Cast your mind back to March 2000, when the Lisbon Agenda was launched by the European Council, at the peak of the Internet boom, just before the dot.com bubble burst. Back then, most of us were enthusiastic about this new vision to transform Europe into “the most competitive and dynamic knowledge-based economy in the world” by 2010. We industrialists in the European Roundtable (ERT) warmly welcomed the agenda and its targets, although we also warned that implementation would be the real challenge.

 

Fast forward to 2005 and what do we find? Europe still faces the same competitiveness issues, but the solution is being re-packaged: the European Council has relaunched the Lisbon Agenda, under a new title, with new priorities and a new process. We now have “A partnership for growth and employment” (certainly more meaningful to the 450m Europeans, than the opaquely named Lisbon Agenda). As the title says, the focus is now on improving Europe’s growth and jobs, where we are clearly faring worse than Asia and the US. The new process aims to tackle the implementation challenge, not only at EU level but also, and most importantly, at national level in each of the 25 member states. We are no longer striving to be “the most competitive … economy in the world” by 2010, but to deliver against 25 three-year renewable “national reform programmes” and a “Community Lisbon programme”.

 

This major change can be looked at in two ways. Pessimists will underline the disastrous retreat from an ambitious vision of a dynamic integrated Europe to 25 short-term national programmes, allowing creaking economies to drift gently into old age. Optimists will rejoice at the EU changing gear and adopting a new approach for implementing (at last!) the key objectives of “growth and jobs”. These two different perspectives reflect each person’s balance of hopes and fears, but the common political question remains “Will Europe be able to deliver implementation this time?”

 

In March 2000, the objectives of the “Lisbon Agenda” were right. They contained the best solutions for reforming Europe’s economy, creating lasting employment, and catching up with, maybe even eventually surpassing, the fast moving economies of the US and Asia. But delivery has been disappointing. Average growth has been less then 2% a year in Europe, versus more than 3% in the US and 8% in China. EU unemployment hovers around 10% while in the US it is 5 %. Older workers are leaving the workforce, taking valuable skills as well as expensively early pensions with them, while the young struggle to find jobs and fear for the future.

 

But not all is gloom and doom. Some member states have reached the top of the global economic league (including Finland, Sweden, and Ireland). Meanwhile, the 10 new member states, having been through their own painful economic reform process to be eligible to join the EU - a sort of Lisbon Agenda for accession countries - are now reaping the first fruits, with several becoming highly competitive economies enjoying rapid growth.

 

So there is no reason to despair, but many reasons still to be disappointed.

 

The Barroso Commission has made “growth and jobs” its major platform for the coming five years, bringing new hope of a European turnaround. We will know this is real when:

·        The average economic growth rate moves from less than 2% to more than 3% per year

·        The unemployment rate drops from 10% to 5%.

 

This would allow us to offer the prospect of sustainable quality employment to the young and secure retirement pensions to the old, underpinned by a “European model” of social cohesion and environmental protection. But success depends on improving our competitiveness with Asia and the US. How can this be done?

 

The first step agreed at the 2005 spring summit was for the Commission to issue integrated guidelines on broad economic policy and employment. Next, each of the 25 member states is preparing a “national reform programme” and designating a national Lisbon coordinator to work with Commission Vice President Günter Verheugen to ensure consistency across Europe and more effective Competitiveness Council. Each national programme is being implemented in consultancy with stakeholders in member states, so Luxembourg Prime Minister Jean-Claude Juncker’s observation “We all know what we need to do, but what we don’t know is how to win elections after we have done it” may no longer hold true.

 

The ERT hopes this new process will work efficiently towards a real implementation of the Lisbon targets. To help regain credibility and momentum, we have strongly recommended that the European Council and the member states secure an “early harvest” of quick wins in 2005. This means identifying a handful of practical and realistic priorities, including some relating to specific industry sectors, where progress will be measurable and where the members of the European Council will personally commit to ensuring delivery by year-end.

 

Europe must not lose sight of the fact that future growth and jobs depend on establishing a strong knowledge base that supports a flourishing, innovative and entrepreneurial business climate. The future development of EU research across a range of industry sectors and technologies (including biotechnology and nanotechnology) hangs in the balance, and will be determined by the policy decisions taken in the coming few years, by governments, businesses and universities. Europe faces a challenge over how to commercialise R&D investments and turn them into business models. Improving the regulatory framework is crucial in this respect.

 

The debate about the Lisbon Agenda - rallying cry or tired slogan – will go on for many years to come, and each of us will have our own answer. But with all due respect, it is not the debate that matters nor the fine words of policy-makers, but the action that follows. Europe is at a cross-road and must act quickly - governments and business together. In the ERT, we feel an acute sense of urgency. European companies, large and small, have no alternative but to innovate and adapt to the new competitive environment of the world economy. Many of them have restructured themselves into global companies. But they would like the choice of being able to continue to invest and do research in Europe. Their roots remain European. What they expect from the policymakers is simple, the business conditions needed for European industry to be successful on the world stage.