The European Parliament,

–   having regard to the Commission's Communication on the implementation of the 2002 Broad economic Policy Guidelines (COM(2003) 4),

–   having regard to the final report of 20 January 2003 submitted by the TEPSA panel of experts to the Committee on Economic and Monetary Affairs on the Broad Economic Policy Guidelines for 2003,

–   having regard to the decisions of the Heads of State and Government at the Lisbon (2000), Göteborg (2001) and Barcelona (2002) European Councils,

–   having regard to its resolution of 12 March 2003 on the Commission's Communication to the Council and the European Parliament on Public finances in EMU - 2002(1),

–   having regard to the Commission's Communication to the Council and the European Parliament on strengthening the coordination of budgetary policies (COM(2002) 668),

–   having regard to the Commission's Communication to the European Parliament and the Council on the need and the means to upgrade the quality of budgetary statistics (COM(2002) 670),

–   having regard to the Commission's report 'The EU Economy: 2002 Review', ECFIN/475/02-EN,

–   having regard to the Commission's Communication on the autumn 2002 Economic Forecasts, European Economy No 5/2002,

–   having regard to the Commission's Communication on streamlining the annual economic and employment policy coordination cycles (COM(2002) 487) and to its resolution thereon of 5 December 2002(2),

–   having regard to Article 99 of the EC Treaty, and to Rule 41 of its Rules of Procedure,

–   having regard to the annual updates of the stability and convergence programmes drawn up by the Member States between October 2002 and February 2003 as well as to the opinions of the Ecofin Councils of 21 January 2003 on these programmes,

–   having regard to Article 163 of its Rules of Procedure,

–   having regard to the report of the Committee on Economic and Monetary Affairs (A5-0047/2003),

A.   whereas, in the context of the Stability and Growth Pact, considerable progress has been made in assessing budgetary convergence in the framework of budgetary surveillance by the Member States, and whereas the inclusion in these evaluations of the level and evolution of the public debt, and of a qualified analysis, could bring more flexibility to the application of the Stability and Growth Pact,

B.   whereas monetary policy is in any case homogeneous for all countries in the euro zone, but owing to different national inflation rates and different growth perspectives it is becoming increasingly necessary to introduce structural reforms allowing similar levels to be attained in the lowest nominal interest rates,

C.   whereas the economic and monetary forecasts for 2003 are strongly influenced by wrong estimates found in the forecasts for 2001 and 2002; and whereas these mistakes derived from a passive policy of awaiting the American recovery in spite of the fact that Europe urgently needs structural reforms,

D.   whereas the appreciation of the euro could penalise European exports of less competitive products, and there is an increasing need to favour and stimulate innovation in such a manner that it also leads to growth in domestic demand, supported by a coherent investment policy within the targets of the Lisbon strategy,

E.   whereas, from a legal point of view, coordination of economic policies is not a right but an obligation of the Member States, Article 99(1) of the EC Treaty stipulating that "Member States shall regard their economic policies as a matter of common concern and shall coordinate them within the Council, in accordance with the provisions of Article 98" and specifying the objectives of such coordination, which would contribute to "the achievement of the objectives of the Community, as defined in Article 2",

F.   whereas the economic policy guidelines to be considered at the Spring European Council must be more strongly geared to a medium-term oriented policy; whereas, however, a serious economic slowdown such as that which is currently occurring, underlines the need for an urgent re-think of the national economic policies in several Member States which, when implemented, will show positive results only in the medium and long term,

G.   whereas there is a strong economic interdependence in the internal market, and in order to boost investments and carry out the structural reforms foreseen in the Lisbon process, an efficiently coordinated economic policy, implemented simultaneously throughout the EU, is the most effective way to overcome the growth crisis,

H.   whereas, over the last few years, the euro area labour market has proved to be inflexible enough to become a major cause of unemployment, a fact which should make this market a priority for structural reforms in a number of Member States,

I.   whereas economic growth, which had been carried in the past by the internal market and the strength of exports, has slowed down, and the Commission has nevertheless continued to issue over-optimistic forecasts; whereas, moreover, major uncertainties continue to surround trends in oil prices, the euro-dollar exchange-rate, stock market weakness and the economic consequences of the Iraq crisis,

J.   whereas, in the past, EU growth strategies were always export-oriented, but in recent years growth has been driven by employment growth within the EU, and although the Commission offers optimistic estimates of an increase in euro area exports (about 5% in 2003), major uncertainties remain due to the volatility of oil prices, the appreciation of the euro, doubts about the EU's capacity to conceive and implement structural reforms, the persistent weakness of the stock markets and the economic consequences of a potential war in the Middle East,

1.  Points out that the aim of securing a balanced budget represents an important foundation for lasting economic development; points out, moreover, that financial policy mistakes by some states in an economic and monetary union can result in all participants being penalised in the financial markets;

2.  Welcomes the highly satisfactory implementation of the stability and convergence programmes in most of the Member States and encourages the others to follow this example; praises the above-mentioned communication from the Commission on strengthening the coordination of budgetary policies as a useful step towards clarifying and enforcing the underlying procedure;

3.  Stresses the necessity of improving budgetary surveillance by Member States, and of continuing to apply the Stability and Growth Pact flexibly; points out that this must include, in countries with excessive budget deficits, continuously cutting back on net new indebtedness by 0.5% annually and holding it sustainably below the 3% threshold, as well as pursuing more consistently the overall indebtedness threshold of 60%;

4.  Considers that the multitude of indicators allows the Commission and the Council to come out with recommendations and early warnings which take into account the most severe cases; considers also that there is a need for a clear choice in favour of investments over regular expenditures and for a general reduction of fiscal pressure in favour of an increase in the active population and active ageing where there are negative forecasts for the costs of the pension systems;

5.  Considers that recommendations and early warnings should henceforth be issued on the sole responsibility of the Commission, and that the Council should not have the right to vote on them;

6.  Stresses that although a multilateral surveillance of budgetary policies to reach convergence in the context of the Stability and Growth Pact is easier to implement in phases of national economy growth, it should also be carried out strictly in accordance with the Stability and Growth Pact in downturns, bearing in mind that in its present form the pact allows for substantial flexibility for struggling economies; notes that those Member States which complied best with the Stability and Growth Pact in a favourable economic climate tend to perform better during a general slump;

7.  Proposes that the targets of the Lisbon and Göteborg strategies be placed at the centre of the EU policy mix and of the Member States' economic policy coordination in order to strengthen growth in the coming eight years and to avoid divergences and contradictions in the various documents which will be assessed at the 2003 Spring Council;

8.  Proposes that all instruments of economic and financial coordination (the Broad Economic Policy Guidelines, coordination of budgetary policies, rationalisation of the annual cycles of economic and employment policy coordination) should incorporate in a coherent manner the objectives of the Lisbon strategy with a view to making up for lost time and achieving substantial results from the implementation of this strategy by 2010;

9.  Welcomes the fact that national stability programmes are finalised before policy coordination sets in, guaranteeing a better position when assessing the financial means available for any economic policy, and avoiding an ad hoc re-interpretation of the Stability and Growth Pact with a view to responding to the wishes for greater expenditure which occasionally emerge when policies are coordinated;

10.  Underlines, in this context, that these strategies should lead to the adoption of the priority target to guarantee a policy of public and private investment in sectors such as innovation, life-long learning, the creation of infrastructure and sustainable development within the European Union, in particular where these are recognised by the Commission and where they are deemed to be of common interest;

11.  Shares the Commission's opinion that the most appropriate answers to the economic slowdown are the Lisbon strategy and Member State-level structural reforms; calls upon Member States to proceed to an immediate and simultaneous implementation of the priorities set down at the European Councils of Lisbon (2000) and Göteborg (2001), in particular substantially to reduce disincentives to work in some Member States and to increase public and private investment in education and training, research and innovation for products and processes, and the development and application of new products and services, with emphasis on the application and interconnections made possible by new technologies; recommends that education, vocational training, life-long learning and research be funded, and that SMEs which undertake these measures be supported in particular;

12.  Recalls that the Lisbon strategy is aimed at increasing labour market participation and also at assuring the sustainability of public finance, in particular in view of Europe's ageing population and the financing of pensions; notes that the mid-term objectives which would allow the EU to become the most competitive economy by 2010 are not being met; calls on the Member States to pursue policies enabling the necessary reform path to be rejoined in order to reduce the lead which the US has over the EU in terms of productivity; calls on the Commission to put forward a plan of action to allow the candidate countries to join the Lisbon strategy process;

13.  Given the major uncertainties surrounding a possible increase in euro exports, calls for additional attention to be focused on endogenous growth, which still remains sluggish in the EU; recommends that public spending be redirected from consumption to investment, proceeding to the immediate and coordinated implementation of the Lisbon strategy simultaneously in all Member States in order to obtain maximum benefit from the aggregated economic impacts of the policies, and allowing for an increase in competition between the national economic policies, thus promoting the emergence of an efficient economy capable of sustaining the social needs of citizens;

14.  Calls for the Commission's evaluations and recommendations on the stability and growth programmes to be forwarded to Parliament in good time in order to give Parliament an appropriate say in the economic coordination process in the context of the Stability and Growth Pact;

15.  Calls on Heads of State and Government, at the forthcoming Spring Summit, to step up efforts to push ahead with the necessary structural reforms on the basis of an unvarnished assessment, so as to ensure that more than a mere Utopian ideal comes out of the ambitious Lisbon objectives;

16.  Instructs its President to forward its position to the Council and Commission, to the governments and parliaments of the Member States and to the social partners.

(1) P5_TA-PROV(2003)0092. (2) P5_TA(2002)0583.