Small businesses can play a vital role in strengthening and developing the economy of Europe, but only if Brussels allows them to fulfil their potential.

That was the call of the Federation of Small Businesses (FSB) ahead of the publication of the EU Small Business Act.

The Act will establish a framework for the way in which the EU deals with small businesses. The aim of the Act is to make a ‘think small first’ principle central to future business legislation, acknowledging the disproportionate burden that regulation often places on small enterprises.

The FSB said it wanted to see four measures included in the Act that will have immediate benefits for small firms.

These include regulatory exemptions for micro enterprises (those employing fewer than 10 staff); a small business element to impact assessments; EU common commencement dates on which new regulations come into effect; and a consultation period on proposed new rules of at least 12 weeks.

Although the four issues are expected to feature in the European Commission’s draft, the FSB said it was concerned the Act will contain too many caveats.

For that reason, the FSB has urged that the better regulation agenda be set in stone when the Act is negotiated in the Council of Ministers during the coming EU French Presidency.

Tina Sommer, the FSB’s EU and international affairs chairman, commented: “Small businesses will make a vital contribution to bringing Europe out of its economic gloom, but the EU must release them from their administrative shackles and allow them to fulfil their potential.

“The Small Business Act provides a critical opportunity to give Europe’s entrepreneurs a better deal. The European Commission’s proposals are a good place to start, but national governments must significantly beef up this document for it to offer tangible benefits to all small businesses.”

Ms Sommer added: “As Europe’s economy continues to slow down, our message to the EU is: help small businesses to help you. This may be an act for small businesses, but it must have bigger ambitions and concrete actions to be considered worthwhile by Europe’s entrepreneurs.”

Another UK business group, the Forum of Private Business (FPB), also argued the case for using the Act as a means of giving priority to the concerns and requirements of small firms and start-up enterprises.

The FPB took the opportunity of a conference on the EU Small Business Act, organised by the European Economic and Social Committee, to stress the importance of removing the barriers that cause many businesses to fail in their first year.

Phil Orford, the FPB’s chief executive, called on the European Commission and the governments of the EU member states to do more to protect small firms at the stage of their growth when they are most vulnerable, particularly during the current global economic slowdown.

Mr Orford told delegates at the conference: “We – as organisations representing small businesses across the European Union – have an opportunity to use the Small Business Act for Europe to hold the commission and member states’ governments to their commitments.

“Our members cannot do this by themselves. We have an obligation to support our members by driving a better regulation and simplification agenda.”

Mr Orford added: “One – just one – mechanism is the Small Business Act for Europe, which incorporates a process that takes into account the impact that all regulation will have on small businesses, which, in turn, will provide an element of certainty so enabling businesses to plan ahead.”

In particular, the FPB said that politicians had to consider small businesses first when introducing tax policies and new legislation, insisting that the dual burdens of disproportionate taxation and over-regulation must be addressed as a priority.

Other barriers to the survival and growth of small businesses, such as the problem of late payment by larger companies, also need to be solved, the FPB said.