geographical spread and helping to leverage significant private investment. It will also seek to change behaviour among some parts of the sector by encouraging a shift from a mentality of grants to loans, strengthening their competitiveness while reducing reliance on public funding.

The proposed €1.8 billion budget for Creative Europe represents a 37% increase on current spending levels. In 2007-13, the MEDIA programme received €755 million, with an additional €15 million for MEDIA Mundus which supports international cooperation in the audiovisual sector. The Culture programme was allocated €400 million in the current financial framework.

The Creative Europe proposal is now under discussion by the Council and the European Parliament who will take the final decision on the budgetary framework for 2014-2020.

Link: http://ec.europa.eu/culture/media/index_en.htm