Summary: December 9, 2004: Günter Verheugen, Member of the European Commission responsible for Enterprise and Industry, on "Making Europe more competitive" at the UNICE Competitiveness Day (Brussels)
Ladies and Gentlemen,
Let me first thank you all for coming together today for the second time in the name of competitiveness. "Play to win" is the motto for this year's UNICE-competitiveness day and while it certainly leaves room for interpretation, the message for the Commission and for me as Vice-President in charge of enterprises and industry is clear:
Only competitive players within the economy are able to win and in this sense the motto includes an indirect appeal to the Commission, Council and the European Parliament to set the right framework to enable our enterprises to be competitive in a global market. And the importance that we devote to competitiveness cannot come soon enough, for Europe is facing difficult and important times that lie ahead.
Europe can look back on a history of outstanding economic growth and prosperity. But we must acknowledge that as we enter the 21st Century our economy no longer seems in full swing. When we consider the economic growth rates of our main competitor, the United States, as well as its technological and scientific lead, we have reasons to worry. Only through a wide-ranging debate that highlights the importance of a strong European economy can we hope to make a first step towards change. Such a
change has to accompany our commitment to a political Union. These issues will become increasingly important in our aim to regain competitiveness in Europe.
In the coming years the key priority must be for Europe to deliver more economic growth and more employment. This will form the top priority in a well-balanced approach to competitiveness which takes sustainable development and social responsibility into account. While it may appear as a change of theme, it is a necessary one. For now that areas of Central and Eastern Europe are experiencing political and economic stabilisation, Europe as a whole needs to find a way to secure its prosperity for
the future. In essence, the challenge Europe faces is to maintain and improve its standing in the face of a rapidly changing global economy. While these changes certainly bear risks, they also offer us great opportunities to seize.
While the World is rapidly changing, so is Europe. We have grown to include 10 new members since May 1st of this year, creating an EU of 455 million citizens. Within the next three or four years we will witness the accession of Bulgaria and Romania which will bring the number up to 485 million people. Accompanying the expansion of Europe's population is a demographic trend that poses a great challenge to most of Europe's Member States: Too few births, a shrinking labour force and many people
who reach an increasingly old age and to whom we owe intergenerational solidarity.
We should therefore realise that we need to respond to these challenges. Let us look for ways to accommodate and soften the impact of these developments. While these issues should rightly deserve our attention, many of our competitor economies are unbothered by such problems. Europe therefore needs to focus its attention even more so on establishing a position of unrivalled global competitiveness.
This objective of course is at the heart of the Lisbon strategy which has set objectives that we hope to achieve by 2010. But looking back over what we have managed during the past five years, it seems that Europe is likely to miss this target unless we change our approach to the Lisbon agenda. Not only has there been widespread apathy, but we have also witnessed a worsening of our competitiveness over the last years. I believe there are a number of reasons for this.
Surely one of them lies in the design of the Lisbon Package itself. It features 28 Main Targets as well as 120 Secondary Targets and 117 Indicators; such a proliferation of targets and figures make it is impossible to manage the process. If we also take into account the volume of reporting that is needed to adhere to the Lisbon strategy, there is little doubt that the sheer complexity of the process is one key reason as to why we have achieved little until now.
From now on, we will need to focus our attention - and the strategy - on two main priorities: Growth and Employment.
You now may rightly wish to ask the 1 million Euro question: "How can Europe deliver these?" I believe the answer is that the work needs to be done in partnership between the Community and Member States. Clear and effective communication will be a key factor in making this approach work. While Lisbon continues to be a project of European cooperation and coordination it will certainly require, in the future, much stronger input and ownership from Member States. What I wish to see are stringent
action plans from our Member States which present policy measures as well as implementation and monitoring strategies. National Parliaments can also provide much-needed support for the Lisbon project. In short, everybody has to contribute - at EU, national, regional and business level.
But we should be clear: the EU cannot replace the decisions or prerogatives of nations, regions or companies. It is business itself that has to take the decisions to invest in R&D, in training workers, or in developing products. What the public authorities can do - including the EU - is to help to create the right framework conditions for Europe. We can build a business-friendly environment where companies can be created, grow, thrive, and compete globally. Let me now present a few key
ingredients for a relaunch of the Lisbon strategy. After all, if the cake is to be a competitive one, we will need the right ingredients as much a good recipe and a well-equipped kitchen.
Firstly, we need to press forward in our efforts to 'Better Regulation'. This is one of my main priorities for the years to come. European businesses must be granted a regulatory environment free of unnecessary, complicated or unfavourable legislation. We must bear in mind the consequences of new legislation for European business. A good way to do this is to extend the use of Impact Assessments. It is time to weed out unnecessary bureaucracy and regulation and to make more use of
Competitiveness Testing of legislative proposals. We need to test our proposals to ensure that they reach their objectives in the most efficient way possible, and without damaging competitiveness.
Secondly, Europe needs a modern industrial policy which acknowledges the changes in the global economic landscape. The 21st Century will be marked by the importance of information and knowledge for Europe's economic performance. Only if we adjust today's policy to tomorrow's requirements will the Lisbon goals be achieved. Industrial policy must also respond to sector-specific conditions and needs if we want to optimise Europe's economic performance. While this can not insulate sectors and
industries from structural change, it can nonetheless help to adapt them to it. Questions of innovation and modernisation are here more important than ever before.
The third requirement for improved competitiveness is to strengthen Small and Medium-sized Enterprises in Europe. Like no other business form they have helped to shape Europe's economic profile. At their best, they are the powerhouses of European prosperity. But they are also much more sensitive to changes in the regulatory and economic environment.
Creating channels through which Small and Medium-Sized Enterprises can communicate their concerns will be an important step forward towards Lisbon's success.
This leads me to my fourth and final key point: Innovation. It is at the same time of supreme importance and of tremendous difficulty. How can we stimulate innovation in Europe? Innovation can never be forced, but can often be fostered. We must acknowledge that the US and Japan are making steady progress in their innovation performance. Sadly, Europe as a whole is not. However, the widening of the overall innovation gap masks some important differences in the innovation performance of European
Member States. Some of our more innovative countries are doing just as well as, if not better, than the US and Japan. Others are far behind the European average. This also holds true for individual sectors. Electrical and Computing industries for instance are pushing at the frontiers of innovation and development. We may need to find a differentiated approach to create more such success stories.
Innovation can be encouraged in a number of ways. Europe and its constituents must find a way in which education and research can be brought to the forefront of our society again. Life-long learning must become not only a hollow mantra, but a way of life. Only through our constant desire to extend our knowledge and capabilities can we remain competitive. Education will be one of the most important mechanisms to respond to the challenge of structural reform.
As an instrument to help safeguard the fruits of innovation, a Europe-wide Patent would ensure that good ideas receive the protection they deserve. I am confident that we will witness an important breakthrough on this in the coming year.
Research and Development is possibly the most important vehicle of innovation. We find that differences in R&D expenditure explain much of the innovation gap between Europe and the US. So it is in this area that the Lisbon project needs new impulses and therefore the target set out in the Strategy of spending 3% of our GDP on research and development deserves our full commitment.
Innovation is always the result of team work and cooperation. Innovation will also set in motion a process of further innovation and change as one idea leads to the next. Innovation can be a perpetual motion that creates and maintains new, modern and sustainable employment. What at first appeared as a vague and empty concept can in fact hold the key to Europe's standard of living in the future.
Ladies and Gentlemen,
We are once again facing an important decision as Europeans. And while the right choice may appear obvious, it is the determination with which we make the choice that will count. A fresh, energetic approach to the Lisbon strategy is what is called for today. We must give Europe's economy the chance that it deserves to become the most competitive economy in the world. Europe needs our firm commitment towards this goal, both at a national level and as a Community. Europe has overcome many phases
of gloom and stagnation through vision and dedication. We have come a long way in less than 50 years - we have created an internal market, opened borders, and have United our countries as Member States and even our national currencies. What we learn from this is that Europe is at its strongest when it acts in unison. It is this unity that we need when we are striving for more competitiveness, more growth and more employment. May I invite you to once again join forces as a true, European
Union.
Thank you.
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