Economic reform and the Lisbon Agenda – Objectives

One of the DTI’s main EU priorities is promoting the economic reform agenda.

Economic reform is key to improving the competitiveness of European economies, thereby allowing businesses to thrive and employment levels to increase. Increasing employment is the best way to make Europe’s economy more productive and sustainable, and more importantly, by unlocking human potential and creating jobs, economic reform can combat poverty and social exclusion.

Economic reform is underpinned by a number of important specific issues, including the liberalisation of markets; promoting the needs of small firms; reducing regulatory burdens; encouraging entrepreneurship; encouraging innovation; and improving access to venture capital.

HM Treasury produce an annual White Paper on EU Economic Reform, which provides an analysis of the benefits of reform for Europe and for the UK in Europe. The latest White Paper was published in February 2005.

The Lisbon Agenda

In March 2000, at the Spring European Council held in Lisbon, European Heads of Government and State committed themselves to a ten-year strategy of reform for Europe’s labour, capital and product markets. We committed ourselves to becoming “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social inclusion” by 2010.

This set of actions and targets has come to be known as the Lisbon Agenda, cutting across a spectrum of issues, including entrepreneurship, social enterprise, employment, sustainable development, innovation, and corporate governance.

The Mid Term Review

At the Spring European Council in March 2005, EU Heads of Government re-launched the Lisbon strategy with a new focus on jobs and growth and a streamlined governance regime. This ‘Mid-Term Review’ was aimed at addressing what is widely seen as the failure of the Lisbon Strategy to achieve its goal of making Europe ‘the most competitive and dynamic knowledge based economy in the world’ by 2010.

New Focus on Growth and Jobs

The Lisbon reforms were proposed in the Commission’s Communication of 2 February “A new Partnership for Jobs and Growth”.

Heads of Government also based their decision on the report of a High Level Group (HLG) of independent experts from across Europe. This HLG was asked by the 2004 Spring European Council to complete a detailed assessment of EU progress towards meeting the 2010 objectives and make recommendations to accelerate their achievement. The UK Government submitted a paper for consideration by the HLG in June 2004.

The ‘Kok Report’ concluded that at the current rate of progress, no Member State would meet the full set of objectives. The Report sent a strong message on the need for urgent reforms to achieve our Lisbon targets. The UK Government endorses the report's analysis and agrees strongly that the focus of action must now be on generating more jobs and growth. Our employment priority must be to increase skills and productivity and expand participation in the labour market. As the report makes clear, we need more jobs and growth to sustain the European social model.

Since 2000, the EU has made significant progress in economic reform, but we will need to accelerate the pace of reform to meet the 2010 objectives. 2005 marks the half-way point in the Lisbon strategy and has provided an opportunity to reinvigorate and focus the Lisbon Agenda on the key reforms needed to:

·          Promote employment and skills

·          Strengthen competition and regulatory reform

·          Advance enterprise and innovation

·          Achieve greater external trade liberalisation

·          Meet the challenge of sustainable development

But the new focus and governance reforms are not about creating new policy initiatives – they are about streamlining existing systems and focusing a few, key priority reforms.

Governance reforms

The key Lisbon governance reform is the introduction of a streamlined system for making commitments to and reporting on economic reform. This is particularly important at the national level, where the majority of difficult economic reforms must be made. National reform programmes (NRPs) will be a single document drawing together the multiple reporting requirements of Lisbon Agenda at national level – covering a three year cycle (2005-8). The aim is to make Lisbon communicable to business and citizens, Member State progress and commitments identifiable, and reduce the administrative burden. They will be high-level and challenging, creating real ownership at national level. 

The Lisbon Integrated Guidelines, as endorsed by the June European Council (16/17 June) will form the basis for drawing up NRPs. Bringing together the existing Broad Economic Policy Guidelines and Employment Guidelines, they should ensure consistency and coordination in national strategies across the EU. The Guidelines are made up of three chapters – macro, micro-economic and employment. The macro and micro-economic chapters will be formally adopted by ECOFIN Council and the employment chapter by Employment Council in July.

Council discussion have shown a consensus that whilst Member States should be allowed enough flexibility to reflect different situations at a national level, it must be ensured that NRPs remain challenging, are delivered on time and allow progress to be measured across the EU.

There are no clear rules on how Member States should develop their plans domestically – although the Spring European Council Conclusions make a recommendation for wide consultation with stakeholders, local and regional governments, delivery partners, in line with existing national traditions.

Member States must adopt NRPs by October 15 2005, under the UK Presidency of the Council of Ministers. The 15 October deadline is a tight timetable to develop and agree NRPs, but the UK intends to meet it.

The Commission will also publish an EU-level counterpart to the NRPs – a Community Lisbon Action Plan (CLAP). This is likely to be published in July. An annex to the Commission’s February communication sets out potential content

Stakeholder input to the UK's National Reform Programme

The Government is about to produce the National Reform Programme (NRP) 2005-2008. As part of this we would welcome input from Stakeholders on the contribution they make towards the delivery of the EU’s Lisbon strategy and its employment and economic objectives.

Next Steps                   

	July 2005	ECOFIN Council and Employment Council formally adopt Lisbon Integrated Guidelines
15	October 2005	Deadline for submission of National Reform Programmes
15 – 16	December 2005	European Council
	January 2006	Commission publishes Lisbon Annual Report, assessing NRPs
	March 2006	Competitiveness, ECOFIN and Employment Councils send key issues papers to Spring European Council
	March 2006	Spring European Council – review of reformed Lisbon governance system
	Autumn 2006	National Reform Programme updates and progress reports due
	2007	Cycle repeats
	2008	Lisbon Integrated Guidelines and National Reform Programmes for next three-year cycle are agreed

Contact points at DTI

Katherine Watson
Tel: 020 7215 4490
Fax: 020 7215 2234
Email: katherine.watson@dti.gsi.gov.uk

Jane Kirby
Tel: 020 7215 2885
Fax: 020 7215 2234
Email: jane.kirby@dti.gsi.gov.uk