Small business is backbone of Europe

The head of the European Investment Bank (EIB) says small and medium enterprises are the “backbone” of growth in Europe. EIB president Werner Hoyer told CNN that the EU’s financing institution, the EIB, will this year focus on small and medium enterprises (SMEs). “SMEs are the backbone of growth, innovation and employment in Europe,” he said. Hoyer, who took over as EIB president earlier this year, says the bank provided €13 billion of finance to SMEs last year and it intends to do the same in 2012. The EIB invests in businesses and projects throughout the continent and across the world, including Africa and Asia. The institution’s shareholders are the 27 member states of the EU, with its board of governors made up of national finance ministers. Hoyer described the EIB’s role as “Lending, blending and advising. That means we lend money for long-term investments, investments which could otherwise be financed only under big difficulties because of interest rates or the length of a loan.” Hoyer says the EIB is needed in struggling economies, adding that it had record investments in Greek SMEs last year. “One should remind oneself that the production of new technologies of innovation is in very many cases linked to small and medium sized companies,” he said. But Hoyer says the EIB is also investing in big projects in stronger economies, such as wind farms in the North Sea, because it’s important for the institution in maintaining its AAA rating. “Our investors look very closely at what we are doing — what is the quality of the loan book, what is the quality of the credits we give out?” Hoyer said.

Business needs a flatter, simpler tax system

The unlamented removal of the Occupy London protesters from outside St Paul’s Cathedral early yesterday coincided with the revelation that Barclays Bank has been prevented from exploiting tax loopholes that could have cost Her Majesty’s Revenue and Customs £500 million. On the face of it, Occupy’s rather inchoate “campaign” against corporate greed could hardly have had a more timely validation. If only life – and the tax system – were that simple. Barclays was actually seeking to make use of measures that have been utilised, without incurring penalty, by other banks. This suggests that the political climate has now become so infused with animus towards bankers that such large-scale avoidance of tax is no longer regarded as palatable, by either hard-Left protesters or centre-Right politicians. Tory Treasury minister David Gauke said the Government “will not allow those who seek to benefit from this aggressive avoidance to get an unfair advantage”. The situation is further complicated by the fact that the tax liabilities of the very biggest corporations – those whose earnings are a measurable share of GDP – are not calculated by HMRC but are instead negotiated, treatment of which smaller businesses could only dream. The interests of both parties are served by such horse-trading. It allows the Government to use the Byzantine intricacies of the tax system to ease the burden on corporations it would be loath to see re-locate to lower-tax regimes overseas; at the same time it allows those corporations to minimise their tax obligations legitimately. Given this chummy set-up, it is understandable that Barclays feels miffed at being blocked from taking advantage of the loopholes by retrospective legislation.

Older workers seeing biggest job gains

The steady improvement in the job market is good news for all Americans, but a detailed look at the data shows that older workers have been the biggest beneficiaries. The number of people over age 55 who have a job has increased by 1.69 million over the past year, to nearly 30.2 million workers, according to data released Friday by the Bureau of Labor Statistics as part of the monthly employment report. That’s a far larger increase than for any other age group. By contrast, the number of jobholders age 25 to 54 has increased by just 322,000 over the same period, even though that group includes more than three times as many total workers. In total, about 2.51 million more people were employed in February vs. a year earlier, according to the household survey of Americans conducted monthly by the BLS. The unemployment rate for workers 55 and over, at 5.9 percent, is also lower than for any other age group. “Obviously you have a lot of older workers that want to stay in the labor force,” said Dean Baker, an economist with the Center for Economic and Policy Research who noted the trend. Baker said there are several reasons why older workers appear to be doing better. One is demographics: As the American population ages, more people are turning 55 and being calculated as part of the cohort. That helps explain why those figures are growing. But another element is economics. Older people who may once have considered retiring are now holding on to their jobs or seeking new jobs, either because their retirement nest egg has diminished or they need the health care benefits that come with a solid job, Baker said.