ECONOMY

Greece is among the Lisbon program laggards, study finds

LONDON – The European Union «must do better» in reforming its economy as it looks set to fail in its ambitious goal of being the world’s most competitive and dynamic economy by 2010, a scorecard of its progress showed yesterday. A detailed independent assessment of where the bloc stands on its self-imposed reform targets, dubbed the «Lisbon Agenda» from its launch at the Lisbon EU summit of 2000, gave it a school grade of «C» – just one year from a midterm review. The fourth annual report on the process by London-based think tank Center for European Reform said a disappointing macroeconomic performance over the past two years meant it was now almost certain the EU would miss its overarching goal of leapfrogging the United States in six years time. A breakdown of individual countries’ results in 2003 showed Ireland and Sweden with top marks from the 15 EU nations while Italy stood out as a major underachiever. But the CER report stressed that despite uneven progress, there was some optimism, due to the decline in the long-term unemployed, the spread of new technology, opening of energy markets and a step-up in reforms in Germany and France. «The fact that the EU is not going to meet all its targets should not lead commentators to condemn the whole Lisbon program,» said Alasdair Murray, director at the CER’s business and social policy unit and author of the report. «The true test of the Lisbon agenda’s success should be whether the EU in 2010 will be able to sustain higher levels of employment and growth than a decade earlier.» As a result, the report recommended retaining and strengthening the process, rather than abandoning it as a failed enterprise. It advised governments to focus on growth and employment, resist changes in existing targets despite EU enlargement and improve national reporting on Lisbon goals. The CER also endorsed the recent call by Britain, Germany and France for a dedicated EU commissioner to coordinate the sometimes rambling legislative push behind the goals. EU leaders meet in Brussels later this month to discuss the bloc’s own assessment. Overall, progress was poor on the headline aspirations to develop the world’s most competitive and dynamic knowledge-based economy by 2010 while ensuring average annual economic growth of 3 percent, with the creation of 20 million jobs. «Rather than catching up with the US, the EU economy is slipping further behind on indicators such as GDP per head.» With average annual EU growth rates of just 1.75 percent since 2000, EU Commission forecasts the average US citizen will be 41 percent richer than EU inhabitants by 2005 compared with 39 percent last year and 37.5 percent in 2002. EU workers are about 20 percent less productive than US colleagues and productivity growth is about half US levels. And employment growth stalled in 2003, when the number of people working did not rise for the first time in five years. «The EU will miss its interim employment target of 67 percent of the working age population in jobs and almost certainly fail to reach its overall Lisbon goal of 70 percent employment by 2010,» the report said. Against that, the CER did highlight the creation of 6 million jobs in the EU since 1999 and a cut in long-term joblessness to 3 percent of the work force from 4 percent during that period. What is more, progress on spreading broadband and mobile technology has been impressive, as has the gradual opening of previously restrictive markets in gas and electricity. Pension and labor market reforms in Germany and France last year are also noteworthy despite the need for more. Aggregate EU measures also mask the variety of speeds at which reform is taking place, however. The CER ranks countries in four main groupings. Top of the class are the Nordics of Denmark, Finland and Sweden. Close behind and committed to the reform process are nations like Ireland, Britain, the Netherlands and Spain. Then comes the bloc’s two largest economies Germany and France, who are starting to reform but are dogged by very high unemployment rates. Finally the laggards are Greece, Portugal and Italy. «Italy is the villain of this year’s scorecard. The (Silvio) Berlusconi government regularly talks of the need for radical reform but has made little real progress,» it said. «Italy’s economic performance is deteriorating while, to the outside world at least, its government pursues an idiosyncratic agenda.»