"The public sector's average payment delay is around 160 days, with peaks even hitting 1000 days. At the same time, SMEs have to pay VAT before they even receive payment themselves - the bad payment morale thus hits our SMEs in a double way, with the liquidity problems resulting in reduced investments. It is therefore necessary that the public sector is included in the scope of the Late Payment Directive we are currently negotiating", demanded Karas.
In a Hearing organised by the CRIS Committee on the consequences of the financial crisis for SMEs, late payment by the public sector was emphasised as one of the most pressing challenges for SMEs. The public health and hospital sector was particularly named as being among the worst examples. "In reaction to this situation, one third of all SMEs say they have to reduce their investments, 20 percent claim they have to reduce personnel. This is a vicious circle for the European economy as a whole. SMEs in particular should be providing more innovation and new jobs, as the industrial sector is continuously doing less in these areas", warned Karas.

The Chairman of Parliament's SME Intergroup and EPP Group Coordinator in the CRIS Committee is therefore calling for more European efforts in supporting SMEs. "The small and medium-sized enterprises are the backbone and motor of the European economy. They deserve and need our continuous support", said Karas. "A report prepared by former EU Commissioner Mario Monti will put special emphasis on SME support in formulating the Europe 2020 Strategy. We need a meticulously planned entry strategy for SMEs in parallel to the Member States' exit strategy from the financial crisis."

At the same time, on behalf of the largest political Group in the European Parliament, Karas called for enhanced efforts in implementing the Small Business Act: "So far, this is a plan without teeth, a good idea with a bad implementation. We are calling for a rigorous implementation of all foreseen actions. 'SMEs first' must not remain a mere catchphrase, reducing red tape must have priority in order to allow our SMEs to fully make use of the common market's possibilities", said Karas.

"The thorough financial audit to be conducted by both the Commission and all Member States, which I and the CRIS Committee are calling for, remains essential. We have to know how much financial leeway we have for additional support to strengthen entrepreneurship and create new jobs. 2008 was the year of the financial crisis, 2009 was the year of the economic crisis. 2010 must not become the year of the social crisis. Strengthening entrepreneurship and supporting SMEs thus remains a core challenge for the EU", concluded Karas.

For further information:
Othmar Karas MEP, Tel: +32-2-2845627
Philipp M. Schulmeister, EPP Group Press & Communications Service, Tel: +32-475-790021