EU prepares "EU2020" strategy to guide post-crisis

UNCLAS BRUSSELS 001736 SENSITIVE, SIPDIS E.O. 12958: N/A TAGS: ECON EFIN EUN SUBJECT: EU prepares "EU2020" strategy to guide post-crisis development ¶1. (U) The European Union is preparing a new vision for economic growth over the coming decade. Dubbed "EU2020" the new strategy will replace the Lisbon Strategy that was launched with fanfare in 2000 with the aim of making the EU "the most dynamic and competitive knowledge-based economy in the world ... by 2010" but fell considerably short of expectations. European Commission President Barroso launched the EU2020 process on November 24 with a call for public comments on the Commission's vision. ¶2. (U) The European Commission's goal is "greener and socially inclusive growth." EU 2020 will take as its starting point the achievements (and lessons learned) of the Lisbon Strategy, as well as the coordination efforts behind the response to the recent crisis in the European Economic Recovery Plan. The Commission's strategy recognizes that the financial and economic crisis has taken a heavy toll on public finances, businesses, employment and households. New policy actions will therefore have to acknowledge limited budgetary margin for maneuver. However, the Commission feels that this also constitutes an opportunity, since as public sector deficits are brought back under control there is the possibility to reshape public expenditure in ways that will achieve the stated EU2020 goals. ¶3. (U) The Commission's call for stakeholder input (available at ec.europa.eu/eu2020) proposes three focus areas for EU2020: - Creating value by basing growth on knowledge EU2020 sees knowledge (education, research, innovation and creativity) as the engine for growth. It therefore aims to strengthen education as one of the most effective ways of fighting inequality and poverty. The EU aims to create an efficient, effective and well-resourced European Research Area to increase research efforts by pooling resources and jointly developing major research infrastructures across the EU. Incentives for the growth of knowledge-based firms, such as better access to credit, are envisaged to provide more attractive conditions for innovation and creativity. - Empowering people in inclusive societies EU2020, with its focus on a smarter, greener and more competitive economy, aimsto boost new job creation, responding to the hih levels of unemployment in the post-crisis European economy. But while this transition takes place, major efforts will be essential to prevent people from being excluded and to ensure social cohesion. Deploying "flexicurity" (a concept attempting to conciliate both employers' and workers' needs - flexibility and security - by ensuring that workers have safe transitions inside the labor market) is considered essential, in conjunction with tackling inefficient labor market segmentation and life-long learning programs to manage the transitions between jobs and between training and jobs. Self-employment will be encouraged, through the removal of disincentives, and existing social security systems will need to be modernized, taking into account the ageing of the European population. - Creating a competitive, connected and greener economy EU 2020 calls for a fresh approach to industrial policy to support industry by putting the emphasis on sustainability, innovation and the human skills. Increases in productivity will need to be realized that, together with the roll-out of high speed internet and the development of smart transport and energy infrastructures, will contribute to increase the competitiveness of Europe's economy while reducing carbon emissions and increasing transport safety and energy security. ¶4. (SBU) The Commission proposes that the European Council (bringing together Member State governments) and the European Parliament both be more involved in designing and championing EU2020 than they were in the previous strategy. The incoming Spanish Presidency has declared economic reform a top priority, and has said it will take a leading role in the design and approval of an EU2020 strategy that brings Europe "jobs of quality" and coincides with a determination that the EU has exited from the financial crisis. They acknowledge that the Lisbon Strategy suffered from unrealistic goals and the lack of Member State buy in. They expect that new European Council President Van Rompuy - an economist by training - will be a strong partner of both the Spanish and the European Commission in moving EU2020 forward; Van Rompuy has already indicated that he plans to convoke the EU's national leaders in February for an informal European Council session dedicated to the economy. ¶5. (SBU) The Commission hopes to complete a set of "integrated guidelines" for the Members States to approve at their Spring European Council meeting. However, Spanish officials, citing concerns that the introduction of a new European Commission in early 2010 may slow Commission work, expect that this process will not be complete until the June 2010 European Council. MURRAY