- The Washington Times - Wednesday, February 2, 2005

BRUSSELS (AP) — The European Union conceded yesterday that its plan to become the world’s most dynamic economy by 2010 had been derailed and set out on a new course to create more jobs.

“We have to get our economy moving,” European Commission President Jose Manuel Barroso told the European Parliament. “If we can redynamize Europe’s performance, we can help guarantee a sustainable and lasting transformation of our continent.”

With high unemployment, the inability to take full advantage of a borderless EU economy and a lack of labor flexibility, the 25-nation EU lags far behind its ambitions.

The Commission said “a renewed drive and focus on fewer, achievable objectives are necessary.”

“Lisbon has been blown off course by a combination of economic conditions, international uncertainty, slow progress in the member states and a gradual loss of political focus,” the Commission said, referring to the EU’s economic reform agenda from 2000.

Now, Mr. Barroso said such cornerstones of EU policy as social protection and environment may be evaluated based on their impact on economic competitiveness.

Ambitions articulated in 2000 to become the “most competitive and dynamic knowledge-based economy in the world” have been quietly toned down as EU countries remain mired in high unemployment and mediocre growth — in contrast to China and other surging Asian economies.

Last year, the EU economy grew by only 2 percent and its employment rate remained stuck at 63 percent of Europe’s work force, well off the 70 percent target the Lisbon strategy sets for 2010.

The European Parliament said this week it will take the creation of 22 million jobs in the next five years to achieve that.

Unemployment in the EU stood at 8.9 percent in December, compared with 5.4 percent in the United States and 4.4 percent in Japan. Some 5 million more unemployed were added when the EU took on 10 new member states last May.

The previous strategy ordered EU governments to generate new jobs and growth by 2010 by boosting research and development spending, cutting bureaucracy and social costs, bringing the Internet into every home and office, increasing education spending and tapping into new technologies.

Mr. Barroso also wants EU nations to spend at least 1 percent of the gross domestic product on research and development and have private enterprise contribute twice as much. Taking the private and public sectors together, EU nations spend only 1.9 percent of their GDP on research and development now.

To promote a seamless EU market, he wants governments to adopt proposals like the community patent, which was supposed to cut costs for European industry but remains mired in language disputes.

Mr. Barroso also favors giving member states more budgetary leeway for deficit spending in lean years to bring Europe back to the top of the global market.

That is an issue that divides the EU states into one camp promoting fiscal rigor as a way out of the crisis and another calling for deficit spending.

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