European Union industry ministers gave the green light yesterday for smaller firms to avoid complying with some of the bloc's financial reporting rules to help cut costs and create more jobs.

"While the major benefits underlying the successive directives framed in the fields of company law, accounting and auditing cannot be contested, one needs to examine whether the instruments provided for in those directives are still suited to the ongoing process of globalisation of the economy," the ministers said.

Ministers called on EU internal market commissioner Charlie McCreevy to turn his ideas for cutting unjustified burdens in the three areas into legislative proposals by the end of 2008.

Mr McCreevy's ideas for cutting burdens include exempting micro firms, defined as having fewer than 10 employees and turnover below €500,000, from EU accounting rules.

EU states will also share experiences in cutting red tape.

The aim is to cut the number of legally required checks on companies and encourage them to communicate with public authorities electronically.

The initiative is part of the EU's core "better regulation" policy of trimming the bloc's lengthy rulebook and updating the single market to make life less cumbersome in particular for smaller firms, the bedrock of the 27-nation economy.

Member states would be left to say what a simpler set of reporting rules should be, but this has raised fears that some countries will actually add new rules.

- (Bloomberg)