The 2013/03/14 at 08:32
Valérie Demon, in Madrid
During a debate on the state of the nation on 20 February, Mariano Rajoy set out to mark a new stage. After one year of intense austerity, the Spanish President announced a series of reforms to help SMEs and small company heads who can potentially help drive the country’s economic recovery.
The first major measure, long requested by small company heads: from 1 January 2014 onwards, the latter along with SMEs invoicing less than 2 million euros will only pay VAT when their clients have actually paid the bills. Indeed, the sector has been notching up cash-flow problems for several years, namely due to huge delays from public administrative bodies. “We have been demanding this measure since 2010. Better late than never. We’re satisfied,” comments Juan de Lucio, Head of the Research unit at the High Council of the Chambers of Spain. The Spanish government will also give an extra nudge to entrepreneurs who have accumulated unpaid invoices predating January 2012 and who were unable to benefit from the former plan in 2012. 2.7 billion euros will be allocated to this end.
Another support measure consists in reducing contribution rates for new enterprises in their first two years of existence, cutting rates from 30 % to 15 %. Enterprises with turnovers under 10 million euros will be able to deduce, from their taxes, up to 10 % of profits reinvested in economic activity. “This is good news even if we would have liked all companies to benefit from these deductions. The effects of this measure will be limited, but positive,” declares Juan de Lucio.
Providing a more direct form of aid, 45 billion euros will be unblocked to go towards Spain’s Official Credit Institute thanks to the help of healthier banks and the creation of approvals and guarantees. “The effect will be moderate, it will allow current financing problems for SMEs to be lightened,” continues the Head of the Research unit of the High Council of Chambers of Spain. What remains to be seen is whether these new measures will truly facilitate access to financing. Banks often defend themselves by asserting that few enterprises request loans. “If bank requirements are high, if financing rates are high, or if they request too many approvals, small enterprises will come once or maybe twice, but not three times,” considers Juan de Lucio. The Head of the Research unit is also extremely concerned about the unequal conditions for access to financing in Europe. “We are supposed to be in a single market, it’s not logical that certain enterprises in northern European countries get financed less dearly than those in the south,” he opines.
Madrid has also presented various measures for cutting youth unemployment (over 53 % of under-25-year-olds are jobless) and for promoting the setting up of companies: the granting of a bonus when a company employing a young person transforms the work contract into a permanent contract; reduced social contributions over a six-month period for young entrepreneurs; the possibility of receiving unemployment benefits during six months while launching an entrepreneurial activity. Finally, as long as the general unemployment rate does not go below 15 %, a bonus system will apply for companies employing young people aged under 30 years.
The Head of the Research unit of the High Council of Chambers of Spain believes that the general context of the Spanish economy has evolved in the space of one year: “Today, no one speaks about financial rescue or the breakdown of the euro as in 2012. True, there is still a long way to go, but all these measures that have been announced will help 2013 to be not as bad a year as last year.” The uncertainty and tension over Spain may have eased, but Juan de Lucio remains very concerned about Europe’s future. “The consequences of the Italian elections, the current doubts over France, and the slowdown in Germany are worrying. If France and Germany begin to show signs of weakness, our foreign trade will suffer. My main fear concerns the EU’s desire and capacity to advance towards the Eurozone banking deal and greater integration,” says the Head of the Research unit.