Mr. Daniel Calleja Crespo:

I am pleased to participate in this session of the joint committee. When I received the invitation to attend the Joint Committee on Jobs, Enterprise and Innovation of the Irish Parliament I had no hesitation in accepting. The meeting in Brussels in January was so successful that I promised to come over, if invited, to continue our discussions. In the European Commission growing importance is attached to relations with national parliaments. It is very important that European policies are closely linked to the activities of national parliaments. It is very important to explain what the Commission does but also to learn the main issues and challenges facing national parliaments.

On Monday I appeared before the committee on jobs of the Spanish Parliament and we discussed the key challenges faced by young people there including job opportunities, policies for SMEs and entrepreneurship.

This meeting is taking place at a very particular moment. Some days ago the Commission issued its country-specific recommendations relating to countries in the framework. A specific process was provided by the annual growth survey in November. In the country specific recommendations process we engage in dialogue with member states and try to point out issues that require more work to each country. We aim identify the most pressing problems that hamper growth and work together to address them. This process will reach an important point in June when the European Council will meet and formally adopt the Commission's proposals.

There were seven country specific recommendations relating to Ireland and they addressed topics such as public finances, health care, the labour market, education and, as rightly mentioned by the Chairman, access to finance for SMEs. I will come to the topic of SMEs but I do not want to take long so I will highlight the priorities of the Department of Enterprise and Industry at the European Commission. There are two major areas of work at that Department, enterprise and industry. On the one hand there are enterprise, SMEs and entrepreneurship and on the other hand there are industrial strategy and industrial competitiveness in all sectors of the economy, from the automotive to the aeronautical to the chemical to the mechanical and so on.

To outline the main priorities of our policy I will first stress the fact that Europe in recent years has seen the most serious economic crisis since the Second World War. Millions of jobs have been lost and there has been a major decline in industry. Thousands of SMEs have closed and we are emphasising the need for a renewed industrial strategy. Industrial competitiveness must be prioritised in the coming years and we must mainstream competitiveness in all areas of the economy. We must make our productive sector the engine of the recovery. For many years it was thought the best industrial strategy was that which did not exist. We have seen that the countries that best survived the crisis are those that did not dismantle their productive sectors. Every country with an industry and manufacturing sector is doing better than those that do not because each job in manufacturing means two or three more jobs in the service sector. This is why we emphasise the importance of industry and manufacturing. It is important that the EU has a strong industrial base as it is a region that can attract investment and have a dynamic, flourishing economy.

However we look at all this we reach the same conclusion: we must work for our SMEs. SMEs are the backbone of the economy and the main source of job creation. In Europe there are 23 million SMEs and they have created 80% of new jobs in the past five years. In the private sector two out of three jobs are in SMEs. If we ignore the importance of SMEs we will not address the needs of our citizens and the real economy. More than this, SMEs are the key factor in social and economic cohesion across Europe. My Department and the Commission seek to place SMEs at the centre of strategy because growth depends on competitiveness and SME policy being in the mainstream.

I will now mention some of the main areas where our actions will focus. I meet representatives of SMEs every day throughout the European Union and they say the most pressing issue they face is accessing finance. The credit crunch and economic crisis have seen many problems emerge for SMEs. The European Central Bank regularly conducts a survey on access to finance and, according to the latest statistics they have gathered, 23% of Irish SMEs find access to finance to be their biggest concern.

That compares to an average of 14% in the euro area. In Ireland it is a very important issue. Some 50% of the surveyed Irish SMEs did not manage to get the full amount they had planned for during the previous six months and 23% of their loan applications were rejected. Some 19% of companies received less than they had applied for. An important first challenge is to make sure that the credit goes back into the real economy. In this respect, we believe that the situation will improve. The measures adopted by the European Central Bank last week and the announcement by Mr. Draghi of €500 billion being put into the real economy and the reduction of the rates will have a positive impact. With the growth in our economies, the conditions in terms of gaining access to finance will improve. However, we need to make a big effort in the coming years to mobilise all the instruments, banking and non-banking instruments. This is precisely one of the recommendations that the European Commission is putting forward. In the case of Ireland we believe it is very important to develop further policy initiatives to address the availability of bank and non-bank financing and, in particular, to improve SMEs' access to bank credit and non-bank finance. I will be more precise about this. There are two important issues that must be addressed. The first is the disseminating of information. SMEs are small micro companies and it is difficult for them to have access to the various financing sources. We need to make a special effort to disseminate information on the possibilities for financing and we need to reach the SMEs. We introduced a pilot programme with the Spanish Banking Association in Spain last Friday in order that the SMEs, even if they are in located in the most rural areas, will always have access to a bank and they will be linked into the information on all the EU financing programmes - this information will be channelled to them.

A second issue that is important in Europe is that we need to do more in respect of non-banking activities. I am speaking about venture capital, business angels and crowdfunding. We must mobilise all the instruments. We have new programmes which we will start this year, 2014, such as the 2020 programme, which will be targeted at SMEs. The COMSE programme is a programme that for the first time in the history of the EU is exclusively reserved for SMEs. Two thirds of the funds will be for loan guarantees and venture capital. This is a programme which offers many possibilities. Horizon 2020 is a programme for innovative SMEs. We will also have an important SME instrument. We will have new possibilities and it is important that we disseminate the information on these new programmes to the various SMEs. I call for members' co-operation in raising awareness of these programmes. I discussed with the Minister of State, Deputy Perry, who is the SME envoy, the possibility of providing more information and assistance to the SMEs. It is important to link with the European Investment Fund which will manage these programmes in order that we will be able to make an important effort in the coming months.

With regard to regional funding, there will be €325 billion available in regional funds for the whole of European in the next seven years. We have built a good deal of infrastructure in Europe. The priority must be SMEs, innovation and new technologies. There are possibilities that can be mobilised.

The late payments directive is an important instrument. One out of three companies which has failed in Europe has done so due to problems related to late payments. We need to have more action on this both from the public authorities and from the business community. I can provide further information in writing on this important challenge, or the members can put questions to me on it.

The second important challenge is internationalisation. We need to do more on this and we would like to work closely with Ireland in this respect. In Europe only one out of four companies is using the Internal Market. This means that three out of four are remaining in the country and only one out of eight is going outside the EU in terms of their operations. The growth with the emerging economies is outside the EU. Internationalisation is a must. We will push very hard in the direction of improving this situation in the coming years. If a company is not global it puts at risk its survival. The world is too big for companies to remain in local markets. There are important opportunities coming up and I will mention some of them. First, there is the free trade agreements, which the European Union is negotiating throughout the world and in particular the Transatlantic Trade and Investment Partnership, TTIP, agreement. It will be a great opportunity. It can inject into the economy €60 billion, 1% GDP additional growth. Ireland is very well placed and Irish SMEs can benefit from this agreement. It is a very complex negotiation, covering tariffs, public procurements and regulatory co-operation but it is an important area and we have to negotiate also with Japan, Canada and India. We need to offer our companies more opportunities but we also need to support SMEs and provide them with more information. The Enterprise Europe Network brings together more than 600 business organisations in more than 50 countries. In Ireland there is currently one enterprise network consortium with partners in the chambers of commerce of Dublin, Galway, Sligo, Cork and Enterprise Ireland in Dublin. This is a consortium that is functioning well. Over the coming years we will be financing it and the idea is to provide information, disseminate opportunities, facilitate contacts and provide opportunities for joint ventures. This will be an very important area. I am referring to internationalisation within and outside the EU.

However there is a third very important priority. It is not only important to gain access to finance and markets but probably one of the biggest challenges facing Europe is promoting entrepreneurship. Only one out three Europeans sees becoming an entrepreneur as a career prospect. This means two out of three would never do it. In China it is exactly the opposite. Two out of three see it as the most important prospect. More than half of Americans view creating their own business as a very good career prospect. Our Entrepreneurship 2020 Action Plan is an effort to work with the member states and the business community to change the situation. There are many reasons. Our society is ageing and it is risk averse. We risk losing an entire generation of entrepreneurs if nothing is done. We need to work first at the education level, starting in the primary schools because this is what delivers the best results. We need to eliminate problems in society. I am speaking about people getting a second chance when an honest entrepreneurship fails and the finger is pointed at him or her. We must facilitate people to get quickly out of bankruptcy procedures. Another issue is the transfer of business. Every year Europe is losing 150,000 businesses and 450,000 jobs because we do not have a good system of transfer of business - of succession. Companies are dismantled. It is much easier for a person to continue an existing company than it is to start up a company from scratch. We will address these issues in this initiative as well as promoting targeted action in favour of certain groups of the population in terms of an Erasmus of young entrepreneurs. A young entrepreneur will be able to spend up to six months in another country. We expect to reach the 10,000 exchanges.

We would like to have more Irish entrepreneurs participating. Entrepreneurship among women is also a vital area. In Europe only 34% of business people are women and there is great potential for growth. Mentoring and coaching programmes are important. Senior entrepreneurs are needed to advise young entrepreneurs. All of that will be part of the entrepreneurship action plan 2020. We are trying to work very closely with the 28 member states. We have the network of SME envoys, which I chair. Ireland is represented by the Minister of State, Deputy John Perry, with whom we work very well. We have the business associations working together in implementing the small business legislation.

There are many initiatives. I do not wish to forget about cutting red tape, administrative simplification, reducing bureaucracy, simplifying the creation of companies, and licensing. There are initiatives in this country in that regard. The Parliament should please do all it can to help. When I speak to SMEs they tell me they spend more time filling in forms than doing their work which is selling products and performing services. It is very important we mobilise our efforts in the coming years. There is nothing more important than confronting this challenge. Europe will not ensure a sustainable recovery and we will not sustain growth and jobs if we do not put our companies, SMEs, and entrepreneurs at the centre of our priorities.

I have exceeded my time. I get carried away when I discuss these issues. Members will have many questions. I wish to conclude with a final message. It is one of confidence. I am very confident that if we work together with the member states, the European institutions, the national parliaments and the business community, we can improve the situation dramatically. We have identified a strategy and there is no disagreement on the problems. I have never heard someone say in any discussion that what we outline is wrong, for example, that access to finance is not important. We know the issues and what we must do in the future is implement a strong strategy to tackle the problems. We must use the new funds we have and seize the opportunity of the recovering economy to change the situation and to provide a favourable environment for entrepreneurs and SMEs so that we can succeed in creating jobs and deliver more prosperity for citizens. That is the challenge. I welcome co-operation from all member states, including the Irish Parliament, to work together to succeed.