Euro 2020: Smart, Sustainable and Inclusive Growth

Mon, 05 Apr 2010

On March 3, 2010, the Commission launched its Europe 2020 Strategy, which aims to guide the EU out of the financial crisis and prepare the economy for the next decade through the accomplishment of

Increasing the percentage of the population aged 20-64 employed to 75%. Currently this figure is 60%.
Investing 3% of the EU's GDP in research and development and improving the conditions for investment by the private sector.
Meeting the "20/20/20" targets to (i) reduce greenhouse gas emissions by 20% compared to 1990 levels, (ii) increase the share of renewable energy by 20% and, (iii) increase energy efficiency by 20%.
Reducing the share of early school leavers to under 10% from its current level of 15% and ensure at least 40% of youth have a degree or diploma.
Reducing by 25% the number of people at risk of poverty. In real terms, approximately 20 million people.

The Strategy, focusing on educational, environmental and social reforms “sums up the European model of social market economy with a strong environmental dimension” said Council President Herman Van Rompuy, and will require an increased commitment from Member States, should it succeed.

But what makes the Commission think that Euro 2020 will be any more successful than its predecessor, the Lisbon Strategy, which, when launched in 2000, set itself the ambitious target of turning the EU into "the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion," by 2010, but which, by 2009 was acknowledged as having failed by the then EU President, Fredrik Reinfeldt.

Given the objectives of the Lisbon Treaty focused on educational, environmental and social reform, it is certain that the widespread criticism with which the Euro 2020 Strategy was met will have come as no surprise to EU leaders. Germany, in particular was quick to voice concern at what they saw as unnecessary EU involvement at national level, having long since considered European integration to have reached its limit.

One aspect, common to both strategies, is the achievement of welfare reform. Many agreed that the Lisbon Strategy’s inability to achieve its aims in this area were at the heart of its failure, sentiments echoed in response to the new Euro 2020 Strategy, with French MEP Pervenche Berès telling Euractiv that "the Commission's approach to poverty reduction is closer to charity than to a real commitment to fighting social inequalities", saying that the new Strategy focused too heavily on a way out of the financial crisis.

Although an overall failure, some aspects of the Lisbon Strategy were successful. Many legislative measures were implemented, but only at EU-level; one of its key failings was the lack of application of EU policy at national level. Commission President José Manuel Barroso has summed up the Commission’s new challenge best, conceding: "We have to be quite honest with you, there are 27 member states and if they don't want to play ball nothing will happen".

Another criticism of the Lisbon Strategy was that the co-ordination of economic policies was not strong enough. Interestingly, key elements of the Euro 2020 Strategy were agreed upon at the Spring Council meeting on March 26, 2010. At the same meeting, leaders were finally able to agree on the terms of the Greek bail-out package. Greece’s current financial situation demonstrating just how interdependent European economies are in the eurozone and highlighting the need for strong, united EU leadership in economic policy. After talks broke down late last year, many had been concerned just how united European fiscal policy was, but the ability of all to resolve this critical issue is a surely sign of strong accord.

Mirroring the Commission’s concern for the need for strong guidance in this current climate, at the same time as Euro 2020 was being unveiled, Germany and France unveiled their own 10-year plan for economic and political co-operation. The France-Germany Agenda 2020 consists of 80 separate measures, with heavy importance placed on fiscal and economic policy. Perhaps then, in the current political and economic climate, the need for strong intra-EU cooperation has become less unpalatable than it may have been 10 years ago. Only time will tell.

The strategy elements of Euro 2020 are set to be formally adopted in June 2010.

by Sarah Hodges