Abstract
The current economic crisis has wrought havoc on Europe. However, the crisis has also given the leaders of Europe an opportunity to re-evaluate European society and the process of European integration. The time is at hand for Europe to create a new strategic outlook for the future. The Europe 2020 strategy could provide the impetus to create a more prosperous Europe that helps citizens and makes them more dynamic in the new world order.
Keywords
The dust of the economic crisis is slowly settling and the economic environment is progressively stabilising after the frenzy of the past two years. But let us make no mistake—the dramatic social impacts of the worst crisis in decades cannot and will not disappear as soon as growth turns positive again. Our economic potential has suffered. Too many people have lost their jobs and too much time for precious investments has been wasted. The crisis has accelerated and in many cases kick-started important economic transitions. Policymakers will have to progressively move from a crisis management mode—where the objective is to avoid the worst—to designing policies that will put the economy on a stronger footing, accompany the necessary transitions and offer a perspective for improving living standards for the years ahead.
The crisis has shown that sitting back, closing our eyes and hoping that problems will resolve themselves is a formula for disaster. As we move out of the crisis, the risk therefore is not in the discussion of long-term visions; rather, the risk is in giving into the temptation of returning to the comfort zone of pre-crisis ‘business as usual’ policies. Indeed, what is so significant about our current situation is that the huge impact of the economic crisis is combined with the need to address without delay much deeper societal challenges.
The effects of human activity on the planet and its resources are starting to be felt. Our strong dependence on fossil fuels and our inefficient use of raw materials expose consumers and businesses to price shocks, threaten economic stability and contribute to climate change. The expansion of the world's population intensifies global competition for natural resources and puts pressure on the environment. Can we continue to consider the Earth an endless resource?
Economic developments of the last decades, and in particular the acceleration of globalisation, have been making the rich richer and the poor poorer. The gap between the winners and the losers has widened. Can inequalities between countries and people within them continue to increase without jeopardising the stability of both the world system and individual societies?
The crisis exposed how quickly and strongly unbalanced global markets can translate into very real human tragedies. In the EU alone, GDP fell by 4% in 2009, industrial production is where it was in the 1990s and, most importantly, unemployment shot up to 10%, reaching some 23 million people. Can a fully connected world continue to function without a global set of basic rules?
At the same time, competition from important developed and emerging economies is intensifying, and countries such as China are investing heavily in research and technology, continuing to quickly catch up to our lead in areas such as information and communication technology (ICT), pharmaceuticals, renewable energy and other industries. Can we Europeans continue to improve our living standards in today's world and address our internal challenges, not least the unfavourable demographic developments, without reforming the way in which our economic and social systems function?
The debate we are having today will determine the way of life for future generations and influence people's living standards and consumption patterns, the quality of the air that they breathe, the satisfaction they get from their role in family and society at large. It is a debate we need to have. And it needs to be followed by courageous political decisions.
When the European Parliament approved by a strong majority my nomination by the European Council for a second term as President of the European Commission, it also endorsed my determination to put the Commission at the forefront of policy action and to bring forth real answers.
There is no reason for Europe to be afraid. Our traditional strengths continue to be the assets that drive success in today's world—respect for the individual, thereby stimulating not only private initiative, creativity and entrepreneurship, but also a sense of responsibility and solidarity with the weakest, a genuine belief in the capacity of technological progress and innovation to bring real value, and a sense of responsibility for the planet which can help us make the necessary decisions.
Indeed, Europe has shown several times in the past its sense of responsibility and its capacity to act when it is most needed. The European integration project itself has proved its potential to be a real driver for change. In the 1990s, Europe launched the largest single market in the world backed by a common currency. Only a few years ago, the division of Europe ended as new Member States entered the EU, while other states embarked on the road to membership or a closer relationship with the EU. Our common action taken through the European Recovery Plan helped prevent an economic meltdown.
The recently adopted Europe 2020 document is the Commission's proposal for the vision which should underpin our political actions as we take up the challenges of the next decade. This vision is comprehensive enough to deliver real change and offers the tools to make it happen. This is why we took the time to assess the successes and failures of the Lisbon Growth and Jobs Strategy. This is why we consulted so widely on the way ahead. This is why I wished to wait for the new College of Commissioners to be in place, in order to benefit from the fresh political vision of my colleagues.
In many respects, Europe 2020 builds on the Lisbon Strategy. It recognises that we can only meet our objectives if we are able to generate economic growth and create jobs. It is based on the values of common action and aims to ensure that the result of EU policy is greater than the combined results of individual Member State policies. It respects the differences which exist between Member States and their regions and offers a blueprint for action relevant to the best performers as well as to those which lag behind.
But it also draws the necessary lessons from the past.
First, with Europe 2020 we recognise not only the importance of growth and jobs, but also the importance of the way we achieve them. This means a way that helps answer the questions outlined above: a way that leads to greater social and territorial cohesion that achieves economic growth while safeguarding the resources of our planet for future generations.
There is no doubt—as confirmed by public consultation—that the core driver of future improvements in our living standards, and our key asset, will be knowledge and creativity. Only new knowledge and new ideas will enable us to offer better products and services than our competitors and to bring forward solutions to today's challenges. But the way we create and use this knowledge today is not sufficient. On the whole, the EU lags behind the most innovative economies in the world. We need to reconfigure the way our economy works to bring in tomorrow's ideas, tomorrow's skills and tomorrow's technologies. To achieve this, our growth in the next decade will have to be more inclusive and more sustainable.
We need to put people back at the centre of our decision making. They are, and have always been, our greatest asset. Europe needs to make full use of its human potential and enable everyone to play his or her part. People will be empowered through new job opportunities, investments in skills and a more effective fight against poverty and exclusion. Modernised labour markets, training and social protection systems will help people anticipate and manage the necessary change. Implementing flexicurity principles will enable people to adapt to new conditions and successfully realise career shifts. Policies to promote gender equality will increase labour force participation, thus adding to growth and social cohesion.
Our economy will also have to be better prepared to address the challenges and seize the opportunities of the future. Global recognition of the need to tackle climate change and the loss of biodiversity will put a premium on those who bring forward real solutions. Recognising this imperative and acting decisively will not only allow us to fully play our part in tackling this tremendous challenge, but will position us in the path of sustainable growth. Our enterprises will be able to offer products and solutions that others want because they solve their problems, too. Such enterprises will be able to reduce their costs when producing the same value with fewer resources. This means exploiting Europe's leadership in the race to develop new processes and technologies, accelerating the roll-out of smart grids using ICTs, exploiting EU-scale networks and reinforcing the competitive advantages of our businesses, particularly in manufacturing and small and medium-sized enterprises. This means implementing our emission-reduction commitments in a way which maximises the benefits and minimises the costs through the spread of innovative technological solutions.
Second, with Europe 2020 we not only recognise the fact that action is needed at all levels; we also want to ensure that the actions taken are mutually reinforcing. That is why the notion of partnership is brought to a new level—basing our actions not only on common objectives we want to reach, but also on common policy agendas we want to implement.
Establishing concrete and ambitious targets is a courageous political decision. It creates a benchmark against which our action will be judged. But I am deeply convinced that it is necessary. Otherwise, we risk losing momentum and a sense of delivery. The targets of our proposed action reflect the way we think future growth should be achieved. The share of people of working age who are actually employed must increase substantially; otherwise we will simply not produce enough value to maintain the high standards of our social and pension systems. Public and private investments in research and development should continue to increase; otherwise we will no longer be able to make the best products at the best prices. A better way to ensure that these new ideas are translated into new products, services and processes will have to be found. Greenhouse gas emissions will have to be reduced, and the share of renewable energy sources in our final energy consumption and energy efficiency will have to increase; otherwise we will not play our part in fighting global warming and realise the competitiveness gains. The number of children who leave the school system without getting the basic skills they will need throughout their lives must be substantially reduced; otherwise precious human potential will be wasted. The share of our population with the necessary specialised skills acquired through high-quality tertiary education will have to increase; otherwise our knowledge base will not be strong enough. And, finally, we should no longer accept that so many people in the EU live in poverty and aim at substantially reducing these numbers.
The Lisbon Strategy also showed that agreeing to targets is not enough. We can only be successful if our efforts on key issues move in the same direction. That is why we proposed to focus policies and money on seven concrete policy agendas that reflect the key bottlenecks that we think need to be addressed:
improve framework conditions and access to finance for research and innovation so as to ensure that innovative ideas can be turned into products and services that create growth and jobs;
enhance the performance of education systems and facilitate the entry of young people into the labour market;
speed up the roll-out of high-speed Internet and enable households and firms to reap the benefits of a digital single market;
decouple economic growth from the use of resources and increase the use of renewable energy sources;
improve the business environment, notably for small and medium-sized enterprises, and support the development of a strong and sustainable industrial base able to compete globally;
modernise labour markets and empower people by developing their skills throughout their lives; and
ensure social and territorial cohesion such that the benefits of growth and jobs are widely shared and people experiencing poverty and social exclusion are enabled to live in dignity and take an active part in society.
Third, with Europe 2020 we propose to continue drawing on the EU's added value to achieve the objectives we have set for ourselves, but we recognise the need to do it more and to do it better. This means creating new momentum to relaunch the single market, making it stronger, deeper and more extensive. We will need to adapt the single market rules to the Internet age and overcome the fragmentation that currently blocks the flow of online content and access for consumers and companies. We will need to improve the way services can be bought and sold in the single market, starting with the full implementation of the Services Directive. We will need to build the necessary transport and communication infrastructure to ensure that unnecessary bottlenecks do not impede the circulation of goods, people and ideas.
This also means mobilising the available EU financial resources more effectively to invest in growth. The EU multi-annual financial framework will need to better reflect its long-term growth priorities. In this context, future cohesion policy and structural funds will need to be geared to support the achievement of inclusive growth in Member States and their regions. The effectiveness and efficiency of the EU budget will have to be improved through stronger prioritisation and better coherence between the funding instruments. The European Investment Bank group should contribute even more to the ‘virtuous circle,’ where innovation and entrepreneurship can be funded profitably from early-stage investments to listings on stock markets. An EU regulatory environment that enables financial markets to finance investments more effectively will have to be put in place.
Finally, this means deploying all available instruments of external policy to a greater degree. This applies to the external aspects of our various internal policies, but in particular to trade and international macroeconomic policy coordination. We need to secure better market access for EU business, including for small and medium-sized enterprises, and a level playing field vis-à-vis our external competitors. We must be able to assert ourselves more effectively on the world stage and play a more important role in shaping the future global economic order.
Fourth, with Europe 2020 we not only recognise the need to build a partnership between the EU, the Member States and their regions; we also recognise that the ever-increasing interdependence inside the EU—not least because of the euro—warrants more coordination and, if needed, closer monitoring of Member State policies. Our strategy should therefore rely on two pillars: the joint work on the priority areas outlined above combining priorities and headline targets; and a country-specific approach to help Member States develop their strategies to return to sustainable growth and sound public finance. New integrated guidelines will cover the scope of the EU priorities and targets. Country-specific recommendations will be addressed to Member States to guide their policy efforts. When things go wrong, policy warnings should also be issued.
The European Council will take full ownership and will be the focal point of the new strategy. The stakes are simply too high for anybody else than Heads of State and Government to take ownership and responsibility. To support this process, the Commission will monitor progress towards the targets, facilitate policy exchange and make the necessary proposals to steer action and advance the EU's flagship initiatives. But defending our values and living standards in a global economy requires a shared effort. I trust that the European Parliament will be even more than in the past a driving force to mobilise citizens’ support. This partnership approach should also extend to national and regional parliaments and national, local and regional authorities, to social partners, and to stakeholders and civil society so that everyone is involved in delivering the vision.
As we move from policy conception to delivery, we will need to overcome obstacles and show determination. Policies will have to react to the needs of the moment and take all constraints into account. To start with, a smooth exit from the exceptional measures put in place to prevent the worst impacts of the economic crisis will have to be designed and implemented. We have made it clear that this is best done in a coordinated way and have offered principles to follow. Indeed, the state of public budgets in a number of countries leaves very narrow margins for manoeuvre. To be successful we will therefore need to be both more effective and more efficient. I trust that working better together, learning from each other and building on synergies is a way to achieve this.
Acting now with a long-term vision in mind is the best way to not waste time and resources. I therefore look forward to the discussions ahead on our proposal, but even more I look forward to when we all together start making this vision a reality.
Footnotes