MEPs slash red tape for 9 out of 10 London firms

4.00.00pm GMT Wed 10th Mar 2010

The European Parliament has voted in favour of exempting struggling small businesses from producing onerous annual accounts. The amendment to EU company law would vastly reduce red tape for the smallest firms, which are 90% of the total number of businesses in the capital.

London Liberal Democrat MEP Sarah Ludford said:

"This will give small businesses the breathing space they need in a tough economic environment."

"Two million businesses in the UK have fewer than 10 employees, with 9 out of 10 London firms falling into that category. This slashing of red tape and costs will boost London's economy and help create jobs."

"EU governments must now endorse this proposal. The Brown government needs to work with LibDems to lighten the bureaucratic burden."

Liberal Democrat MEPs have also backed a €100 million (£90 million) microfinance scheme. LibDem leader Nick Clegg recently launched in London the party's campaign to revitalise Britain's high streets by saving independent shops (12,000 of which closed last year) through reform of business rates and local decisions on whether competition from supermarkets should be permitted.

ENDS

Note to Editors

The objective of this measure is to reduce the bureaucratic burden on small companies in order to enhance their competitiveness in the current financial and economic crisis. Small firms would still have to keep records showing the company's business transactions and their financial situation, but would no longer have to observe the same reporting rules as the big companies that have the time and money to produce annual accounts with ease.

Those which would benefit are businesses where two of the following three criteria apply: balance sheet below €500.000 (£400,000); net turnover below €1,000,000 (£880,000); fewer than 10 employees. The London Development Agency's 2004 London Annual Business Survey estimated that 9 out of every 10 London businesses employed fewer than 10 people.