In March 2005, Parliament said the Lisbon Strategy should be the top priority for the EU until 2010.  Reviewing progress in March 2006, MEPs noted their satisfaction with the revised Lisbon Strategy, in particular the National Reform Plans, with their focus on priority areas such as research and development, innovation and education, as well as the clarification of competences at EU and national level that came with the re-launch.

 

At the same time, Parliament stressed the importance of “effective and speedy implementation” of the NRPs, and that economic growth would require a supportive economic framework, including a coherent EU investment strategy.

 

Parliament stressed the importance of fully accomplishing the internal market with its four core principles of free movement of capital, goods, persons and services.  It said a genuine social dimension was essential to public support for the reforms advocated by the strategy.  It also insisted that long-term stability and sustainability of public finances are a precondition for success.  MEPs highlighted the potential offered by eco-innovation and environmental technologies, and called for a shift in taxation from labour to resource use.

 

Among other points, Parliament also expressed concern about protectionist steps taken by a number of Member States, which it said were “an assault on the basic principles of the internal market.”

Since 2000 a range of economic legislation has been adopted, mainly aimed at opening up markets in various goods and services.  MEPs have generally sought to balance liberalisation with measures to protect consumers, employees, the environment and basic public services.

 

What came to be known as the Lisbon strategy required action on various fronts: the internal market, the information society, research, education, structural economic reforms, a stable currency and a macroeconomic policy mix favouring growth and sustainable public finances. 

 

MEPs were initially divided over the issue of liberalisation. Many called for greater emphasis on job-creation, environmental issues and the needs of the poorer sectors of the population.  Others argued that jobs would follow from growth itself and therefore pushed for structural reform, believing too much worker protection could be counterproductive. In the end, the 1999-2004 Parliament settled for a middle path, amending the European Commission's legislative proposals to strike a balance between the various interests.  In the present Parliament the approach of seeking consensus across ideological lines has continued, enabling MEPs to reach deals on key pieces of legislation which have then been largely accepted as the best possible compromise by Member States.

 

Many of the measures agreed at Lisbon were not legislative but intergovernmental, based on coordination and benchmarking among Member States, with the Commission and European Parliament in a bystanders' role. Others did require Community legislation, with Parliament playing a key part as joint legislator.

MEPs have said that sustainable growth and employment are Europe's most pressing goals and underpin social and environmental progress, while well designed social and environmental policies are themselves key elements in strengthening Europe's economic performance.

 

Job creation was a key objective of Lisbon from the beginning. It was to follow mainly from economic growth generated by improved competitiveness, structural reform and less red tape. European  governments were supposed to encourage best practice and the exchange of ideas about job creation. 

Parliament has said stronger efforts are needed to finalise the internal market and Member States must face up to the structural reforms necessary to preserve the European Social Model. Sound environmental, health and food safety policies will have a positive impact on growth and competitiveness. 

 

A complete and fully operational single European market has always been a key element of the Lisbon Strategy. Removing barriers to competition and allowing companies from other Member States to access national markets on equal terms was regarded as crucial to economic growth.  Over the last seven years Parliament adopted legislation opening up several markets, including electricity, gas, postal services and rail freight and international rail passenger services.  Public procurement rules were updated and there has been progress towards the single management of air space in Europe. However, proposals to open up port services to competition have twice been rejected by Parliament amid to concerns over safety and employment. 

 

The services directive, which aims to make it far easier for companies to provide services in other Member States was one of the major items of EP business over the last two years.  Parliament's goal was to find a way of opening up the internal market in services to cross-border competition without eroding the European social model.  The directive is intended to boost growth and jobs but also to ensure that Member States do not lose control of the market in services of public interest and that workers' rights are protected.  This balance seems to have been achieved. The crucial "country of origin principle" was replaces with the "freedom to provide services". On the one hand, the text bans the Member States from erecting obstacles to the free movement of services.  But, at the same time, it stipulates grounds which would allow Member States to limit this freedom through national rules.

 

In fact, the compromise agreed within Parliament at first reading in February 2006 paved the way for an agreement between the three institutions. The Commission supported the Parliament text and the Council accepted it almost unchanged in its common position in July 2006.

 

Efficient and transparent financial markets foster growth through better allocation of capital. At Lisbon, there was a call for greater integration of the EU's national financial markets and since then Parliament has approved a range of legislation on subjects including a single passport for issuers of bonds and shares; boosting competition between banks and stock exchanges in the share execution business; common rules against insider dealing and market manipulation; eliminating barriers to investment in pension funds; opening up the insurance mediation market; protecting minority shareholders during takeover bids; transparency requirements for publicly traded companies.

 

In the last two years, Parliament has adopted measures on auditing, reinsurance and on the capital requirements for credit institutions.  The last of these should make it easier for small businesses to get access to credit.  MEPs have also been closely monitoring the implementing rules now being developed under much of this legislation to ensure the proper balance is maintained between the interests of the companies involved and their customers, whether corporate or individual, while also aiming for efficiently operating markets. 

 

Parliament is ready to move ahead with the legislation needed to create a single European payments area, which should make cross border financial transactions faster, cheaper and simpler for consumers, as soon as the Council can agree on its position on the proposals.

A friendlier environment for business, particularly small and medium-sized companies (SMEs), was a key element of the original Lisbon strategy.  Member States were to share best practices and try to eliminate red tape and the cost of setting up new companies. In this area, Parliament's role was limited.  However, MEPs backed efforts to help SMEs and pushed to ensure their needs were reflected in the relevant legislation, for instance by making it easier for them to compete for public authority contracts or to have access to EU research funds.  They also adopted an EU law to make intellectual property rights easier to enforce.

 

Parliament rejected a proposal on computer implemented inventions (the so-called 'software patents directive') since there was no agreement on how to ensure genuine inventions could be protected without stifling competition. On the other hand, the majority of MEPs  believed the compromise achieved on the REACH chemicals legislation was an example of the Lisbon Strategy in action, balancing competitiveness and environmental, social and public health goals.

Another pillar of the Lisbon strategy from 2000 onwards was the development of the information society, which should help the shift towards a knowledge-based economy and the creation of jobs in areas with strong growth potential. The previous Parliament adopted major legislation designed to increase competition in the telecommunications industry and expand use of the internet. Integrated and liberalised telecoms markets should lead to even lower costs and lower prices for the user, both private and corporate, and hence also cut the cost of internet access.  MEPs are currently working on the Commission’s proposals for a cap on the, often very high, charges for using mobile telephones outside their user’s home country.

Another broad issue is the "macroeconomic policy mix", i.e. the best balance of economic policy tools for achieving growth. MEPs have been critical of the fiscal part of the mix, as there is no fiscal policy at EU level and the Stability and Growth Pact, the set of rules on public expenditure, has often not been respected to the letter by EU governments, although the situation is now improving as the economic growth has improved. Many MEPs were unenthusiastic about the new rules agreed by Member States in June 2005.  While some welcomed the additional flexibility, others argued that the change rewarded the countries which had broken the old rules. MEPs have also been concerned about slow progress in redirecting public expenditure towards productive investment, as was agreed at Lisbon, and to alleviate the tax pressure on labour sufficiently.  Overall, MEPs have consistently called for more effective coordination of economic policy, in particular between the euro area Member States, better to complement the monetary policy set by the European Central Bank.

Education and research have a major impact on growth and employment. As EU leaders said at Lisbon, "investing in people and developing an active and dynamic welfare state" are crucial to the knowledge economy.  This means Member States must aim to increase per capita investment in human resources and give higher priority to lifelong learning, since better skills enhance employability. However, on the whole this area has not been subject to EU legislation.  Instead a benchmarking exercise was set up - and the results have been poor. The EU invests 1.28% of GDP in higher education, compared to 3.25% in the US.  The difference is largely due to a lack of private capital, as public investment levels are similar. The proportion of adults with higher education is growing but the gap with America remains. And the percentage of young people dropping out of school without any sort of qualification is still above the 10% objective for 2010.

 

Parliament strongly supports the goal agreed by Member States of devoting 3% of GDP to research and development. It was just 1.93% of GDP in the EU in 2003, as compared to 2.59% in the US and 3.15% in Japan.

 

The EU has a joint scientific research programme, and at the end of 2006 Parliament gave the go-ahead for a new seven-year Framework Programme (FP7) with a budget of more than €54 billion over its lifetime.  The European Parliament has joint legislative power with the Council on the main programme and the rules for participation.

 

Parliament strongly backed this legislation from the outset and made every effort to speed it through the legislative process.  

 

Many of Parliament's first-reading amendments were accepted by Council, including those aimed at encouraging participation by small and medium-sized firms and boosting the position of young researchers and women in science, and those dealing with stem cell research.

 

MEPs insisted on shifting some of the spending towards Parliament's own priorities, including research on renewable energy and energy efficiency as well as the possibility of funding research on children's health, respiratory diseases (including those induced by allergies), plus research into neglected diseases.

 

MEPs have backed efforts to promote movement of researchers and students, via the Erasmus Mundus programme, and have improved legislation on EU-wide recognition of professional qualifications, designed to make it easier for professional people to work in another Member State. MEPs say there should also be more measures to facilitate cross border exchange of researchers.

 

Attempts to introduce a European Community patent, which would boost research by simplifying patent procedures, have run into the sand for the time being.

The most important areas of policy and practice for the revitalisation the European economy are either wholly or mainly matters for national governments and parliaments.  When it comes to labour market reforms, changes in tax systems, improving opportunities for education, encouraging greater participation in the workforce of women and older people and many other policies, the EU's role is only to help Member States through coordination, benchmarking and encouragement.  But the Lisbon Strategy has often mainly been discussed at EU rather than national level.  The aim of parliamentary meetings like the one this week is to help national parliaments take greater "ownership" of the strategy.