- The Washington Times - Tuesday, January 14, 2003

BRUSSELS, Belgium, Jan. 14 (UPI) — The European Commission Tuesday painted a bleak picture of the state of Europe's economy and said unless urgent reforms were undertaken, the 15-member bloc would miss its goal of becoming the world's most competitive economy by 2010.

Three years ago in Lisbon, Portugal, EU leaders drew up a shopping list of targets — including full employment, increased productivity and boosted investment — aimed at making the club more dynamic than the United States and Japan by the end of the decade.

However, the commission's hard-hitting report concludes that few of these lofty goals have been met.

Member states were blamed for failing to increase productivity, balance their budgets, complete the single market in goods and services, conduct growth-oriented labor market reforms, abolish barriers to geographical mobility and raise the age people stop working.

The commission admitted that sluggish growth, stubbornly high unemployment and "sticky" inflation rates limited governments' room for maneuver, but argued delaying reforms and racking up debts would not lift Europe's economies out of the doldrums.

"The reaction to the slowdown in economic growth is characterized by policy inertia and backtracking. Once more, the failure to act more decisively on public finances when growth was favorable takes its toll. Once again, governments display insufficient resolve in pushing through badly needed structural reform…"

The commission's survey was not all doom and gloom. Member states were praised for reducing regulatory burdens, pushing ahead with the privatization of key industries and promoting information technology usage.

However, the EU executive concluded: "Despite progress in some areas, the overall picture that emerges from this review is rather disappointing. … It is necessary to match words with action and develop a new sense of urgency."

Speaking to Euro-deputies in Strasbourg, European Commission President Romano Prodi said the future of Europe's cherished social model depended on meeting the Lisbon targets.

The former university professor also appealed to EU governments to increase funding for education and research or risk a "brain drain" to the United States.

"You can have as many Lisbon strategies as you like but unless Europe becomes a meeting place for the best brains in the world, we will never become the most competitive economy in the world."

Members of the European Parliament also urged governments not to shy away from the reforms they had signed up to in 2000.

"The reality is we are falling behind. This report is a wake up call and if it sends a shockwave through the system in several national capitals it will have done its job," said Labor Party deputy Gary Titley.

EU leaders are due to discuss the report's findings March 21 at a summit in Brussels.





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