Small and medium-sized businesses consistently underperform compared to their American counterparts and larger companies when it comes to productivity, growth and innovation.

So says the European Parliament in a report which calls on the Council and Commission to join Parliament in making the Small Business Act legally binding. The report was adopted with 536 votes in favour, 47 against and 47 abstentions.

While the European Parliament supports the Commission's Communication of 25 June 2008, which introduces ten guiding principles aimed at promoting the growth of small and medium-sized businesses, it stresses that implementing these principles at European, national and regional level is an "absolute necessity".

The report by Edit HERCZOG (PES, HU) also calls for mandatory, systematic and targeted impact assessments for SMEs, known as an ‘SME test’. The SME test should apply to all new proposals for EU legislation affecting business including simplification of existing legislation and withdrawals of pending proposals, the report says, and Member States are encouraged to introduce similar SME tests at national level.

Moreover, MEPs stress that common commencement dates for new Community legislation affecting SMEs should be introduced and that red tape must be cut by at least 25%.