Starting a business is faster, cheaper, but challenges remain

The European Union adopted the Small Business Act in 2008, with the intention of making it easier to start and run a business. Two years on, the EurActiv network takes a look at the achievements and challenges ahead. Starting her own online art gallery in London this year took Gina Cross about a week and cost £70 (€82), about the average for entrepreneurs in the United Kingdom. Likewise, in Bulgaria, France and Ireland, registering a new business costs less than €100 and takes less than a week.

"It’s quite easy," said Cross, founder of A Little Bit of Art, a small company which sells printed artworks. But in Poland and Spain, entrepreneurs still wait about a month for their initial paperwork to be approved. In Italy, Luxembourg, Greece and the Netherlands, the process is faster but expensive – more than €1,000. That discrepancy highlights the challenges facing efforts in the European Union to jumpstart the economy. When it comes to economic initiatives the EU has no powers to enact rules with teeth. They host meetings, promote programmes and share best practices, but at the end of the day their recommendations are only as strong as the political will to enact changes at the national and regional level.

"Certain member states moved on certain elements, but not all […] There’s definitely space to push further. We’re very much aware of that," said Marko Curavić, head of unit for entrepreneurship in the European Commission. Four years ago, leaders from all 27 member states set a 2007 deadline for their own countries to create one-stop-shops for setting up a company quickly – ideally within a week. Start up fees, the European Council concluded, should be as low as possible, and hiring the first employee shouldn’t involve more than one public administration point. Clearly many countries are years behind schedule.

Small and medium-size businesses create 80% of new jobs in Europe. That means entrepreneurs and small and medium businesses will play a critical role as Europe recovers from the economic and financial crisis. So anything that hinders new businesses hinders growth. This is especially important now because while the unemployment rate in the EU averages around 10%, and it’s double that for job seekers under the age of 25, according to research published last week by the Organisation for Economic Coordination and Development. The highest youth unemployment rate was in Spain, followed by Ireland, Slovakia and Greece. Only Germany posted a slight decrease.

News source: EurActiv link: article

Montenegro becomes formal EU candidate

EU heads of state and government have granted Montenegro official candidate status, moving forward its bid to join the European Union in an important step. The European Council, meeting in Brussels, agreed to grant Montenegro candidate status, which will allow it to begin official accession negotiations, but did not give a specific date for the start of the talks. EU leaders agreed to a written statement declaring Montenegro a formal candidate, and the approval "went automatically", Lithuanian President Dalia Grybauskaite told the German Press Agency dpa. Montenegro welcomed the decision, but noted that challenges lay ahead. "The decision of EU leaders is a major encouragement for Montenegro and an affirmation of our efforts,' Deputy Prime Minister Igor Luksic told the dpa.

In November the European Commission recommended that Montenegro be granted official candidate status, but outlined several areas where Podgorica must make improvements. European Enlargement Commissioner Stefan Fuele, speaking at the press conference announcing the annual progress report that contained the recommendation, said further work was needed in the field of the rule of law, noting that officials now have seven specific priorities that must be met in order for accession negotiations to begin. Although the country is considered a parliamentary democracy, parliament's control of the government remains weak, the report says. And although there is broad consensus on the fundamentals of economic policy, the Commission does not believe that the country is a functioning market economy.

The report notes: "The main concerns are related to the politicization of the judiciary and shortcomings in the functioning of law enforcement institutions, in particular in fighting organized crime and corruption. There are also concerns over efficiency and accountability of the judiciary." The tiny Balkan state of 600,000 people, which declared its independence in 2006, joins Croatia and Macedonia on the list of Balkan countries that have been granted the status. Turkey and Iceland are also official candidates. Albania, Bosnia, Serbia and Kosovo are considered potential candidate countries.

News source: Balkan Insight link: article

Euro area annual inflation stable at 1.9% EU stable at 2.3%

Euro area annual inflation was 1.9% in November 2010, unchanged compared with October. A year earlier the rate was 0.5%. Monthly inflation was 0.1% in November 2010. EU annual inflation was 2.3% in November 2010, unchanged compared with October. A year earlier the rate was 1.0%. Monthly inflation was 0.2% in November 2010. These figures come from Eurostat, the statistical office of the European Union.

In November 2010, the lowest annual rates were observed in Ireland (-0.8%), Slovakia (1.0%) and the Netherlands (1.4%), and the highest in Romania (7.7%), Estonia (5.0%) and Greece (4.8%). Compared with October 2010, annual inflation rose in ten Member States, remained stable in five and fell in twelve. The lowest 12-month averages up to November 2010 were registered in Ireland (-1.8%), Latvia (-1.5%) and Slovakia (0.6%) and the highest in Romania (5.8%), Hungary (4.8%) and Greece (4.5%).

The main components with the highest annual rates in November 2010 were transport (3.8%), alcohol & tobacco (3.4%) and housing (3.3%), while the lowest annual rates were observed for communications (-0.8%), recreation & culture (0.0%) and household equipment (0.7%). Concerning the detailed sub-indices, fuels for transport (+0.37 percentage points), heating oil (+0.13) and gas (+0.09) had the largest upward impacts on the headline rate, while telecommunications (-0.09) had the biggest downward impact. The main components with the highest monthly rates were clothing (0.9%), alcohol & tobacco (0.5%) and food (0.4%), while the lowest were hotels & restaurants (-0.6%), recreation & culture (-0.5%) and communications (-0.2%). In particular, fuels for transport (+0.06 percentage points) and garments (+0.05) had the largest upward impacts, while accommodation services (-0.07) and package holidays (-0.05) had the biggest downward impacts. 

 

News source:  Eurostat link: article

Bosnians cheer as EU Visa-Free regime takes effect

Bosnians joined an open-air party on Tuesday night to celebrate their newly achieved visa-free regime with the EU after twenty years of long queues in front of western embassies. “We felt like second-rate citizens for too long, but that is over now,” Sabina Curcic, 54, said with a wide grin during the celebration organised in the central square in Sarajevo only a few hours before the visa-free regime came into effect at midnight. Shouting over the noise of fireworks and singers performing on a stage erected for the occasion, 23-year-old Mirza exclaimed: “no more humiliation in front of embassies, freedom at last!” Addressing the celebration, Bosnia’s Security Minister Sadik Ahmetovic said the day when visa requirements were lifted “will be remembered for generations”.

However, he again urged citizens not to abuse the new regime, a growing concern in the EU after thousands of Macedonians and Serbians sought asylum in member states of the bloc in the months after visas were lifted for their countries last December. A group of some 50 youngsters, who boarded a bus in Sarajevo just before midnight on Tuesday to travel to a concert in Slovenia, will most likely be the country’s first citizens to enter the EU without visas. Smiling and waving their biometric Bosnian passports, the teenagers happily got on the bus, which was to make stops in Banja Luka and Bihac to collect more passengers. Under the EU decision, some four million Bosnian citizens are now allowed to travel using biometric passports to a total of 28 nations that are either inside Europe’s borderless Schengen zone or aspire to join it.

Tanja Fajon, a Slovenian member of the European Parliament who has been the leading advocate of EU visa liberalisation for Bosnia, also welcomed the “very important step” the county has taken towards Europe. “This (lifting of visa requirements) is proof that Bosnia-Herzegovina is not only a part of Europe, but I believe it will soon be a part of the European Union,” Fajon told journalists in Sarajevo. Bosnia’s international administrator Valentin Inzko also welcomed the end of the country’s isolation after its authorities had met a long list of requirements imposed by the EU. “The objective was to secure real benefits for Bosnia-Herzegovina citizens by implementing ambitious but sensible reforms – and that is what has been done,” Inzko said. “The same model can now be applied to a whole range of reforms that will take Bosnia and Herzegovina towards the European Union,” he added.

News source: Balkan Insight link: article

EU urges Greece to use aid funds to boost economy

The European Union on Friday (10 December) urged cash-strapped Greece to tap into available regional aid funds to help pull itself out of its debt crisis and return to growth. Greece has only used 15% of a 22-billion euro budget earmarked by the EU for infrastructure and regional development projects for 2007-2013, according to its development minister. Most of this is financed by the EU but the cash-strapped country is struggling to bring in the necessary co-financing money in the wake of budget cuts agreed in return for a 110 billion euro EU/IMF bailout. "The structural funds can help Greece [...] but let me stress that it's now your turn to actually use these funds," EU Regional Policy Commissioner Johannes Hahn told reporters.

Hahn said Greece should speed up the uptake of funding, especially cohesion monies earmarked for large investments in infrastructure and environment projects. Development Minister Mihalis Chrysohoidis told the same news conference that Greece was aiming to bring the take-up of the EU regional funds to about 18% by the end of the year and 35% in 2011. Greece's economy, which has been in recession since 2009, is seen shrinking by 4.2% this year and by another 3% in 2011. In a bid to help the country return to growth, the government presented earlier this week a draft law which offers businesses tax-cuts, low-interest loans and subsidies to invest in new projects.

News source: EurActiv link: article

Romania uses EU funds to modernise Bucharest hotel

The Bucharest-Ilfov region is using EU funds to develop its tourism infrastructure and improve its attractiveness to business travellers in the country's capital. EurActiv Romania reports. How does a country like Romania spend the money that it receives from the European Union through the structural funds? One concrete example can be found in a business district of Bucharest, where €1.8 million of EU funds are helping to pay for the extension and modernisation of a hotel. The owner of the Criss Hotel is Radu Antonie. His project is the first tourism-related investment to be approved for co-financing under the European Regional Development Fund (ERDF) in the Bucharest-Ilfov region, which is the principal hub of economic activity in Romania and has over 2.5 million inhabitants.

The project, which is due to cost around €4 million in total, involves renovating and modernising the entire hotel and increasing the capacity by adding an additional 77 guest rooms, as well as meeting rooms, a new restaurant and a fitness room. The extension and renovation of a private hotel with public money may sound surprising at first. But Antonie is confident that his hotel is in the right location to invest in new tourism infrastructure. "Very close to the hotel, there is a well-developed business park with hundreds of companies' offices and commercial spaces. People travelling on business want to stay close to their destination place, not to visit the city," he explained. Demand for rooms remains steady, even amid the current economic crisis. "Most of the time, the hotel is full, with clients even opting to stay whilst construction work is going on," the owner told EurActiv Romania. A Spanish company is also benefiting from the project, as it is responsible for the construction work currently under way. "The company is extremely serious, they have experience in Spain and they came from that country with a different perspective of doing business," said Antonie.

Conditions

According to Dan Nicula, who heads the Regional Development Agency in Bucharest-Ilfov, applicants must fulfil a number of conditions before their projects can be approved for financial support. In the case of the Criss Hotel, the decision to co-finance the project was only made after the relevant criteria had been met. "At first, the project was rejected but the manager has followed all the recommendations he received from the Agency so he applied again with a better version of the project," said Nicula. After the construction is finished, the project will lead to the creation 30 additional long-term jobs at the hotel. There should also be significant indirect benefits to the economy of the whole business district, as the hotel will make the area more attractive to businesspeople and investors. When asked about the economic and social impacts of the project, Nicula said these could only be properly assessed in the longer term – "a few years after the investment is finished".

Tourism: Important for Romania's growth

From the medieval towns of Transylvania to the beach resorts of the Black Sea coast, Romania is certainly not lacking destinations to tempt tourists. But Romania felt it was lacking facilities for business travellers rather than families. In the 21st century, business travellers expect to find good facilities wherever they go, including high-quality hotels with every convenience, from en-suite bathrooms to wireless Internet access. Any region that lacks such facilities will find it very difficult to compete for business and attract inward investment in the globalised economy. Recognising the importance of tourism for economic growth, the Romanian government chose 'sustainable development and promotion of tourism' as one of six priority axes for its Regional Operational Programme (ROP). The EU has promised to give €3.7 billion to this Programme via the European Regional Development Fund (ERDF) during the current period (2007-2013). Under the seven-year plan, a total of €559 million is reserved for 'sustainable development and promotion of tourism' throughout Romania. This money should be used, for example, to improve the quality of accommodation and tourist infrastructure, which is seen as a way to facilitate job creation and sustainable economic growth. For the purposes of the Regional Operational Programme, the country is divided into eight regions. In each region there is a Regional Development Agency, which examines proposals for projects, communicates with applicants and makes decisions on how and where the money should be spent. During the current period (2007-2013), Romania is expected to spend a total of €19.7 billion of EU money via the various structural funds. Most of this money should be used for projects that will contribute to economic growth and job creation, in line with the so-called Lisbon objectives. The main priority areas include: improving transport infrastructure, investing in research and innovation, education and training, support for small and medium-sized enterprises (SMEs), the social inclusion of disadvantaged groups, improving the environment, and promoting energy efficiency and renewable energy.

News source: EurActiv links: article

The European Union’s IPA 2007 Programme for Croatia EU Twinning Contract

The role of the Assistant of Resident Twinning Advisor will be:

To support the RTA in different aspects of his daily work including assistance in the following tasks:

• assist the RTA in the implementation of the work plan of the twinning project organising meetings, seminars and workshops, and creation of working materials for such events (slides, handouts, etc.), attending meetings, training workshops and other projects related events and producing minutes;
• assist to prepare financial information and maintaining contact with the project beneficiaries and MS experts;
• edit the monthly, quarterly and final project reports and any other relevant documents;
• provide support for office management and general work (answering phone calls, filing, photocopying, sending and receiving mails and faxes;
• identify contracting and monitoring relations if necessary (extra translation, logistics for study visits and similar);
• act as interpreter and translator for the RTA and Short Term Experts involved in the project if necessary;
• develop and maintain close working contacts and relations with Croatian project leader and RTA counterpart, and other Croatian officials involved in the project;
• assist the RTA and visiting short term experts with arrangements for travel accommodation and any other issues arising from residence and work in Croatia.

Skills and experience required for the Assistant of Resident Twinning Advisor

The Assistant of Resident Twinning Advisor will:

• Be of Croatian nationality; with a university degree, an excellent command of spoken and written English and Croatian, knowledge of German and/or Slovak/Czech would be an asset;
• Be free of any links with staff members of the Ministry of Economy, Labour and Entrepreneurship of the Republic of Croatia;
• Have excellent organisational and communication skills, and some understanding of financial management;
• Have excellent computer skills (MS Office, Excel, Internet)
• Additional training, specialisation, post graduated studies in law, social sciences, OSH will be considered as an advantage;
• Have excellent inter-personal skills;
• Willingness to travel in the country;
• Have an experience of working in Twinning or similar projects will be an advantage. Experience in the field of occupational health and safety at work are desirable.

News source: Ministry of the Economy, Labour and Entrepreneurship link: article

Romania Inches Toward Modern Motorways

The Romanian government plans to pour billions of euros into efforts to expand and modernize the country's roads and rails in 2011, one of the few sectors to get a major boost in the new budget. With less than 350 km of motorways and poor rail connections, Romania is kilometers away from the state-of-art infrastructure seen in other parts of Europe. Years of neglect, lack of funds and bad management has deprived the Balkan country of the economic growth associated with faster and easier cross-country transit. But now, with help from the European Union, the government in Romania hopes to improve the situation, even while other sectors suffer deep cuts as part of the severe austerity measures imposed as the country attempts to recover from the effects of the global financial crisis. Transport Minister Anca Boagiu said on Saturday that the state will spend €5.57 billion next year for the construction of 289 kilometres of motorway and upgrades to 166 kilometres of train tracks.

“Around 72 per cent of the Ministry’s budget, or approximately Lei 8.3 billion (€4.1 billion), will be allotted for infrastructure projects. Furthermore, €5.5 billion will come from the EU’s Transport Operational programme,” Boagiu said. The government also plans to upgrade 943 kilometres of national roads using €848.45 million from a loan granted by the European Investment Bank. Romania currently has 314 kilometres of motorways and 243 kilometres under construction. Further funding is also expected for the country's railways. Romania used to have one of the most extensive rail networks in Europe, but after years of neglect many of its 11,000 kilometres of track are in a "catastrophic state," experts say. Some of the rails are currently being modernised with funds from the EU, such as the line between Bucharest and Constanta, on the Black Sea coast. Today it takes about five hours to make the 225-kilometer journey, even more than during the Communist period. Travel time should be cut to two hours and a half by mid-2011, when the work is scheduled to be completed.

News source: BalkanInsight link: article

IMF Executive Board concludes 2010 Article IV Consultation with Bosnia and Herzegovina

After several years of strong growth, increasingly accompanied by external and internal imbalances, the economy of Bosnia and Herzegovina fell into recession in 2009. Like elsewhere in the region, Bosnia and Herzegovina’s pre-crisis growth relied on booming domestic demand financed from abroad. Sharp increases in government spending on wages and social transfers in 2008 added to demand pressures, which manifested in widening current account deficits and a spike in inflation. The global economic and financial crisis triggered a collapse in the demand for Bosnia and Herzegovina’s exports and severely curtailed cross-border financial inflows. Private investment and spending on consumer durables collapsed, while private consumption softened to a lesser extent, on the back of moderate growth of wages and social benefits. The pre-crisis credit boom came to a sudden stop.

Faced with increasing financing pressures in early 2009, the authorities put together a comprehensive program supported by an IMF Stand-By Arrangement. The program was designed to safeguard the currency board and cushion the effects of the deteriorating external environment, while adopting policies to redress fiscal imbalances and strengthen the financial sector. The authorities’ approach included: gradual fiscal consolidation accompanied by structural fiscal reforms to bring public finances on a sustainable path; steps to strengthen the resilience of the financial sector alongside commitments from foreign parent banks to maintain their exposures to BiH and keep their subsidiaries capitalized; and substantial financing from the IMF along with funds from the World Bank and the European Union (EU).

Bosnia and Herzegovina’s stabilization program has helped mitigate the impact of the global financial crisis on the economy. The IMF’s financial support package has helped minimize the impact of revenue shortfalls on government spending, thus limiting output losses. It has also helped stem the loss of foreign reserves by the central bank and shore up investor confidence. Confidence building steps, including Bosnia and Herzegovina’s participation in the European Bank Coordination Initiative, and the increase of the scope and limit of deposit insurance coverage helped restore depositors’ confidence in the banking system. Performance under the program has been encouraging: fiscal restraint is addressing large imbalances of recent years and structural fiscal reforms have advanced, albeit at a slower pace than initially envisaged.

The economy appears to have bottomed out and is projected to stage a modest recovery in 2010, paving the way for a rebound in 2011. Domestic demand will remain subdued, held in check by stagnant real wages and ongoing fiscal consolidation. This will contribute to a further narrowing of the current account deficit. Underlying inflation is projected to remain low. Private sector credit will pick-up slowly, as banks have yet to absorb the full losses due to non-performing loans in their portfolios. The program targets a general government deficit of 4.5 percent of Gross Domestic Product (GDP) in 2010.

News source: IMF link: article

Market support for clean and energy-efficient vehicles

Clean and energy-efficient vehicles are essential if the European Union is to achieve its 2020 targets for improving energy efficiency, increasing the market share of renewable energy sources, and reducing CO2 emissions. The directive on the promotion of clean and energy-efficient road transport vehicles (1), which applies to all procurements of vehicles for public transport services from this month, will broaden the market. This directive requires public authorities, when buying a vehicle, to take account of its energy consumption, CO2 emissions and pollutant emissions over the vehicle's lifetime.

What will this directive change?

The clean vehicle directive introduces for the first time sustainability obligations into public procurement law for the whole EU. All purchase decisions by public authorities and private operators concerning vehicles for public transport services will now have to take into account the impact of their energy consumption, CO2 emissions and pollutant emissions affecting air quality, integrated over the entire lifetime of vehicles.

Thus, the real costs to be encountered over the lifetime operation of vehicles are anticipated, giving a relative advantage (lower lifetime costs) to vehicles that pollute less and consume less energy. The obligation extends to all purchases of road transport vehicles by public authorities or by transport operators charged with public service obligations.

How are lifetime costs of energy consumption and pollutant emissions calculated?

The directive defines a methodology for the calculation of lifetime cost for energy consumption, CO2 emissions, and pollutant emissions of vehicles:

* Lifetime cost of energy consumption = cost per unit of energy X energy consumption   per km X total lifetime mileage

   

* Lifetime cost of CO2 / pollutant emissions = cost per kg of emissions X kg of emissions per km X total lifetime mileage

How will the clean vehicle portal help to identify cleaner and more efficient vehicles?

The clean vehicle portal has been set up to support public procurement of vehicles as well as help private users in buying a cleaner and more energy-efficient car. The portal takes advantage of Europe's largest vehicle database and provides the consumption and emission data of vehicles, as required for the calculation of lifetime cost. It features an online calculator to carry out lifetime cost calculations for the vehicles chosen. An internet forum allows public procurers to team up to joint procurement calls. This should allow aligning and bundling purchases of vehicles to achieve economies of scale with larger volumes.

The portal also gives information on the technical and economic aspects of the different vehicle technologies, including hybrid, electric, biofuel, natural gas, LPG, and hydrogen vehicles. Information is provided on public procurement legislation and specific programmes and incentives for the purchase and operation of clean and energy-efficient vehicles, at EU level and in the different Member States at national, regional, and local levels.

News source: EU Press Room link: article

Bulgaria urges fiscal leeway for Nabucco financing

Bulgaria urged the European Union on Tuesday to allow countries in the Nabucco pipeline to write off bank guarantees they are to extend from their fiscal deficits, to show the gas link is a priority for Brussels. "We have always put the Nabucco pipeline as a priority ... But I have many, many remarks on the speed of work and on its actual, real position as a priority for the European Union," Bulgarian Prime Minister Boiko Borisov told an energy forum.

"My proposal is for member states in Nabucco, the bank guarantees that we will give to the European Investment Bank, or the European Bank for Reconstruction and Development ... to be written off the deficits of these countries," he said. Borisov said if the fiscal leeway was not provided, Bulgaria would be forced to breach the EU's threshold for a deficit of 3.0 percent of gross domestic product. Bulgaria's state company BEH is one of the shareholders in the 7.9 billion euros ($10.39 billion) pipeline, aimed to transport Caspian gas through Turkey and eastern Europe to Austria and cut the continent's dependence on Russian gas.

Other shareholders include Austria's OMV (OMVV.VI), Germany's RWE (RWEG.DE), Hungary's MOL (MOLB.BU), Romania's state-controlled Transgaz TGNM.BX, and Turkey's Botas.

Each shareholder has to provide about 2 billion euros in bank guarantees, the head of the Nabucco consortium, Reinhard Mitschek told reporters on the sidelines of the same forum.

Borisov's offer concerns Bulgaria and Romania, which will have to provide state guarantees for Nabucco. Borisov said Bulgaria would not block the project in case Brussels turned down its request, but said it would be a bad signal to Bulgaria and push it to an excessive budget deficit.

The Balkan country hopes to bring its fiscal deficit to 2.5 percent of GDP next year, after a prolonged recession and hidden deficits piled up by the previous Socialist-led government is likely to push its budget shortfall to 4.6 percent of GDP.

Last week, the spokesman of the Nabucco consortium said the first gas contracts for the Nabucco pipeline should be sealed by the middle of 2011 as gas supply talks with Azerbaijan had intensified.

The pipeline, which competes with Russia's South Stream gas pipeline, is expected to become operational in 2015.

News source: Reuters link: article