Plan to revitalise Europe's economy

The European Commission yesterday proposed a new strategy to create more growth and jobs in the EU over the next five years.

The strategy aims to revitalise the so-called Lisbon Agenda - the EU's economic reform agenda intended to put Europe in the driving seat of the world's economy by 2010.

The actions proposed yesterday by Commission President José Manuel Durao Barroso could boost GDP by three per cent by 2010 and create over six million jobs.

Speaking at a press conference in Brussels, Mr Barroso said there was a compelling case for urgent action. "Five years after its launch, the Lisbon Strategy is not on track to deliver the expected results. To preserve the EU's model of sustainable development for the future, the competitiveness of the Union must be strengthened; its economy must be more dynamic".

Mr Barroso said that the overall Lisbon goals were right but the implementation was poor. "The lesson from the last five years is that we must re-focus this agenda to deliver results. With this new strategy, I believe we have the right tools to achieve our goals."

In its proposals, which still have to be approved by the member states, the Commission said Europe needed to become a more attractive place in which to invest and work.

It is therefore proposing to complete the Single Market in areas which can deliver real growth and job dividends and are of immediate relevance for consumers and to ensure open and competitive markets inside and outside Europe.

This will be done by redirecting state aid towards sectors with high growth potential, creating an SME-friendly business environment, creating access to third markets and simplifying European and national regulation.

The Commission is also proposing to improve European and national regulation to reduce the burden of administrative costs and to expand and improve European infrastructure.

The Commission recognises that knowledge and innovation are essential for Europe's growth. It is thus proposing a three per cent GDP target for research and development expenditure by 2010.

Other initiatives should also promote the uptake of information and communication technologies and the development of innovation poles linking regional centres, universities and businesses.

The plan also includes a bigger boost to European technology initiatives through public-private partnerships and the creation of a European Institute for Technology to attract the best minds, ideas and businesses to Europe.

Mr Barroso said that creating more and better jobs will be his main focus. He said that this will be done by attracting more people into employment in particular through action to reduce youth unemployment and by modernising social protection systems.

Other initiatives in this sector will include an attempt to increase the adaptability of workers and enterprises and the flexibility of labour markets through removing obstacles to labour mobility.

More investment will also be directed to human capital through better education and skills by reforming the EU Structural Fund and Cohesion Fund.

These proposals will be discussed further at the spring EU Council scheduled for mid-March. All EU heads of government will attend.