Engines of the future

  • Kay Swinburne MEP

    “Politicians across Europe should see investors as the lifeforce that can drive their economies forward”

Commentary by Kay Swinburne MEP, Member, Economic & Monetary Affairs Committee, European Parliament, ECR

One of the most rewarding parts of my work as an MEP is supporting SMEs not only in my own constituency but also throughout the EU by ensuring that legislation facilitates the growth of businesses. Where barriers to innovation, expansion or financing are identified, we work across different disciplines to ensure that we have an environment which nurtures and encourages entrepreneurs.

I have huge pride that my constituency of Wales is home to a number of companies in this booklet. They may be little-known now, but there is no reason they couldn’t be the big employers in Wales in the future. The companies featured throughout are shining examples of Europe’s creativity and inventiveness and will hopefully be the future engines of the EU economy.

However, we also need to recognise that the conditions do not always facilitate growth and expansion, and that appropriate financing plays a key role. This is why the Capital Markets Union (CMU) project is needed now more than ever. We need to ensure that Europe’s savers become Europe’s core investors, and that Europe’s SMEs have access to a more diverse array of funding options. Politicians across Europe should not see investors as suspicious, but as the life force that can drive their economies forward by providing the ‘risk capital’ required. Too many EU companies have had to leave their home countries in search of venture capital or private equity funds. CMU should be about helping these new companies find that same funding within the EU.

While the overall goal is changing people’s mindset across Europe, there are plenty of small ways in which politicians and regulators can work together to help foster this change. Our current tax rules across the EU unhelpfully favour debt over equity financing; they rarely reward investors for putting capital at risk in high-growth ventures, and innovative companies are given little incentive to remain. More can, and should, be done to identify schemes that work in one member state in order to identify best practice and export that across the whole of the EU28.

On the side of the issuers we can make it easier for small companies to issue prospectuses when they publically list, introduce minimum standards that are not gold-plated by lawyers and consultants, and reduce the burden to the lowest level possible when the target investors are truly local.

On the side of investors, we can reinforce the value of an EU passporting regime, removing local idiosyncrasies, so it is as easy to invest in a company in Romania when you are based in Berlin as when you are in Bucharest.

There is a lot more work for policymakers, but the companies featured in this report should inspire the next generation of SMEs across Europe to innovate and grow using all the financing tools available.