A plan to use 420 million ecus (£300 million) from the European Union budget to boost job creation by small companies will be put to EU governments in Brussels today.

The plan, drawn up by Finance Commissioner, Mr Yves-Thibault de Silguy, involves:

making capital available for investment by small high-tech companies;

the promotion of cross-border joint ventures;

and the creation of a guarantee fund that would make it easier for start-up companies to raise funds from private banks.

The input from the EU's multibillion-pound annual budget would be spread over three years, starting in 1998.

The proposals, which are expected to prove controversial with certain EU states, like Germany, which argue job creation is a matter for national governments, are to be debated at an extraordinary meeting of EU finance ministers in Brussels.

The talks are designed to prepare the November 20th-21st summit of EU leaders devoted to producing concrete initiatives to cut the Union's 18-million jobless total. The ministers will also review the Commission's overall guidelines for a new EU job creation strategy.

These call on EU governments to commit themselves to the goals of offering every unemployed adult a job or training place within 12 months of becoming jobless (six months for the youth unemployed) and for the reform of social security systems to encourage people currently dependent on benefits to take up work.

EU governments are also urged to cut the high payroll taxes that make it prohibitively expensive for firms to expand their workforces and stifle entrepreneurship and to lift spending on research from 1.9 to 2.5 per cent of Gross Domestic Product.

Implementation of these guidelines, the Commission believes, would create some 12 million jobs in five years and could lower EU unemployment from 10.7 per cent of the workforce to 7 per cent.

EU governments have given a broad welcome to the proposals while playing down the significance of the targeted figures for fear of raising false expectations.