The lifeblood of any economy are the small to medium sized enterprises (SME’s) spurred on by entrepreneurship and the drive for profit. So why does the EU raise barriers to entry for our small businesses struggling to get a foothold?
Just behind Washington DC, Brussels now has the second highest concentration of corporate lobbyists who seek to influence legislation in favour of big firms. As the EU vies for more harmonisation into a single federal super-state, its one size fits all approach often infringes on the aims of many SME’s. They do not have the staff or the ability to sift through the piles of legislation which are passed through the European Parliament all the time.
Just this week, small business campaigners known the EU VAT Action group managed to achieve a small victory over the EU Commission’s punishing tax rules for small digital sellers. Brussels rules stated companies had to pay VAT in the countries where online goods are being sold, rather than where the company is based. Small companies were previously exempt from the duty as they benefited from a minimum threshold of £81,000. This has now been eliminated.
The Prime Minister David Cameron will take credit for this ‘win’ over the EU, however it is the hard work from these small groups of campaigners who continually struggle for reforms. Not surprisingly, it is estimated the reforms will take 2 to 5 years to pass through the bureaucratic super-state. This only goes to show, how ill-thought and irrelevant the EU law making process is.
Across the UK, there are almost 5 million family-owned businesses, accounting for 25 to 30% of the country’s GDP. As influential groups like the pro-EU Confederation of British Industry (CBI) bombard the airwaves with Brussels’ scaremongering, the obstacles placed in front of smaller companies need to be highlighted.
From the local high street shop to the tradesman, the majority of British businesses trade within a 5-mile radius of their base. Forcing all of them to adhere to the EU rules and regulations formulated for the benefit of large companies is grossly unfair.
Large corporations can afford to hire teams of lawyers and accountants to deal with the incoming costs of red tape coming from Brussels, but small and medium sized companies cannot.
From ‘Nanny State’ rules – such as stopping hairdressers working too much in case of ‘emotional collapse’ – to forcing micro enterprises to follow crippling and time consuming employment consultation laws – the situation is absurd.
Even members of the pro-EU CBI have voiced their concerns about burdensome EU rules and regulations. This clearly shows the counterproductive inertia which surrounds competition within the EU. The European Economic Community, (the EEC) was formed in 1957 in a period of post war recovery. Having started off as a trading institution, not a political one, the present EU and has changed beyond all recognition. Today’s globalised world transcends the outdated institution.
While the bureaucratic EU machine constantly forces directives and regulations on its 28 Member States, how are Britain’s SME’s expected to compete – especially as many of these rules are completely irrelevant to their businesses? It is estimated less than 1 in 10 UK businesses actually trade with the EU, yet all must comply with all EU laws ranging from health and safety, waste management and environmental regulations. Such legislation is not proportionate to small companies and ignores the limited resources they have. As the EU seeks to legislate on a Pan-European level, Westminster has no say at all.
The Centre of Economic and Business Research says our SMEs are being forced to waste 28 hours a week on EU red tape, at a cost of almost £5 billion for small businesses alone. From the EU’s cider tax, which removed tax exemptions for local British producers, to the market trader who gets penalised for using imperial measurements, the EU shows no signs of understanding the struggles of small entrepreneurs in Britain.
Despite the glaring obstacles the EU throws at small firms all the time, organisations such as the CBI would have you believe Brexit is only advocated by a small minority of business owners. Yet the tables are clearly turning. A poll last week on behalf of Business for Britain asked SMEs if they believe the EU is ‘harming’ or ‘helping’ their business. The result shows a staggering majority (41%-20%) of the former believe the EU is actually harming their businesses. Likewise, 74% of businesses believe Britain should regain the power to make its own trade deals.
Even a recent poll by The Federation of Small Businesses (FSB) found only 26% of businesses are happy with the current state of the EU. The majority want the UK to bring back power from Brussels. Research into FSB’s poll found 17% of those businesses asked in the survey relied on EU trade, however the national figure is lower than 5%. Despite the disproportionate survey, the results do not bold well for the pro-EU lobby.
Once the EU tries to solve one issue it has unnecessarily got involved in, (overruling its own principles of ‘subsidiarity’), another damaging proposal simply pops up. The latest in its long line of unintended consequences is the European Court of Justice’s statement three weeks ago, whereby employers without a fixed office must pay an employee’s first and last commute of the day. Again, good on paper for large companies, but the damage to family-run businesses will be catastrophic.
Watching the debates in the European Parliament does not reassure anyone either. There’s lots of vague rhetoric like ‘social solidarity’, and its clear high youth unemployment in the EU will never fully recover when small businesses are not properly encouraged.
In 2013, Prime Minister David Cameron set out Britain’s agenda against spurious regulations – now dubbed his Bloomberg speech. Yet a Britain within the EU will always be part of an unfair playing field. Many other Member States simply ignore and do not comply with damaging EU laws, unfortunately Britain always seems to do so.
When 50% of new business start-ups fail within the first few years, is it wise for the EU to tie their arms behind their backs? Britain’s small businesses must be empowered by Westminster, not treated as a cash cow Brussels politicians can extract huge amounts of money from.
The Eurocrats show no signs of limiting their mandate over Westminster, as MEPs have just voted for Britain’s EU bill to be hiked up another £400 million next year. During a time of Cameron’s ‘renegotiation’, it is clear the opinion of the Great British Public does not concern them. This is why we MUST Get Britain Out of the EU.
Chris Muspratt is researcher for the cross-party grassroots Eurosceptic campaign group Get Britain Out