Kay Swinburne, author. – Madam President, Europe’s SMEs, including in my own constituency of Wales, have shown remarkable resilience in times of recent financial troubles, but now need capital to fuel their expansion and growth. In much of the regulation that was negotiated during the aftermath of the financial crisis, there was emphasis placed on higher capital requirements for credit institutions across the board. However, we sought in this House, where possible, to minimise the impact that this would have on lending to the real economy. Part of these measures included the SME supporting factor, which was intended to provide an incentive to banks to lend to SMEs as they would receive a slightly lower capital charge for this type of lending.

However, the European Banking Authority (EBA) report on how this has been implemented suggests it is having little impact. I quote: ‘SME bank lending has suffered a significant backdrop in volumes from a peak of EUR 95 billion in 2008 to approximately EUR 54 billion in 2013-14. Bank lending to larger corporates, on the other hand, has already recovered to its pre-crisis volumes. The EBA analysis questions the effectiveness of the entire SME supporting factor. However, I do not think it is fair to look at this factor in isolation, as other factors affecting lending, such as reduced demand and confidence among the SMEs themselves, have also got to be taken into account.

Both anecdotal evidence in my own constituency and data analysed by the Bank of England suggests that nearly 77% of SMEs in the last year that have applied for bank loans have received them; so I am concerned that the EBA only looks at the level of capital supplied, as opposed to the level of capital requested, and therefore its conclusions should be treated with a healthy level of scepticism.

Can the Commission therefore explain how the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) is working with the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) to look at the wider confidence issues in the SME sector, and bear these measures in mind when reviewing the very important SME supporting factor.