Europe 2020

Address the weaknesses of the Lisbon strategy and confront the crisis.

Europe 2020 was adopted by the European Council 17 June 2010. Result of a consultation launched in November 2009, the strategy developed by the European Commission follows the Lisbon and is something of the roadmap of the EU until 2020.

1. The context

Europe 2020 has been designed to meet the urgency of the crisis and its social consequences while proposing a strategy for long-term growth. It also aims to fill a number of deficiencies that had not allowed the Lisbon Strategy goals of particular limits by giving new emphasis to the theme of governance.

Moreover Europe 2020 should be analyzed in terms of a changing European context, following the adoption in force of the Lisbon Treaty in 2009 and while talks on a permanent Fund for Assistance to the Eurozone are changing gradually but thoroughly European institutions and prerogatives.

2. A strategy for smart, sustainable and inclusive

Europe 2020 first introduced the elements of context that can account for the spirit in which this strategy was designed. Emphasizing the transformation period in which we live, several observations are made:

• The impact of the crisis that destroyed many jobs, revealed some structural weaknesses of European economies and taxed the capacity of European investment in the coming years.
• Structural weaknesses updates are: the widening gap in productivity between the European area and its major economic partners; the low rate of employment in the EU; accelerated aging.
• In parallel, several global challenges are acute in EU economies increasingly interdependent in a context of increasing competition globally; imbalances, the short-termism and speculative behavior which still govern the global financial system, the challenges of climate and resources, especially energy.
• The risk of decline: the finding of extremely strong dependencies within the EU requires internal coordination even more important to draw up the EU. Moreover, it must acquire the capabilities to be added value in the international arena if it wishes to remain against the assertion of emerging countries. "Europe must make clear choices, but exciting" and seeking to realize the scenario of sustained recovery.
• Make our exit from the crisis point of entry into a new economy: building on its strengths and its proven ability to meet the challenges posed by major events, the EU has undeniable assets to build an economy smart, sustainable and inclusive employment levels, productivity and social cohesion.

Once the context is set, the strategy revolves around three mutually reinforcing priorities and seven flagship initiatives that result. These priorities should achieve five key goals by 2020. The architecture of Europe 2020 is presented in the table below for download:

Table reproduced from "Strategy 2020" - Annex 1 - Overview Europe 2020

To borrow a formulation of the Commission document, this strategy should help establish the foundations of what could be the European social market economy of the XXI century.

3. To lift the blockades: continuity and deepening of logic carried by the single market

Europe 2020 is the finding of a single market which is slowing and proposes to continue and strengthen the European market integration by removing a number of barriers and maintaining a strong competition policy. This is both the single market to adapt to an economy increasingly based on services and information technology and communication. The translation of contracts, the patent system, legal systems for use, the administrative and fiscal barriers, the financial market supervision are all themes on which the EU must work to thin the single market.

Concerning the means at its disposal, the mobilization of cohesion policy and its implementation in line with the objectives carried by the EUROPE 2020 Strategy should afford to invest in smart, sustainable and inclusive while addressing the fragmentation of instruments European funding. Moreover, new financial instruments must be designed, including reliance on the European Investment Bank, the European Investment Fund and the private sector to find the necessary means to implement European ambitions in the context limited financial resources. Finally the creation of a European venture capital should facilitate efficient access to capital for businesses and foster innovation.

Finally, it is clear that the return to growth will not rely solely on the domestic market instead. This is why the mobilization of external trade policy instruments are subject to special attention. The conclusion of multilateral or bilateral negotiations, trade openness in the growth sectors in the WTO and the establishment of a strategic dialogue with key economic partners of the EU are all fundamental tools put forward by Europe 2020 and to which backs onto the EU trade strategy prepared by the Commission and presented in November 2010.

4. The recommendations to emerge from the crisis: tame financial markets, the vicious cycle of debt

To achieve the 2020 targets, it is first necessary to leave the European economies from the crisis. This is somewhat of a prerequisite, otherwise it will be difficult to advance in the implementation of Europe 2020. The first recommendations concern a coordinated and progressive mechanisms of fiscal stimulus and aid to financial institutions to troubled industries, people (unemployment), to investors.

One major challenge remains the implementation of the G20 commitments to restore the strength, stability and healthy financial sector by reforming the financial system, coaching and providing the means for a policy that allows to anticipate and manage possible future financial crises.

To return to sustainable growth, the fiscal consolidation is a major issue. The Pact of Stability and Growth and deficits limited to 3% of GDP is still the framework imposed in this area. It seems clear that some difficult choices in terms of priorities will be needed: in this context, quality and distribution of public spending are central, as is the role of public procurement. In addition, fiscal consolidation will be possible only insofar as it is accompanied by structural reforms, particularly in the areas of pensions, health and welfare systems and education.
Moreover, in the field of taxation, the tax level rise is expected to shift the tax burden from labor to energy and the environment by promoting environmentally friendly taxation systems.

Finally making the finding of a necessary deepening of coordination in the EMU, the Commission undertakes to make proposals on:
- A monitoring framework for the enlarged euro area, beyond that fiscal discipline would be extended to macroeconomic imbalances and competitiveness developments,
- A framework for responding to imminent threats of financial instability in the euro area,
- An appropriate external representation of the euro area.

5. Governance of Europe 2020

During the presentation of the Europe 2020 in Marseille, Anne Houbtmann, the Commission representative in France, had long insisted on the novelty and the qualitative leap that represented the integration of governance arrangements in this text, which drew the well lessons from the weaknesses of the Lisbon strategy.

To get results, tangible, new mechanisms have been defined to ensure that all players take their responsibility in the implementation of this strategy.
The thematic approach around the flagship initiatives will be doubled for the preparation of country reports which will be detailed responses to the items identified barriers and strategies to end the crisis (corresponding to Parts 3 and 4 of the strategy). An evaluation system was implemented, it provides for a joint analysis of country reports and compliance with the commitments of the Pact of Stability and Growth Pact, thereby coupling the budget issue with macroeconomic issues and the establishment structural reform.

A reduced set of guidelines will replace the existing 24.
Recommendations will be made on the basis of the analysis of country reports. If states do not follow these recommendations, the Commission may address a political warning.
This evaluation mechanism is intended to enable the State to face their responsibility by making them accountable to their peers each year. The Commission also established a system of indicators to continually assess the implementation of the strategy.
The European Parliament, national parliaments, regional and local authorities and citizens are also encouraged to take responsibility and be part of the momentum carried by the strategy to achieve the proposed objectives.

The Commission has already published its first assessment report for 2010, albeit very brief, but gives a first indication of the willingness to follow the strategy.
Finally, Van Rompuy decided to establish a European semester, which would, each year from March to July to verify the transformation of the recommendations of the Commission budget lines. This monitoring cycle is intended to help strengthen coordination within the Economic and Monetary Union.

To go further:
The site of the Commission on Europe 2020

On the " European Semester "