EU 2020 Strategy: Another well-meaning laundry list?
2 March 2010
After the failure of the Lisbon Strategy, which was supposed to turn the EU into the world’s most competitive economy by 2010, the European Commission is now poised to present its EU 2020 strategy on 3 March: a roadmap to growth banking on innovation, education and new technologies – but which is already beset by doubts.
Returning to growth with super energy grids, new rules on state aid, a bona fide European patent system, a single research and development market, a green transport system, and, last but not least, high-speed low-price internet for everyone. Europe realises there are endless ways to put the bloc’s economy back on track, and it makes no bones about the fact that the last time we tried, with the Lisbon Strategy for 2000–2010, the results fell far short of expectations. Not only that: "The financial crisis has cancelled out our recent headway,” announces the EU Commission, stressing the need to up the ante now. A new road map is needed, one that works and that everyone sticks to, especially “since the recession has made it harder to plan for guaranteed economic development.”
The answer, or at least what we hope might be the answer, is “EU 2020”: a 30-page strategy blueprint which the Commission is to present on 3 March as the Barroso II team’s managerial debut. It comes across as an economic overhaul plan – with more than a pinch of utopianism. Judging from the latest draft, the five goals set for 2020 are indeed ambitious: to push employment from the current level of 69% of the working-age population to 75%; to invest 4% of GDP in research and development; to cut CO2 emissions by 20% on 1990 levels; to increase the percentage of college graduates to 40% of the adult population; and to reduce by a quarter, or 28 million, the number of people living below the poverty line.
Two GDP points and 5.6 million jobs
The target is, in a nutshell, “two GDP points and 5.6 million jobs in ten years”, but the plan has yet to be officially launched. In its own assessment, the Commission attests to “a development rate that is structurally weaker than those of our main partners, chiefly due to an increase in the productivity gap”. This goes hand in hand with a stagnating job market as compared with our American and Japanese rivals, not to mention the fact that the combination of fewer employees and more retirees will end up "putting European social security systems and public finances in trouble”. The Commission also stresses that “the challenges are much greater than those posed by the need to end this crisis”, and that the interdependence between EU economies is irreversible and coordination indispensable. “Either we all join forces to face the future and meet the challenges of recovery,” warns the Commission, “or we run the risk of a permanent loss of growth that could lead to high unemployment, social tensions and a decline in the global arena.” This is the worst-case scenario, that of a “lost decade”, which we had better avoid.
Three ways to grow
In this age of nationalist temptations and waning European spirit, this is not exactly the best time to be asking EU member states to pull together. But the Commission believes we have no alternative and we must not yield to divisive forces. It proposes three roads to growth, “intelligent, green and inclusive”, to be pursued partly in Brussels and partly in each member state. The first points toward innovation, calling for increased research and development spending, which currently amounts to 2% of GDP compared to 3.4% in Japan. Hence the need to pool our resources, maximise the potential of European patents, and launch partnerships to accelerate the pace of technological progress.
The green road should pave the way for the automobile and mobility of the future, as well as for new ways of funding sustainable projects. The roadmap is designed to promote a clean and efficient energy policy with “super grids” to make Europe self-sufficient; the creation of industrial estates for small and medium-sized businesses; flexicurity, combining flexibility with job security, an employment model better adapted to future exigencies; and the enormous potential of the high-tech sector.
It will be up to the governments to flesh out these fine formulas. Indeed, this is an opportunity for member states to take advantage of the single market with a more effective system of private and public financing. Brussels will coordinate what it can, but the states will have to play by the rules, balancing their budgets and taking care to "raise taxes without hurting growth”, ensuring rapid and transparent bidding processes and efficient public services. Everything should run better and more smoothly, with maximised synergistic effects.
The European Council and Parliament are to hand down their verdict in June. Then the responsibilities will be assigned and the Commission will oversee the implementation of its roadmap, doling out “policy warnings” to those who stray from the straight and narrow. Actually, they ought to have agreed sanctions, which were missing from the Lisbon Strategy and might well have kept it from failing. But not even the current crisis was enough to convince EU members to accept severe constraints on their sovereignty.