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José Manuel Durão Barroso

President of the European Commission

"Europe's invisible giants: Family firms in an open, innovative economy"

II GEEF European Meeting
Lisbon, 29 October 2007

Mr Ernani Lopes,

Mr Michael Worley,

Ladies and gentlemen,

I'd like to thank Mr Mariano Puig for his kind words of introduction, and say how delighted I am to join you today for this Second GEEF European Meeting. It is a particular honour to be invited to speak during your 10th anniversary celebrations.

Family firms are crucially important for Europe. They make a significant contribution to Europe's GNP and employment, and tend to be great innovators, with a longer-term vision. They also tend to be firmly rooted in their regional and national culture, displaying the sort of European values that we all share.

Like a family firm, Europe must also build on its strong traditions, its reputation for quality, its skills and experience. At the same time it must be innovative and adjust to rapidly growing competition.

Like a family firm, Europe must value:

Not just short term profits, but long term sustainability and growth;

Not just building shareholder value, but building trust and commitment among wider stakeholders;

Not just traditional markets and products, but also new markets and innovative solutions.

And like any family firm, we must plan ahead; anticipating and preparing for the future.

Yes, Europe is a main player in the global economy. But it has major challenges ahead, which require adjustments and are likely to intensify in the coming years. A more and more globalised economy. Climate change. Rapid advances in science and technology.

Let me say a little more about each of these three challenges in turn.

Globalisation is nothing new; but in recent years it has been accelerating at an extraordinary speed. Every day we feel the impact of the emergence of new economic players. Twenty years ago just 10% of manufactured goods came from developing and emerging countries. By 2020, China’s and India’s share alone are expected to be up to 50%.

Of course, globalisation creates anxieties. These cannot be ignored and should be mitigated. But we cannot hide from global competition. Protectionism won't protect our citizens; it will impoverish them. We need to be open without being naïve. That means encouraging others to open up as well. We can and will require a level-playing field for all.

Globalisation brings huge opportunities. We need to free the way for Europe's businesses to take advantage of those opportunities. That is why my Commission has placed the renewed Lisbon Strategy for Growth and Jobs at the centre of its agenda.

What about climate change? The EU has played a real leadership role in this area. We intend to reduce EU greenhouse gas emissions by 20% in 2020 compared to 1990. We are also prepared to be even more radical, cutting emissions by 30% by 2020, if other developed countries join us.

But it’s not just about the challenge of cutting emissions, but transforming our whole economy to a low carbon model. This idea will be central to our proposals for the UN Climate Change Conference in Bali this December. It will provide great opportunities to those companies, typically family companies, who are quick to innovate and adapt to new realities.

Innovation has been crucial to the success of your companies and is also crucial for the future of Europe as a whole.

The European Commission puts special emphasis in this area. And we are moving in the right direction. Expenditure in R&D is increasing. Member States and industry are making progress towards the 3% GDP target. The innovation gap between the EU and the US has narrowed for the fourth year running.

But still, we need to do better in bringing our research and creative ideas to market. We need to work on both sides - the demand and the supply side - to boost innovation.

We must make it easier for innovative products, services and processes to be brought to market, through the use of strong, but flexible standards.

We must establish a system of protection of intellectual property which strikes the right balance between rewarding innovation and enabling knowledge transfer.

And above all, we must ensure that product and labour markets perform in a way that encourages and rewards innovation.

Ten days ago, here in Lisbon, I set out the Commission's vision of Europe's interests in a global world to other European leaders. I explained that in a knowledge economy we need to promote the free movement of ideas and researchers. We need to imagine a fifth fundamental freedom for the Single Market; the free movement of knowledge.

My Commission has not wasted time in dealing with all three of the challenges I have just set out. And we refuse to be complacent. By the end of the year the Commission will put forward further ambitious proposals to deliver on the following objectives:

A sustainable industrial policy;

The new cycle for the Lisbon strategy;

A review of the Single Market;

And proposals to boost the competitiveness of EU companies working in high potential "lead markets".

We have also just announced our intention to adopt a Small Business Act for Europe before the end of next year.

Your firms were born as the result of entrepreneurial activity. You know the obstacles that small businesses can face in accessing markets, in accessing finance, in dealing with red tape.

The Small Business Act for Europe will address these obstacles. It will address the concerns closest to small businesses with a series of concrete initiatives.

Europe needs entrepreneurs that are not only driven by a desire for shareholder value and profits. Europe needs entrepreneurs that are capable of growth and commercial success which is built on foundations of social and environmental responsibility.

In all these areas, family enterprises have a role to play. Family firms do not perform worse than others, on the contrary!

For family firms, Corporate Social Responsibility is an old and much-respected concept. Family firms tend to take a long-term view. You depend more than other companies on a stable social structure, a clean environment and the prosperity of the community in which you operate. You take these responsibilities seriously.

A more strategic vision of Corporate Social Responsibility can be built on these traditions, where the competitiveness of the company, the personal and professional wellbeing of the employees and the environmental sustainability of the region are strongly interrelated.

We will continue our efforts to promote Corporate Social Responsibility in Europe.

We recognize your contribution and your fundamental role in achieving this task.

We understand that, faced with large corporations competing on scale, innovation is a vital weapon in your armoury, and not a luxury extra.

Your long-term perspective perhaps also means that you are less likely to underestimate the importance of the European project for European businesses.

It is exactly 50 years since the Treaty of Rome established the basis for our European Single Market. It is a terrific success story. Since 1992 alone it has created 2.5 million new jobs and generated an increase in wealth of nearly €900 billion.

It has given you the opportunity to position your companies not only in your national markets - in which you have a leading position - but also towards a market of 500 million consumers on your doorstep.

Nowadays many of you feel that Europe is your home market, indeed you may even take it for granted. But we should never forget that only one or two generations ago doing business across Europe's borders involved many thousands of different rules, regulations and standards.

And the Single Market has never been more important than it is now. It is the effectiveness and efficiency of our own market that makes us lean and competitive in global markets. You use it as the testbed for your products and services, the springboard from which you can successfully face world-wide competition.

Family businesses are as important for Europe as Europe is for family business. That is why, I assure you, the voice of family firms is heard loud and clear in Brussels.

The Commission and particularly the Directorate General for Enterprise and Industry will continue to value your contribution, and will continue to listen attentively to the concerns and suggestions of the representatives of family businesses. I would encourage you particularly to reflect on the potential of a Small Business Act for Europe and play an active role during the consultations we will carry out during its preparation.

This will provide the basis for possible future specific measures at the European level.

Ladies and gentlemen,

We are not just aware of the significant role of family business - from the smallest craft business to BMW and Peugeot - in the European economy. We also recognize your great potential.

There are many challenges ahead and a lot of work is still to be done.

We need your support to achieve the goals of the renewed Lisbon Strategy for Growth and Jobs. It is ambitious and comprehensive: we want to bring more people into work and to raise the productivity and competitiveness of the European economy.

But this will take partnership. Family firms have been the invisible giants of the European economy for far too long. And yet, rooted as they are in Europe's landscape, they are our natural partners in building an open, innovative economy for the 21st century.

It is time for family firms to stand up and fulfil their true potential in Europe!

Thank you.

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