CLOSING THE DELIVERY DEFICIT: The future of economic governance in Europe By Alasdair Murray ★ The Council of Finance ministers should assume leadership of the EU’s efforts at economic reform. Ecofin should become a ‘Super-Council’, co-ordinating all the Union’s economic policy-making. ★ The EU should merge the plethora of specialist industry councils into an ‘Enterprise’ Council led by European industry ministers. The Enterprise Council should push forward structural reform, placing a special emphasis on improving the environment for entrepreneurs and small businesses. ★ The Commission should appoint a ‘Lisbon’ commissioner to oversee its own work on economic reform.
The EU has set itself a series of highly ambitious economic goals to fulfil in the next decade. Eurozone countries are committed to ensuring the longterm health of the single currency, which will mean further economic integration. The Union will need to incorporate successfully at least ten dynamic but diverse accession country economies. Above all, the EU is determined to meet the target, set in Lisbon in 2000, of becoming the “world’s most competitive knowledge-based economy” by 2010.
The Lisbon agenda, in particular, poses a new set of problems to the EU’s traditional way of taking decisions. The EU has set out a broad reform programme, which could influence almost every aspect of the member-states’ economic and social structures. The EU will need to employ a mixture of policy measures to achieve its Lisbon goals. This means the Union must not just improve the quality of single market legislation, based on the traditional ‘Community method’. The EU must also make better use of the ‘open method of co-ordination’ – the (EU’s) recently developed system of target setting, benchmarking and peer pressure.
However, the EU’s existing institutional structure appears inadequate to cope with these economic challenges. The EU has so far made only patchy progress towards meeting the Lisbon goals. At the Barcelona summit in March 2002, EU leaders again failed to make substantial headway – despite Tony Blair’s insistence that it was a “make or break” meeting for economic reform. Moreover, budgetary co-operation between euro-zone countries appears to be faltering. President Chirac, for instance, has apparently reneged on a commitment to balance the French budget by 2004.
The imminent enlargement of the Union is likely to exacerbate the problems the EU faces in turning its economic reform rhetoric into action. An EU of 15 members already finds it extremely difficult to find a common position on many economic issues. The EU has still not reached agreement on vital legislation such as the Takeover Directive – despite a decade of trying. Soon there will be up to ten new member-states, each with their own political sensitivities and economic idiosyncrasies, which will need to be taken into account.
The EU’s economic challenge
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