Strasbourg, 11/12/2007 (Agence Europe) - Meeting in Strasbourg on Tuesday 11 December, the 'College' of Commissioners (all the EU Commissioners meeting together) adopted a strategic progress report on economic reform in Europe under the revised Lisbon Strategy for 2005-2007, to be submitted to the European Council in March 2008. The European Commission's report's main conclusions are highly encouraging, to the delight of Commission President José Manuel Barroso. Three years after its launch in 2005, the Growth and Employment Strategy, aka the revised Lisbon Strategy, is working well and contributing to the current raft of good performance in the European economy. Structural reforms are also starting to increase the EU's future growth potential and improve long-term property prospects. The Lisbon Strategy is clearly working. It is helping Europe and its citizens position themselves on the road to success in the era of globalisation. We have had better macroeconomic results since the 1980s. Our growth and employment targets are being met and we are getting figures that we have never known in Europe in terms of budget consolidation. New companies are starting up and multiplying and greater investment is being made and important agreements have been signed with the employers and trade unions. We have given ourselves the arms to build a prosperous Europe, explained Barroso, outlining alongside EU Industry Commissioner Günter Verheugen the mid-term progress report on the revised Lisbon Strategy, which Barroso is piloting.
The President of the Commission did not, however, express any complacency, saying it would be fatal to the hopes of Europe to have an impact on globalisation. The path remains long, he warned, recognising that while good performance has been achieved by reform efforts by the EU17, it also includes a cyclical element (the economic upturn) and plenty of work remains to be carried out because progress varies from one political domain to another and the overall positive outcome cannot hide the huge differences between the member states in actual implementation of reforms. Some member states have energetically responded to the demands of the revised Lisbon Strategy, but others have been distinctly lack-lustre in their attitude to reform over the past twelve months. The Commission is therefore keeping up the pressure for the next round, 2008-2010. The EU will have to continue and deepen its economic reforms at EU and national level in order to lessen the deleterious impact of the global financial turbulence and the hike in raw material prices. The Commission's report sets out new measures to this end.
Excellent, at times record-breaking, macroeconomic performance …
Economic growth reached 3% in the EU27 in 2006 and is only expected to fall by 0.1% in 2007 to 2.9%. According to the Commission, since 2005, structural reforms have helped increase the forecast growth potential in the eurozone by 0.2%, expected to reach 2.25% in 2007. Nearly 6.5 million new jobs are expected by 2009. Unemployment is expected to fall below 7% (the lowest level since the mid 1980s) and, for the first time in ten years, strong employment growth has been accompanied by strong growth in productivity. Budget deficits in the EU27 fell significantly from 2.5% to 1.1% of GDP between 2005 and 2007, and the EU27 public debt fell substantially from 62.7% of GDP in 2005 to just under 60% in 2007). Among the main progress areas, the Commission points out that it is now possible in virtually all member states to set up a company in less than a week through the one-stop shop system. It also welcomed important progress in Better Regulation. Hailing the way nearly half of EU member states have drawn up or are drawing up policies based on 'flexicurity', the Commission calls on the member states to apply the consensus now reached on a range of common principles in this domain. Welcoming efforts by the member states on R&D, the Commission notes that if all the national investment targets are met, the EU will reach a total R&D investment target of 2.6% of GDP in 2010 (compared with 1.9% in 2005). This would be a notable improvement although the EU target of 3%, of which 2% would come from the private sector, would not be met until a later date.
… but there is still a lot to do
The Commission notes that in R&D, European countries recent investment has not matched growth in GDP. The average percentage of GDP devoted to R&D fell to 1.86% in 2006, with considerable variations from one member state to another. This leaves the EU far from the aim of 3% of GDP. In budgetary terms, the Commission notes that, despite improvements in public deficit and debt, the opportunity to take advantage of the reasonably stable growth has not been fully taken by member states, particularly those in the euro area. The Commission feels, too, that member states still have a long way to go to reduce administrative constraints and improve the business environment, especially for SMEs. It also criticised the slowness in opening the enterprise and network services sectors to competition. The Commission report also reveals that several labour markets remain segmented, with well protected workers alongside those whose situation is rather more uncertain (without the protection of a contract). It also highlights the shortcomings of the educational systems, the continuing lack of worker mobility (only 2% of working age citizens live and work in another member state), and the continued existence of obstacles to changing employment. In the area of information and communication technology, the Commission notes that Europe is still lagging behind other economic powers in terms of investment and use of ITC. Finally, the Commission stresses that several member states are still far from achieving their Kyoto targets and points out that they will have to make considerable efforts to reach the energy and climate change targets set by the European Council of March 2007.
Raft of new initiatives for 2008-2010
Ahead of the new reform period from 2008 to 2010, the Commission's strategic report reveals a raft of new initiatives in each of the four pillars of the revised Lisbon Strategy (priority sectors identified by the European Council of March 2006): - in terms of investment in human capital and modernising the labour market, the Commission calls on member states to draw up action plans and set objectives which will reduce poor school performance and improve basic reading skills; - in terms of the business environment, the Commission would like to see an integrated policy through a European “Small Business Act” for SMEs to promote their development and growth; - in terms of knowledge (education, R&D and innovation), the Commission proposes measures to encourage what it calls the “fifth freedom”, the free movement of knowledge, through the creation of a genuine European research area and specialised integrated legislation on patents. It also calls on member states to develop national broadband strategies and set national objectives for the use of the internet to achieve a 30% connection rate for the European population, and connection for all schools by 2010; - in terms of energy and climate change, the Commission confirms the importance of completing the internal energy market and calls on member states to set binding targets for reducing energy consumption in public buildings, and to systematically include energy efficiency in the criteria for awarding public contracts.
Importance of external dimension confirmed
The raft of measures brought forward by the Commission for the period 2008-2010 strengthens the external dimension of EU competitiveness by combining opening and defence of European interests. There will be deeper and more rationalised dialogue with third countries, with the emphasis being placed clearly on issues related to globalisation, with mutual interests such as market access, convergence of regulations, migration and climate change. The Commission promises to publish an annual report on market access taking information from those countries and sectors where the greatest obstacles remain.
No change in integrated guidelines
The Commission says that changes to the revised strategy will not require any amendment of the integrated guidelines adopted by common accord by member states in 2005. However, the text accompanying them will be updated.
National assessment of implementation
Finally, the report includes a member state by member state analysis of progress made and formal recommendations, and also an analysis for the euro area. The conclusions by country for each chapter are available at: http://www.ec.europa.eu/growthandjobs/index_en.htm (E.H.)