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Speech
by President Barroso Ladies and gentlemen, I am delighted
to be here for the launch of the CER Lisbon Scorecard. This is now the eighth
edition of the Scorecard. CER has shown a sustained commitment to the Strategy.
I am very grateful to them for their work. I am particularly pleased to be welcomed here by Charles Grant who is such an authoritative voice on EU affairs. Once again, the Scorecard is compulsory reading for anyone wishing to understand and evaluate the Strategy. Coming as it does just days before the crucial European Summit, it is a valuable contribution to the debate. Indeed, it contains important messages which Europe's leaders would be well advised to listen to. Having said that, I must say that I find the overall grade that you have given the EU and Member States for the reform efforts a little harsh. A grade of C+ is probably not what most parents would want their children to bring home from school. The message seems to be: "you have done ok, but you need to do better." Well, I agree with the second part; we certainly need to do better. But I might quibble with the first part; I think we've done a bit better than ok. As you say in the Scorecard, the Strategy has helped to persuade Europeans of the necessity of reform. It has changed political priorities at national level. There is now a consensus as to the basic direction of reform. Issues such as innovation, better regulation and flexicurity have risen up the political agenda across the EU. Member States are learning from each other what works and what does not. As the Scorecard says, Lisbon has turned the EU into "a laboratory for economic policies." Nearly 6.5 million jobs have been created in Europe in the last two years. Unemployment is at its lowest for 25 years. What's more, job creation has gone hand in hand with productivity improvements. Productivity is now growing faster in the EU than in the US. These are no mean achievements. In its title, the Scorecard asks an important question: "Is Europe ready for an economic storm?" The answer to this is yes, it is. And this is partly thanks to the Lisbon Strategy. Of course, Lisbon cannot shield us from negative economic developments whose origin lies outside of Europe. In today's inter-connected economy, that is impossible. So we have had to trim our growth forecasts slightly for this year. But we are still predicting growth of 2% - a very respectable performance. The reforms already carried out have made our economies more resilient and flexible. This has left us better able to cope with external shocks. Of course, when conditions deteriorate, the voices of those who feel threatened by globalisation inevitably get louder. The drum beat of protectionism grows stronger. Equally, there are always people who call for a change in direction or an artificial stimulus package for the economy. But these are siren calls. They seem superficially attractive. They appear to provide easy answers. But if we heed them, we will do more harm than good. We must say no to "quick fix" solutions. A retreat into protectionism would be madness. Europe has been a huge winner from globalisation.
[With just 7% of the world's population, Europe accounts for 30% of economic output. We account for seven of the ten most competitive nations in the world. And, despite the rise of China and India, we remain the world's largest trading entity. In fact, our share of world exports has actually increased over the past decade. European countries accounted for nearly 50% of global FDI inflows between 2000 and 2006. America's investment stake in Europe rose to $ 1.2 trillion in 2006, nearly three times larger than corporate America's investment position in all of Asia. U.S. assets in the UK are the largest in any nation in the world, totalling $ 2.3 trillion in 2005. An amount greater than total combined U.S. assets in Asia, South America, Africa and the Middle East. U.S. assets in the Netherlands ($ 868 billion) were the second largest in the world in 2005. In 2006 U.S. companies ploughed another $128 billion into the European Union. This is a record amount, eclipsing even the investment boom of the late 1990s. It shows that not only are the figures for FDI flows into Europe impressive in absolute terms, but the trend is in the right direction.] There is plenty of empirical data to prove this. But people's perceptions often differ from the reality. For many people, globalisation is still something to fear. I am particularly concerned about young people in Europe. We must convey a positive message to them. Globalisation is not going to go away. They will have to live with it throughout their lives. We must give them the confidence to do so. We must not tell them that globalisation will destroy Europe. It won't. We must tell them that there are huge opportunities out there and that they must grab them with both hands. We must create a culture of optimism in Europe. As I have said time and time again, globalisation is not a zero sum game. The emerging economies' gain is not our pain. Globalisation has created a win-win dynamic, allowing millions of previously impoverished people to get richer while the developed nations also benefit. So, do we want to turn our backs on all this? I do not think so. The Lisbon strategy is Europe's response to globalisation. And it is working. It is a strategy for good times and bad. It was right when the economic conditions favourable. And it is also right now that they are less favourable. We do not need a new strategy. We need to pursue the existing strategy, but with greater vigour. Ladies and gentlemen, let me now turn to the Scorecard itself. It divides Member States up into "heroes" and "villains" and those in between. Ranking the performance of different countries is inevitably a very tricky business. I recently attended the launch of the Lisbon Council's Jobs and Growth Monitor. The ranking they give to particular countries is somewhat different to yours. This is not to decry what you - or they - are doing. Far from it. Reports such as yours enrich the debate and generate interest in the Strategy. But it does demonstrate that assessments vary depending on the methodology and criteria used and that one can arrive at different conclusions and about national performance depending on the approach taken. Having said that, the Commission has not shied away from saying in general terms that the performance has been uneven. Some Member States have clearly shown more commitment to reform than others. In the past 12 months in particular, signs of "reform fatigue" have become apparent in some countries. This is a cause for concern. Europe's economies are highly inter-dependent. Prosperity in one generates prosperity in the others. Sluggishness in one holds the others back. In other words, the laggards damage not just themselves, but others too. Fortunately, we have a very powerful instrument under the Treaty in the country-specific recommendations. The adoption of the recommendations last year was a big step forward. This year, we have fine-tuned them. I will give you a few examples in a moment. We expect the Spring European Council to endorse them and they will then be adopted by the Council. This means that Member States agree collectively what individual Member States should be doing to reform their economies. The recommendations provide a basis for discussion with social partners and stakeholders and strengthen the hand of those who want change. In many Member States, they have had a major impact. It is essential that, in the next cycle, all Member States press ahead with them. The next step is for each Member State to set out exactly how it intends to respond to the recommendations addressed to them. What measures? By when? How will they be financed? Their proposed responses will be assessed by the Commission and discussed as part of the existing "multi-lateral surveillance" process in the Council. This should help to ramp up the pressure a little. I very much agree with the last sentence of the Scorecard; governments need to have the courage to hold each other to account when promises are not kept. I think that your analysis is fairly similar to ours and that the conclusions you reach more or less tie in with the recommendations. Italy, for example, has received recommendations relating to their labour market, their government debt levels and the need to prepare for the ageing of the population. For France, the recommendations emphasise the need to ensure fiscal sustainability and reform the pensions systems, as well as the need for greater competition in the gas, electricity and rail freight sectors. France is also urged to adopt a flexicurity approach to overcome labour market segmentation among different contract types. The UK has a country-specific recommendation, in the area of skills. Skills levels must be improved to improve productivity and increase opportunities for disadvantaged. Of course, we agree too with the conclusion that some of the new Member States will have to raise their game if they want to cope with competition from emerging Asia. Hungary, for example, has done very well in consolidating its public finances but must now increase its efforts to modernise its economy. Poland has received recommendations to improve public finances, strengthen competition in network industries, reform the public research sector and develop a flexicurity approach. So, you see, we have not pulled our punches. Our partnership with the Member States is based on honesty and constructive criticism. It is also important to remember that all Member States face important challenges, even those who are "heroes" today. Both Austria and the Netherlands, for example, need to take steps to increase the labour supply. And Estonia, which has done very well in making its business climate more attractive, must also work hard to prevent overheating. Being top of the class does not mean that you have nothing left to learn. If you stop getting better, you will not be top of the class for long. Heroes and villains alike, no Member State can afford to take its eye off the ball. As well as assessing progress on a country by country basis, the Scorecard analyses progress in different policy areas. This analysis is rich and detailed; I cannot possibly do justice to it here. But let me make one or two points. The Scorecard is rather dismissive of our 3% R&D target. You argue that the EU is too diverse in terms of its industrial structures for a single R&D target to make sense. This is based on a misunderstanding. 3% is an EU-wide target within which Member States set their own national targets. I think the target has been useful. It has helped to focus minds. We may not reach it by 2010, but we are definitely moving in the right direction. However, I agree with your basic point: we should not become overly focused on a narrow spending target. It is more important to get the framework conditions right. Indeed getting these conditions right is the key to increasing private sector investment which will help us hit our targets. How do we do this? Well, we need a strong and vibrant single market. I was glad to see that the Scorecard emphasises the importance of service sector liberalisation. A lack of innovation and slow productivity growth in certain key services sectors is what is holding us back. Clearly, full and timely implementation of the Services Directive is a top priority. The Scorecard describes the text which emerged from the legislative process as a "pale copy" of the original. I think this is slightly exaggerated. The directive will make a difference by considerably simplifying authorisation procedures and red tape. The Scorecard also stresses the importance of completing the internal market for energy. As you say, we must achieve a fully-integrated and competitive energy market which will also help us to meet our environmental policy objectives. I believe that the omens are good. We are making progress. The Commission will not give up until a genuine solution is found, and one which secures full unbundling or its functional equivalent. Your analysis of the business start up environment is interesting. You seem to suggest that Europe has enough SMEs but that they are much less likely than their US counterparts to grow into global giants like Google or Microsoft. This ties in with our own assessment. That is why I will be asking the European Council next week to endorse the idea of a Small Business Act designed to remove legal and administrative obstacles to SME growth at all stages of their development. This will not be an American-style Small Business Act, reserving certain procurement contracts for SMEs, or otherwise distorting competition. Nor will it be just a simple political declaration or a catalogue. The idea is to set SMEs free, not make them dependent on state largesse. Finally, you rightly point out that, although Europe has created jobs at an impressive rate, young people are still losing out. This is a persistent problem for many EU countries, as young people are still more than twice as likely to be unemployed as the average for the workforce as a whole. Part of the problem is that nearly one in six young people drop out of school early. Our December package tackles this problem head on. We must give these young people the skills they need to succeed. With the demographic situation as it is, we cannot allow the talents of any of our young people to go to waste. Ladies and gentlemen, CER is a strong voice for economic modernisation in Europe. You have consistently supported the Lisbon Strategy through your work. I would like to thank you for everything you have done so far. We now need to make the new cycle a success - not least so that it can form the basis for an even better new programme beyond 2010. I know that we can count on your continuing support. Thank you. |