Kok report ‘ignores’ family firms

By Peter Chapman

Date: 09/12/04

EUROPE'S family-run firms claim they have been totally ignored by former Dutch premier Wim Kok's report on kick-starting the bid to make Europe the world's most competitive economy.

Kok's report, unveiled to much fanfare last month, offers the EU a check-list of reforms that need to be addressed if the Union is to have a hope of competing with its old rivals, the US and Japan, and staying ahead of the emerging economic giant China.

But Michael Worley, president of the European Group of Owner Managed and Family Enterprises, known under its French acronym GEEF, says the report missed out a group of businesses that accounts for around 70% of the EU's non-public sector economy.

"To encourage start-ups is fine," said Worley, boss of a family-run steel company in the English West Midlands. "But to ignore those firms which account for most private sector jobs in Europe is a serious omission."

Worley has written to the Dutch Minister of Economic Affairs, Laurens Jan Brinkhorst, to encourage the EU presidency to put matters right in forthcoming discussions of the newly formed 'high level group on competitiveness and growth'.

Many of the issues concerning family firms are in the hands of national governments because they concern taxation. Coordinated policy on taxation is only possible with unanimity.

Nevertheless, Worley says that peer pressure from the Council of Ministers and the European Commission can help to nurture a more favourable environment.

He says that firms are most concerned about unfavourable tax regimes governing the transfer of a company to other family members when the owner dies or retires.

"Inheritance and gift taxes…can only be funded by raiding the assets of the company. This inevitably undermines entrepreneurial ambition and often leads to the firms' contraction or closure," he said.

High levels of taxation of retained profits - one of the key sources of finance for unlisted family firms - is also a big issue for family firms, Worley added.

The European Group of Owner Managed and Family Enterprises, known under its French acronym GEEF, said that the Kok report which presented a mid-term review of the Lisbon Agenda, had missed out their group of businesses, accounting for around 70% of the EU's non-public sector economy.