Brussels, 27/01/2005 (Agence Europe) - On Thursday, together with a series of other reports (see yesterday's Europe, p.11), the Commission adopted its second report on the implementation of the BEPGs (Broad Economic Policy Guidelines) for 2003-2005. The report notes that progress in 2004 is very uneven, both at industry level and at Member States' level. In a press release, European Economic and Monetary Affairs Commissioner Almunia said: “Member States need to embrace the path of economic reforms more convincingly if they want to achieve the ambitious objectives they have set themselves in terms of increased competitiveness and job creation”. As reported in Europe of 26 January, p.8, the best performance was found in Belgium, the Netherlands, Demark, Finland and Ireland. Cyprus and Slovakia are also described as good examples of countries whose implementation seems to be satisfactory, compared with the recommendations made to them in 2003, notes the Commission. We will return to the Commission Communication in more detail in our Europe/Documents series.
Generally speaking, the pace of labour market reform was maintained, the liberalisation of the energy and other network industries progressed, competition policy was enforced more forcefully and the European Union's single market functions better - all of which contributed to an overall improvement in the business environment and the competitive process, notes the report. Labour market reform has been pursued in Germany, Denmark, the Netherlands, Ireland and Austria in particular, focussing on tax relief and lifelong learning strategies rather than pay negotiations and job protection legislation. The report notes that no Member State has yet taken on the issue of permanent contracts, which sometimes provide too much protection, or market segmentation depending on type of contract. Liberalisation in network services like energy in Belgium, the Netherlands, demark, Luxembourg, France, Ireland, Italy and Portugal, and implementation of competition policy are quoted as positive achievements.
Progress in terms of environmental sustainability can be illustrated by finalising the EU greenhouse gas emissions trading system, although emissions are not yet being brought down fast enough to honour the EU's Kyoto commitments. In 2004, several Member States attempted to promote energy efficiency and the use of substitute energies. Four tried to foster renewable energy through the tax system, namely Finland (which removed renewable energy from the tax system), Denmark, Germany and Spain, through electricity pricing.
Little progress has been made in terms of moving towards a knowledge-based society, particularly in terms of integrating services and budget discipline. Without a change in policy, the target of increasing R+D investment to 3% of GDP by 2010 will not be reached, notes the Commission. It observed a modest increase between 2000 and 2003 (of around 2%) but this will not bridge the gap with the United States.
The integration of the internal market has slowed down and delays are setting in for the transposition of internal market directives. Only Spain and Lithuania managed to hit the agreed target of less than 1.5% of EU directives untransposed (see page 20).
As it reported in its autumn forecasts, the Commission's comments on improving public finance came as no surprise. Together with under-par growth in 2004, the nominal eurozone deficit almost hit the 3% GDP limit. The introduction of a stable Presidency of the Eurogroup should provide greater continuity in the way the eurozone is represented in international meetings. In the EU25, 'only eight EU Member States broadly managed to achieve and/or maintain a budget of 'close to balance or surplus' (namely Belgium, Denmark, Estonia, Spain, Ireland, Luxembourg, Finland, and Sweden). Budget deficits widened in ten other Member States, particularly Greece and Poland, with surplus turning to deficit in four other Member States. The impact of the ageing population remains a major concern. A number of countries, notes the Commission, 'important pension reforms were undertaken in 2004', 'while in others they appeared insufficient to contain the budgetary burden arising from an ageing population (Greece) or are only at their initial stages (Czech Republic).