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European Commission Vice President responsible for Industry and Entrepreneurship
Lecture and Discussion with students at Regent's College
3 December 2012
Ladies and gentleman,
It is a great pleasure for me to be here again, at Regent’s college, an institute which fosters entrepreneurship and innovation. On my last visit in March, I talked about a wish I had. This wish was to take a fresh look at EU Industrial Policy and to make it more competitive.
Well, (we did just this.). On 10 October, the Commission adopted a new Industrial Policy Communication on a Stronger European Industry for Growth and Economic Recovery. This Communication is an update of the existing EU Industrial Policy of 2010.
This update was made for two reasons.
1) One, because the economic situation and the state of industry in the EU has deteriorated significantly, especially since mid-2011 [mid two thousand and eleven]. Industrial production did initially recover after the 2008-2009 [two thousand and eight, two thousand and nine] crisis. But it has started contracting again. It now remains at about 10% below its pre-crisis levels. Also, the employment situation is increasingly worrying. We have lost 3 million jobs in manufacturing in the last 4 years.
2) The second reason is that around the world, we can see increasing evidence of a new industrial revolution taking place. A number of new technologies are converging to deliver new products and increase productivity. I am speaking about new materials such as bio-based plastics, new processes such as 3D printing and new ways to deliver energy such as smart grids.
Europe can and should take the lead in this new industrial revolution. We have great assets like our Single Market and some of the world’s best research infrastructure. What we need is a strong manufacturing base to deliver these innovations. What we want to do is to reverse the declining trend. We want to return to a share of industry similar to that at the end of the 1990s.
That is why we have set ourselves a political objective: industry to account for 20% of EU GDP by 2020. At present, this share is just below 16%. This figure is not unachievable. If we simply correct some economic imbalances such as the one on real estate there is room for more real economy.
The Member states which have performed best during this crisis are the ones with stronger industrial base and capacity to export.
The UK, like France, is significantly below this level (at about 10%). Both will need to act aggressively to build a strong industrial base at home.
We recognise that industry is the backbone of our economy. It plays a crucial role in the growth of related services sectors; for each job in manufacturing another is created in related services.
Taking into account current performance and challenges to EU industry, and after wide consultation, we have focused our policy on four pillars:
1- More investments in industrial innovation.
2- Access to finance.
3- Access to markets.
4- Skills and training.
Let me (briefly) take each in turn.
The first: More investments in industrial innovation. Our aim to push for more investment and to remove uncertainties surrounding investments. We must invest in the early stages of adopting new technologies. Only then, will we take the technological lead and get a return on our investment. A return in terms of jobs and growth. Investment is, after all, a matter of confidence in the future.
Our policies can never be about "picking winners’, so we are taking a horizontal approach. We have decided to target six technologies:
Access to finance
The second, Access to finance. Improving access to finance for businesses is an important pillar of the Europe 2020 strategy. It is especially important for SMEs to be able to innovate and to become more competitive. SMEs, in particular, face obstacles in accessing debt and equity financing. The situation has become worse with the crisis. The Commission is making a concerted effort in this area.
I believe that the role of public support is also very important, especially through a strengthened collaboration with the private sector. The EU has put in place a set of financial instruments which are targeted to different needs and which rely on the support of private investors.
Under the current Competitiveness and Innovation Framework Programme (CIP), the European Commission is providing 1.1 billion Euros for loan guarantees, and venture capital channelled via financial intermediaries to SMEs. Besides, to improve the EU market for venture capital, we recommend:
The third pillar is improving the internal market. We have a big internal market, this is one of our major assets, but we have to ensure that this Single Market works effectively in all domains: goods, services, networks, utilities and the digital economy. Framework conditions, rules and standards can be better designed to have an effective market. Trade in goods in the internal market is just below 21% of GDP. Our target is to increase this rate to 25% by 2020.
A strong single market creates a strong home base for all our companies. It allows them to face external competition more efficiently. By 2015, 90% of world growth will be generated outside Europe. Today, only 13% of European SMEs are internationally active outside the EU. European SMEs have to be a part of the future, and we need to find the best ways to help "Small Companies" prosper in the "Big World".
This is why I have taken several groups of industry representatives and SMEs on my ‘Missions for Growth’. We have created many business partnerships and opportunities in several Latin American and North African countries. We will continue with these missions next year, notably in Asia.
For me, these missions for growth are not only exploiting business opportunities, but also about restoring confidence in Europe. My message is that ‘Europe is in business’.
Skills and training
Our fourth pillar focuses on skills and training. We need a better match between the demand and supply of skilled labour. People want to work, and our firms need certain skills. Our education systems must make sure our youth are equipped with the skills and knowledge for tomorrow's industry.
We have already started the ball rolling with these four pillars. To achieve common goals, we will need true partnership involving EU institutions, Member States and industry.
Europe has some of the best R&D institutions, the most efficient infrastructure, world class businesses, a big single market, and most importantly, a highly skilled workforce. The foundation is in place for SMEs to grow their businesses.
SME’s already create more than 85% of all new jobs in Europe. 99% of businesses are small and medium-sized enterprises.
But, a recent Eurobarometer survey showed that 51% of Americans and 68% of Chinese would like to be their own boss. In Europe this figure was only 37%. We must create a more favourable climate to get more young people into entrepreneurship.
How can we create this environment?
This is one of the objectives of the Small Business Act for Europe. The act fosters an entrepreneurial culture and business-friendly environment. SMEs are an engine of economic recovery. They are also at the centre of the Europe 2020 strategy, the EU’s main strategic document.
The Commission is also proposing an "Entrepreneurship Action Plan", to be adopted before the end of this year. The plan’s focus is on revolutionising entrepreneurial culture in Europe and creating a favourable environment for entrepreneurs. We want to create an environment that allows easy access to finance, and one that reduces administrative burdens.
An open and effective business environment is a catalyst for growth. It promotes business activity and reduces unnecessary costs for enterprises.
Over the past few years, many EU countries have adopted legislation and set up "one stop shops" for starting companies. It now takes, on average, 6.5 days to register a company. We are aiming to reduce it further, to 3 days or less, at a cost of less than €100. Both Member States and the Commission are working on cutting red tape for businesses.
We must also accept that business failures and successes are natural processes, inherent in economic life. The failure of today probably contains the seed of tomorrow's success.
Entrepreneurs who have failed are valuable assets for Europe. They learn from their mistakes. When they start for a second time, they have lower failure rates than new entrepreneurs. We must give them a second chance because they are creating jobs.
But even a favourable environment is not enough. What takes place in people’s heads and hearts is crucial. If you are innovative, if you take initiative, if you don’t shy away from taking risk, and if you have good communication skills, then you are entrepreneurial.
The good news is you can learn these skills and develop such attitudes. And this is where entrepreneurial learning comes in. Research shows that young people, who have entrepreneurial experience during their education, are more likely to start their own business. They are employed faster too.
According to a recent study, 78% of young people who followed an entrepreneurship course at university found their first job straight after graduation. In short, entrepreneurial learning can benefit our societies in many ways.
To conclude, let me stress that the bright young people that we have in Europe should be encouraged to become entrepreneurs. This is why the Commission is promoting entrepreneurial learning across Europe and at all levels of education, starting from primary school. You are our future and we rely on you to bring growth to the European Union. I encourage you to use your entrepreneurial spirit and turn your ideas into successful businesses.