European Economic and Social Committee issues opinion on COSME

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On 29^th March, the European Economic and Social Committee (EESC) issued its opinion on the draft regulation proposal for COSME. The EESC points to a number of ambiguities between the proposed financial instruments, the Horizon 2020 programme and other sources of financing, such as those put forward in the proposals for regulations on territorial cohesion. This situation is somewhat problematic for SMEs. It therefore asks for clarification of the link between these different forms of financing. While it welcomes the fact that 56% of the budget has been allocated to financial instruments, the EESC calls on the Commission and the European Parliament to establish a clear dividing line between the two instruments, to make them accessible to all companies and for all types of investment, and to coordinate them with other, similar types of Community funding in order to enable SMEs to choose the instrument that is best suited to them. It also calls for the rules and conditions of the LGF guarantee to be modified.

The EESC recommends that the European Parliament and the Council support and strengthen the programme by increasing the visibility of its content, its operational measures and the financing of its priorities while ensuring partnership with European SME organisations. Given its objectives, its budget of EUR 2.5 billion seems to be patently insufficient. The EESC is opposed to any attempts to reduce the programme's budget and asks that the Parliament accord it greater importance. The EESC considers that it is SMEs which will help the EU climb out of the crisis and create new jobs.

The EESC believes, however, that the programme lacks ambition. It feels that the proposed budget of EUR 2.5 billion will not be sufficient to implement the measures that are required to support the long-term activities and development of SMEs, and yet it is SMEs that will help the EU climb out of the crisis and will create new jobs. The EESC is thus opposed to any attempt to cut this budget. It calls on the European Parliament to bring it up to par with the budget for the current Competitiveness and Innovation Programme (CIP) with a view to increasing, as a matter of priority, the budgetary resources allocated to financial instruments.

The EESC urges the Commission to specify what criteria were used to set this level as the CIP programme did not establish any limits. The EESC notes that the amount proposed covers the actual loan amount. Nonetheless, loans for business start-up, investment or transfer are often for significantly higher amounts. This means that higher loans would effectively be guaranteed under the Horizon programme even though it is only supposed to be used for innovation projects.

The EESC therefore calls for a return to the previous CIP system, which did not set any limits. Failing this, it requests that the limit of EUR 150 000 apply only to the counter-guarantee amount and not to the loan amount. With regard to business transfers and acquisitions, the costs of which are often significantly higher than for business start-ups, the EESC urges that no limit be set for the counter-guarantee amount.

The same point discusses the drafting of reports on the "innovative SMEs" supported. The LGF must be capable of benefiting all businesses, whether they are innovative or not. The EESC reiterates its doubts as to the usefulness of such reports; they should be limited to information that can be used directly and should not encumber budgets that are earmarked for business financing. The EESC demands that all measures relating to the definition and introduction of financial instruments be adopted in consultation with European SME organisations and their financial partners.

Link: http://www.eesc.europa.eu/

Source: EESC opinion on COSME