European Commision Warns Of "Lost Decade"

On Wednesday, the European Commission is set to present a new 10-year economic strategy, that warns of a lost decade should the 27-nation bloc continue at a slow and largely uncoordinated pace of reforms.  According to the EUobserver the draft document argues in favour of  “smart, green and inclusive growth.”

“The proposal does not sufficiently reflect the different development levels of regions and member states and therefore does not respect the underlying factor of economic cohesion in the enlarged EU.”

Mikolaj Dowgielewicz

After a decade of the EU’s failed efforts to become the world’s most dynamic knowledge-based economy, Brussels is laying down a fresh economic vision based on innovation, education and digital technologies. However, it stops short of introducing sanctions to ensure that the local governments stick to the plan.

The draft document, seen by EUobserver, argues in favour of “smart, green and inclusive growth” – an objective mirrored in five “measurable” targets that should be later translated into national obligations.

The EU should increase its employment rate from the current 69 percent to at least 75 percent by the end of the next decade; should boost its investment in R&D and innovation to some 4 percent of GDP; and stick to its green goals of lower CO2 emissions, more renewables and higher energy efficiency.

In addition, at least 40 percent of Europeans aged 30-34 should obtain a university degree – currently, only 31 percent do so, while some 28 million people (or a quarter of Europeans) should be lifted out of poverty by 2020.

“The monitoring of progress towards these targets should become an integral part of our economic governance,” the paper says.

The idea of sanctions or incentives – floated by the Spanish EU presidency and opposed by Germany – has not made it into the commission’s package, however.

Instead, Brussels is opting for “country reporting” based on “reform programmes” that EU capitals will need to submit for evaluation together with their stability or convergence programmes, which examine country’s macroeconomic and fiscal stance.

If a member state fails to “adequately respond to a policy recommendation … or develops policies going against the advice, the commission could issue a policy warning,” says the document. EU institutions now enjoy a stronger say in the area of economy.

But the EU executive is likely to ruffle feathers in some capitals when it comes to discussing financial resources for Europe 2020, particularly the idea that future priorities should be mirrored in the bloc’s post-2013 financial multi-annual budget.

“We have insisted that the debate about the 2020 economic strategy cannot be the debate about the European Union‘s budget,” Slovak Prime Minister Robert Fico said at a February EU summit partially devoted to the topic.

According to diplomats, the view is shared by Hungary, Poland, the Czech Republic as well as the Baltic states.

“Member states must have the right to choose how they achieve the economic growth,” Mr Fico argued, defending current financial tools such as the Cohesion Fund. “Such policies must be part of the 2020 strategy. If not, some countries would be significantly disadvantaged.”

Poland’s EU affairs minister, Mikolaj Dowgielewicz, echoed Mr Fico’s concerns.

“The proposal does not sufficiently reflect the different development levels of regions and member states and therefore does not respect the underlying factor of economic cohesion in the enlarged EU. The ‘one size fits all’ approach should be eliminated,” he told EUobserver.

The minister voiced special concern over plans to “green the economy” due to the vast differences in emissions levels between the old and new EU states.

“We should stick to the Cohesion Fund and structural funds, which have well-established and operational delivery mechanisms,” he added. “Poland is against creating separate thematic funds to address new challenges.”

Original article at

Related by the Econotwist:

Crisis In A New Light

East European banks needs $304bn

C.B.of Norway: “All Banks Must Be Allowed To Fail”

Norway’s Prime Minister Fears Social Unrest

European criminals and politicians taking “libel tourism” trips to UK

Europe Risks Being Sidelined In Climate Talk

And The Euro Came Tumbling Down

“A Breakdown In Our Values”

The Greek Bond Bomb Keeps Ticking

Europe’s Real Estate Industry: “A long, Slow Haul To Recovery”

The Ethics of Financial Services in Europe

E.U. Parliament Spending Out Of Control?

Traders Short Record Amount of Euro

Germany In Favour Of Creating European Army

End Of The European Upswing?

Baltic Countries Remain In Recession

Why Should EU Bail Out Greece?

Naked self-interest

Wave Of Protests To Hit Troubled E.U. States

Iceland Debt Talks Collapse

Ukraine Dropping E.U. Membership?

Reblog this post [with Zemanta]


Filed under International Econnomic Politics, National Economic Politics