Speech by José Manuel Barroso
President of the European Commission

Centre for European Reform: Launch of 'The Lisbon Scorecard V: Can Europe compete?'
Brussels, 17 March 2005

"Decoding the Lisbon mythology"

Mr Chairman,
Ladies and Gentlemen,
Let me thank you for this kind invitation to join you today.
The Centre for European Reform has been one of the most vocal supporters of the ambitious agenda for reform launched in March 2000. I welcome this support.

At the same time your real strength has been your ability to shine a spotlight, area by area, on those who are leading the way and those who risk slipping behind.
Over five years your scoreboard has grown into a useful and serious measure of progress towards our Lisbon goals. Your analysis, underpinned by the freedom you enjoy to present things very directly, has focused media and political attention across Europe.
And let me say from the outset that I am encouraged by the similarity between your assessment and that of the Commission.
- First, we share a common concern that reforms have not gone far or fast enough.
- Second, we both recognise the political climate is changing in response to global competition and an ageing population; the need for action is urgent.
- Third, we agree on the need for Europe to step up a gear, while acknowledging that serious and real efforts to reform are being made in many Member States.
- Finally, we share the view that there are "cautious signs for optimism". Lisbon is about achieving the possible, not the impossible. Economic reform will take off in the second half of the decade. In part, this is because of the growth and jobs dividend that the first five years of Lisbon reforms are starting to deliver.
Next week's European Summit has the potential to be a turning point. So let me take a few minutes to explore the "mythology" of the Lisbon strategy and set out why the path to growth and jobs is more likely to be a case of a European renaissance than a classical tragedy.

Mr Chairman,
As your Report recognises, this Commission has placed growth and jobs at the centre of its priorities; a choice strongly supported by the European Parliament last week.
For some this is a risky strategy.
Yes. There are important reforms at an EU level - service markets, boosting research and innovation, getting a good deal on the future financial settlement for the Union.
But real success from labour markets to tax, pensions and education policy is largely (and rightly) in the hands of the Member States. So we need action not more words from next week's Summit. We need a clear and unambiguous commitment to change.
So why has the Commission taken this risk?
Because boosting our economic performance and giving more people the opportunity to work hold the key to our wider ambitions for society and an improving quality of life. Moreover, in the face of global competition and demographics standing still is not an option.
In the words of the high level group, chaired by former Dutch Prime Minister Wim Kok, which reviewed the Lisbon strategy: "Governments and especially their leaders must not duck their crucial responsibilities. Nothing less than the future prosperity of the European model is at stake".

So what is the Commission's response?
At the centre of our approach is a vision of a strong, competitive and reforming Europe; a Europe in which citizens in every part of a new, larger Union enjoy improvements in their standard of living.
And as you acknowledge, if we look today in global terms at the competitive position of EU Member States and business there are encouraging developments, along side well as causes for major concern.

On the positive side:
- The Union has already shown through the Single Market, the euro and Enlargement that it can mobilise support for far-reaching reform.
- In almost all areas of the Lisbon reform agenda, your scoreboard confirms that we have countries that meet the Lisbon targets - five years ahead of schedule.
- Moreover, difficult national reforms of labour market and pension systems are now being pursued; investment in knowledge and other areas is being raised; important reforms from telecoms, energy and gas to public procurement have been put in place at EU level.
- And we must not forget that economic success is driven principally by businesses and not by governments. Look at Airbus or GSM, we can still be proud of our strong industrial base and dynamic small and medium-sized business.
But despite these positives, on the negative side:
- The strong performance of some is been offset by economic malaise in others. GDP per head for the EU as a whole is still only around 70% of that in the US - the same level as 30 years ago;
- Not enough has been done to close the gap with the US in key areas such as productivity growth, or public and private investment in research, new technologies or the infrastructure needed by a modern economy;
- Overall employment rates are lower here than in the US (particularly for key groups such as young people, women and older workers); and
- Significant gaps remain in our enlarged Single Market, most importantly for our service sectors. Yet, making an integrated market a reality - for goods, services, businesses and workers - is absolutely fundamental to achieving our Lisbon goals.
And this lack of progress comes at a cost. Our recent analysis of the costs of non-Lisbon quantifies the impact our Lisbon goals can have.
- Overall, delivering Lisbon can mean increasing our growth by a half to three quarters of a percentage point - taking our potential rate of growth closer 3% each year. And if this is backed by the right level of investment - EU and national - in knowledge the figure could be even higher. Over a 10 year period this could mean increasing GDP by 7 to 8%.
- Ensuring effective competition in sectors such as electricity and telecoms alone could add 0.6 percentage points to EU GDP.
- While cutting red-tape and the associated administrative burden in the EU could boost add one percentage point to GDP.
Let me turn to what changes with the new Lisbon focus on growth and jobs.
We must use the motor of a dynamic economy to fuel our wider social and environmental ambition. This is why we are focusing more on growth and jobs. We aim to deliver the reforms already agreed while launching a Partnership for Growth and Jobs to mobilise support for a more focused set of actions.

A Partnership that means making Europe an attractive place to invest and work.
- Through an enlarged internal market that works - also for the services sector.
- Through rules which are better designed and simpler for business.
- Through strengthening mobility - of ideas, but also of people.
- Through a rapid agreement on the trade negotiations in the Doha Development round.
- Through investing more in 21st century transport, energy and communications networks.
A Partnership that means placing knowledge and innovation at the heart of European growth
- By boosting business and public investment in research, innovation and education, and revising the State aid rules to help.
- By setting up a fully independent European Research Council, drawing on our best scientific minds, to support research excellence across the Union.
- By creating regional innovation poles and supporting European excellence in key technology areas, like eco-innovation.
I should mention that I met earlier this week with a group of Europe's Nobel prize winners. They were very supportive of the idea of a European Research Council, and of the focus on knowledge within our reform agenda.
A Partnership that shapes policies allowing our businesses to create more and better jobs.
- By targeting employment policies on getting people into jobs, particularly key groups such as women, older workers and the young.
- By launching a European Youth Initiative for Europe's young people to give them a decent start.
- By modernising social security systems for those who cannot work and for the sick, vulnerable or retired.
But while the Lisbon reforms offer the right recipe, its ingredients are not for free. This is a shared responsibility. We need a common effort to overcome the risk that people believe we can simply carry on as things are.
This is why our new approach also focuses on improving the way we push the Lisbon agenda forward.
This must mean creating ownership of these reforms not just by national governments, but by business, the unions and civil society.
The centre piece of the new approach is for Member States to present their own National Reform Programmes in the autumn, tailored to their national situations; this is an idea the Centre for European Reform has long advocated.
These plans should be the subject of wide debate so that everyone understands that they have a stake in our success.
And Member States will be judged by their results against the targets and commitments they themselves make.

How will the Commission support this process?
The Commission will be an active - I should say an even more active partner - in this process.
- First, we will be presenting "integrated Lisbon guidelines" made up of our main instruments for economic policy and for employment. This will improve overall consistency in our action and will form the backbone of the national programmes, while leaving Member States free to prioritise the way they respond to the most pressing challenges that they face.
- Second, we are simplifying reporting. One Lisbon report at EU level each January, drawing on a single national report each autumn from the Member States.
In many cases this will free Member States from the need to produce individual reports in each sector under the open method of co-ordination, although the co-operation and sharing of best practice in these sectors will continue.
Less reporting means more time for Member States to focus on delivery.
- Third, we will be strengthening our contacts with Member States to help them in shaping and following up their national programmes. The carrot of persuasion rather than the stick of league tables.
In parallel, to improving the delivery of Lisbon we must also ensure that our commitment to reforms is backed by the necessary financial support at EU and national level.
This is why we will continue to fight for an ambitious financial settlement for the Union for 2007-2013; a deal that will allowing us within the overall amounts identified to match our vision for reform with the resources needed at EU level to bring this vision about.

Mr Chairman,
Let me conclude by addressing the issue of naming and shaming.
Some voices have suggested that the Commission's new approach to Lisbon is letting the Member States off the hook. Your own report highlights a concern that we are not following the Kok report recommendation of "naming, shaming and faming" the Member States.
Here let me reassure you: the Commission will continue to monitor vigorously progress in the Member State towards the Lisbon goals; the basic facts and figures will still be available. And I am quite certain that future editions of your scoreboard will do the same.
We have to recognise as well that Lisbon's success relies on a partnership. If we want results we must invest in ownership.
This is why we accept a greater degree of flexibility for Member States in tailoring national programmes to national needs. This is why national programmes should be widely debated at national level. This is why we will work even more closely with Member States in launching and following through on their commitments.
If you like this is part of the contract to which Member States sign up in setting out their national reform programmes. If Member States make a serious commitment to reform, then the need to name and shame will be reduced.
But, in any event, the Commission will continue to follow progress and work proactively to keep the process on track. That is one of our strengths, but also our responsibility; a responsibility, which with the help of scoreboards such as yours, we can use to make Lisbon part of a vigorous national debate.

Mr Chairman,
The race before us is a marathon rather than a sprint. It is a race that this Commission is determined to win. Europe, our businesses and citizens cannot afford for that not to be the case. But organisations such as yours have a central role in mobilising support and making the case for change.
You have not remained on the sidelines and I hope that we will continue to be running side by side: the Centre for European Reform and a European Commission that places reform at the centre of its mandate.

Thank you.