The European Commission has been frustrated in its efforts to set up a €100 million fund to support entrepreneurs because of disagreement between MEPs and national governments on where to find the money.
The Commission proposed setting up the fund (known as the European Microfinance Facility) in June as a rapid-response measure to compensate for the reduced availability of credit since the start of the crisis. It planned to manage the fund in partnership with the European Investment Bank and other international financial institutions and had wanted to set up the fund by the beginning of 2010.
MEPs and the Swedish presidency, however, failed to reach agreement on the scheme at a late-night meeting on Tuesday (8 December). The meeting was the last opportunity for agreement to be reached between the Council of Ministers and the Parliament before MEPs vote at a reading on 15 December. The failure means legislative work to set up the facility will continue well into 2010.
The Commission proposed that that money for the facility should be diverted from Progress, an EU programme to support social policy objectives.
The Parliament’s employment and social affairs committee, however, voted on 10 November that the money should be found from unallocated funds in the EU’s multi-annual budget. They also voted that the size of the facility should be increased to €150m. Kinga Göncz, the Parliament’s lead MEP on the dossier, said that taking money from Progress would send the “wrong signal” during a time of rising unemployment.
National governments support the Commission’s approach. Diplomats said that a number of member states, enough to form a blocking minority, firmly opposed using money from sources other than Progress.
The Commission estimates that the fund could leverage €500m in private sector support to entrepreneurs. José Manuel Barroso, the president of the European Commission, has said that the fund is a key part of the EU’s “social recovery plan” from the crisis. “Many perfectly viable small businesses are having difficulty getting access to finance because of banks’ current reluctance to lend,” he said.