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“While efforts to make it easier for Europeans to set up their own company are starting to pay off,” Euractiv reports, “a majority of EU citizens continue to hold back for fear of going bust. The Commission is now proposing taking action to reduce the stigma attached to business failure and encourage non-fraudulent bankrupts to make a fresh start.”

Small- to medium-sized enterprises (SMEs) account for 99% of all businesses in the EU, employ 77 million people, create one in every two new jobs.

EU policies initiated in 2005 to encourage SME development are already showing effect, according to the article. The cost of setting up a company in the EU-15 has dropped in the last five years €813 to €554, on average. It now takes 12 days to register a company, compared to 24 days in 2002.

Nevertheless, a recent Eurobarometer poll shows that only 28% of Europeans have ambitions of starting a company while 49% have never even considered the idea - roughly twice the US figure.

The Commission communication “Overcoming the stigma of business failure – for a second-chance policy” invites member states to:

• Disassociate bankruptcy from fraud – seeing as only 5% of bankruptcies are fraudulent – and advertise the benefits of making a fresh start;
• modify bankruptcy law so that fraudulent and non-fraudulent bankrupts are treated differently, with legal proceedings made simpler and faster for the latter;
• provide early support for viable enterprises in difficulty, including affordable expert advice and financial support to prevent bankruptcies;
• adapt insolvency laws in order to provide the opportunity to restructure and rescue a company rather than focusing solely on liquidation;
• encourage banks to be less cagey towards restarters, especially regarding access to loans;
• ensure that public procurers do not discriminate against former non-fraudulent bankrupts in tenders, and;
• provide technical and psychological support for restarters.