Europe’s leaders unveiled an ambitious agenda for modernising the European economy at the Lisbon summit in March 2000. The EU vowed to push forward a wide-ranging reform programme, embracing new measures on innovation, liberalisation, enterprise and social inclusion. It is easy to dismiss the Lisbon agenda. Critics point to the programme’s over-ambitious overall objective, namely to turn the EU into "the world’s most competitive, knowledge-based economy by 2010". But progress is being made – labour markets are becoming more efficient and previously protected product markets are being opened up to competition. The Lisbon agenda has not been a failure. It provides EU governments with possible solutions. It sets targets and benchmarks against which to measure national performance. And it encourages EU countries to learn from each other.

Eastward enlargement of the EU and growing competition from emerging Asia are forcing Europeans to accept change. Nevertheless, member-state governments need to take their Lisbon commitments much more seriously if Europe is to rise successfully to the challenge presented by globalization. The EU does not have all or even most of the answers to Europe’s economic malaise. But it can help the member-states, individually and collectively, to cope with global competition. It can foster competition between different economic and social models and so help to spread best practice. It can also encourage national governments to co-ordinate their economic policies where needed. And finally, it can implement certain policies at the EU level to increase efficiency.