# EUR-Lex - 52007IP0051 - EN

Important legal notice

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# 52007IP0051

**European Parliament resolution on the Situation of the European economy: preparatory report on the broad economic policy guidelines for 2007 (2006/2272(INI)) **

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Official Journal 287 E , 29/11/2007 P. 0535 - 0542 *

P6_TA(2007)0051

Economic policy guidelines for 2007

European Parliament resolution on the Situation of the European economy: preparatory report on the broad economic policy guidelines for 2007 (2006/2272(INI))

The European Parliament,

- having regard to the Commission's Integrated Guidelines for Growth and Jobs (2005-2008) (COM(2005)0141) (the Integrated Guidelines),

- having regard to Council Decision 2005/600/EC of 12 July 2005 on guidelines for the employment policies of the Member States [1],

- having regard to the Commission's Economic forecasts [2],

- having regard to the Commission's EU Economy 2006 Review of 22 November 2006, "Adjustment dynamics in the euro area — Experiences and challenges",

- having regard to the Member States' autumn 2006 reports under the Lisbon Strategy on the implementation of their national reform programmes [3],

- having regard to the Commission's annual progress report of 12 December 2006 on the Lisbon Strategy, "Implementing the renewed Lisbon Strategy for growth and jobs — A year of delivery",

- having regard to the Commission Communication to the Council and the European Parliament, "The long-term sustainability of public finances in the EU" (COM(2006)0574),

- having regard to the Commission Communication, "The demographic future of Europe — from challenge to opportunity" (COM(2006)0571),

- having regard to the Commission Communication to the Council, the European Parliament, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank, "Annual Statement on the Euro Area" (COM(2006)0392),

- having regard to its resolution of 26 May 2005 on the Commission recommendation on the broad guidelines for the economic policies of the Member States and the Community in the framework of the integrated guidelines for growth and jobs (2005-2008) [4],

- having regard to the Key Issues Paper by the Council Presidency of 7 February 2006 for the Ecofin Council with a view to the spring 2007 European Council,

- having regard to the Presidency's conclusions at the European Council in Lisbon of 23 to 24 March 2000, the European Council in Göteborg of 15 to 16 June 2001 and the European Council in Brussels of 22 to 23 March 2005,

- having regard to Article 99(2) of the EC Treaty,

- having regard to Rule 45 of its Rules of Procedure,

- having regard to the report of the Committee on Economic and Monetary Affairs (A6-0012/2007),

A. whereas the Integrated Guidelines are a central instrument of EU policy on the economy and employment focusing on a medium-term period of three years; whereas that instrument should, based on the version of 2005 and its forthcoming review, be assessed carefully and developed further in the interest of improving its implementation,

B. whereas the Integrated Guidelines, the reformed Stability and Growth Pact and the Financial Framework for 2007 to 2013 will contribute together to creating greater coherence in the policy-making process and improving the economic governance of the European Union,

C. whereas the Integrated Guidelines should not be regarded merely as the relabelling of existing policies but should become a genuinely integrated package of policies encompassing and converging macroeconomic, microeconomic and employment dimensions,

D. whereas the Integrated Guidelines are an essential component of the Lisbon Strategy and should, as its central implementing instrument, with the aid of a balanced "policy-mix" approach, pursue reciprocally inspiring reforms in the areas of the economy, employment, the environment and social security,

E. whereas economic growth is not an end in itself but a necessary condition, and as such, part of an integrated approach, for securing the welfare and living standards of citizens; whereas the endeavour to achieving sustainable growth must be based on a policy for the economy, social security, employment, the environment and the budget that does justice to its responsibility towards future generations,

Making good use of the upswing in the economy and employment in the European Union

1. Notes that after six years of low economic growth, stagnation or even recession in many Member States, the European economy is now achieving better results with a growth rate that exceeds that of previous years, that is to say a growth rate in 2006 of 2,8% of GDP in the European Union and of 2,6% in the euro area falling in 2007, however, to 2,4% in the European Union and 2,1% in the euro area; raises the question as to the extent to which European growth may be cyclical and stresses the need to enhance Europe's growth potential so as to be able to generate employment;

2. Points out that there are wide disparities between the growth rates of the Member States and expresses concern at the relatively low growth rate in a number of the larger Member States, which is primarily attributable to stagnant internal demand; notes in this context the above-average growth rate enjoyed by the Scandinavian countries accompanied by a recent substantial reduction in unemployment;

3. Stresses the improvement in public finances with a reduction in the average budget deficit to 2% of GDP in 2006; expects further improvements in the quality of public finances which do not only mirror cyclical factors;

4. Notes the positive development in the employment market, with a doubling of the annual growth rate of labour productivity from 0,6 to 1,2% and a decline in unemployment to 8% in both the European Union and the euro area in 2006, and a predicted unemployment rate of 7,3% in the European Union and 7,4% in the euro area by 2008, employment growth around 1,4 %, representing 2,9 million new jobs in 2006 with the prospect of a further 7 million new jobs during the period 2007 to 2008, which would mean a rise in the employment rate from 63,7 % in 2005 to 65,5 % by 2008; notes, however, that unemployment rates, particularly among women, are still high and far from achieving the Lisbon Objectives; calls, therefore, for further efforts to be made towards attaining an effective and inclusive European labour market, which combines flexibility and security and is able to achieve a significantly higher participation rate; stresses in this context that necessary reforms should be designed and implemented in best collaboration with the social partners;

5. Is concerned at the constantly high level of poverty in the European Union which, following a fall from 17 to 15 % in the mid-1990s, has recently risen again to 17 % in 2005; considers it unacceptable in this connection that, in the enlarged European Union, around 80 million people now have a disposable income of below 60 % of the national equalised median income;

6. Points out that in 2006, the European Union expanded its leading role as a world champion exporter, with an 8 % growth in exports, but underlines the fact that the export surplus accounts for only about 0,3 percentage point of the current GDP growth in the euro area and stresses the risk factor attached to the high euro-dollar exchange rate; draws attention to the fact that the present economic upswing is predominantly riding on recovering domestic demand and that this is largely as a result of short-term investment; points out that the fundamental problem facing the European economy in the last decade has been inadequate domestic demand attributable to a lack of confidence caused by unemployment; expresses concern as to how far a continual increase in investment and consumer expenditure, together with a sustained improvement in the employment situation, can be achieved to ensure that the mainly cyclical upswing will turn into a structural upward trend;

7. Considers that the European economy has been strengthened by the main achievements of the economic and monetary union and the single market; calls for full completion of the internal market, particularly in financial services and the energy sector by means of rapid and complete implementation of the electricity and gas directives; accordingly, stresses the importance of investment in the infrastructures needed to achieve this objective; expects further economic stimuli from a European market in services that will guarantee service providers' access free of discrimination and the protection of labour and social security laws at the place of the service provision; urges the Member States, with regard to the latest enlargements, to maintain an open and free labour market that supports economic growth;

8. Points out that a more permanent increase in economic growth potential in the European Union under the umbrella of the Lisbon Strategy requires the ongoing implementation of well-balanced reforms, including measures aimed at strengthening innovation, technological advance and human capital accumulation, removing remaining barriers hampering the operation of the internal market, and creating a more conducive environment for business activities in Member States;

9. Draws attention, against the background of an expected decline in growth in the United States and hence in world trade, of potential external shocks, such as the abrupt adjustment of global imbalances with massive effects on exchange rates and financial markets, and of a possible further rise in the price of oil, to the need to support and strengthen the economic upswing by an economic policy improving the effectiveness in the markets of goods, services, labour and capital, that promotes growth and is equally geared to export and domestic demand;

10. Is concerned about a euro exchange rate which could harm Europe's competitiveness as against the United States; expects the European Central Bank to monitor developments closely and to take appropriate measures in order to safeguard Europe's economic interests in the international financial system;

Encouraging the Member States to produce benchmark results

11. Notes that the real economic growth in the European Union is characterised by old and new divergences, with the lowest growth rates in Portugal (1,2% of GDP) and Italy (1,7 %), and high growth rates among the EU-15 in Spain (3,8 %), Greece (3,8 %) and, in particular, Sweden (4 %), Finland (4,9 %) and Luxembourg (5,5 %); notes that the new Member States are registering particularly high growth rates in Slovakia (6,7 %), Lithuania (7,8 %), Estonia (10,5 %) and Latvia (11 %); underlines that these divergences also reflect important structural differences, different domestic economic policies and demographic structures as well as asymmetric impacts of common policies, illustrating underlying risks to the European Union's internal cohesion; therefore stresses the need for policies that strengthen economic cohesion and thus foster the internal market and monetary union;

12. Points out that, in the case of modernising efforts and economic performance, the Member States that are most successful are those that combine forward-looking and well-balanced structural reforms with higher-than-average investment in transport, information technology, research and development (R&D) as well as innovation, education, lifelong learning and care facilities, and the renewal of reliable social networks; notes that, for the most part, the same Member States have a highly efficient and transparent administration, an innovative entrepreneurial environment, budget surpluses, lower-than-average debt rates and high-quality public spending, while showing signs of a contribution by technical progress to the national growth result that is almost twice the size of the EU average; concludes that those Member States policies that seek to achieve high employment rates, including the employment of women and older workers, will enable the European Union to face with greater confidence present and future challenges such as an ageing population and growing competition as a result of globalisation;

13. Emphasises in this connection that the most successful Member States with regard to their strategies of economic and social renewal can also be seen as role models for the successful implementation of the Lisbon Strategy, and encourages other Member States to be guided by them, even if the measures implementing the Lisbon Strategy must be developed to suit the situation of the relevant Member State and must remain the responsibility of that Member State;

14. Notes, with regard to the Member States' national reform programmes, that, by and large, there are signs of greater harmonisation and also of a new commitment to direct policy towards objectives agreed throughout Europe; underlines, however, that Member States have different points of departure and show considerable variations as regards the content, pace and intensity of reforms across policy areas; takes the view that the reforms only respond to a limited extent to the present economic and employment situation, and that in many cases such central tasks as innovation, job creation, energy supply, a sustainable environment and better law-making are still not adequately incorporated into an integrated reform agenda; regrets that even in the fields of boosting the employment rate and active employment policy, progress and reform efforts are moving less rapidly than in other fields; welcomes, however, the efforts to strengthen responsibility at national and regional level ("ownership") and the involvement of the parliaments and social partners, and calls for the further expansion of such endeavours;

Strengthening potential — extending success: what still needs to be done

15. Calls on the Member States to make good use of the new economic situation and the resulting margin for manoeuvre to promote a more sustainable form of economic growth, and one that is more closely geared towards quality objectives; underlines that a healthy and stable macroeconomic environment requires improving the quality of public finances with budgets that are further consolidated, and an intelligent private and public investment policy that delivers forward-looking infrastructure and opens up tomorrow's markets today;

16. Stresses that in order to benefit fully from the potential of the internal market and to strengthen Europe's position in the global market, current protectionist and anticompetitive tendencies must be curbed;

17. Emphasises the role played by small and medium-sized enterprises (SMEs) in generating employment; accordingly, stresses the need to create a favourable climate for them through more favourable tax arrangements, a reduction in regulation and administrative burdens, improved access to financing, an improvement of their situation regarding business costs in terms of energy, transport, communications and services, improved access to information and communication technologies and increased investment in R&D and innovation;

18. Stresses the importance to the European economy of excellent competitiveness as well as the need to sustain demand potential, and expects the economic policy actors to make further efforts to achieve a higher long-term growth rate in conditions of economic stability and sustained development also by effectively coordinating economic policies;

19. Stresses in this context the importance of education, in particular tertiary education, to the strengthening of future growth potential and increasing skills levels, mobility and adaptability of European citizens; calls on Member States to step up efforts aimed at making European education systems more attractive, accessible and competitive;

20. Recalls that the achievement of the Lisbon Objectives requires sufficient financial resources through the Community budget; regrets in this context the insufficiency of financial resources to achieving the said objectives;

21. Takes the view that a simultaneous and coordinated approach by the Member States to growthintensive spending, the stimulation of private investment and joint initiatives in the area of private and public cooperation can unleash substantial synergies, improve Europe's ability to meet the existing challenges in the fields of science and research, transport and communication, energy and environmental sustainability and will support the efficient allocation of resources throughout Europe; notes in this connection the importance of a coordinated fiscal framework including corporate tax arrangements favourable to SMEs and geared to generating employment; considers that Member States should improve the efficiency of tax and social contribution arrangements in order to ease job creation, particularly for specific social groups such as women, the long-term unemployed and older people; considers that competitive tax regimes should encourage the establishment of new businesses without undermining national funding capacity and should shift the burden from taxation on labour to environmental taxation, including fiscal incentives to support R&D and the use of renewable resources;

22. Calls once again, in view of the forthcoming review of the Financial Framework, further to adapt the EU budget in the light of the Lisbon Objectives and in this way to support the full implementation of the Lisbon Strategy as a whole;

23. Recognises that much progress has been made in shifting the focus of State aid to horizontal objectives; encourages Member States to continue this trend and further to align State aid with the Lisbon Objectives such as employment, innovation and sustainability;

24. Underlines the need in the future to direct the competitiveness of European economies even more strongly towards an intelligent and sustainable economic process, to go hand-in-hand with the more efficient use of resources; recommends here in particular looking into the following measures at national level, which serve the aims not only of modernising the economy, developing new technologies and strengthening competitiveness, but also of environmental compatibility and opening up new areas of employment:

(a) in the fields of R&D, promoting:

- incentives to extend private R&D activities;

- public investment in the context of R&D, namely public-private partnerships;

- networks and cooperation between universities, research institutes and companies;

- national or regional coordination offices in the field of R&D;

- innovation and the development of new technologies by SMEs and small service providers, particularly by improved access to all sources of capital, in particular to venture capital; and

- training and retraining in the interest of an active employment policy in the area of modern technologies;

(b) in the fields of energy and the environment:

- implementing the electricity and gas directives in the interest of a fair, competitive, functioning and non-discriminating European energy market;

- securing energy supplies for the European economies through the diversification of sources and transit routes of energy imports;

- introducing fiscal incentives, performance incentives and investment to promote energy efficiency measures, including the implementation of energy-saving objectives;

- introducing fiscal incentives, performance incentives and investment to promote renewable energies and environmentally efficient technologies and innovation;

- ensuring the independence of national regulatory authorities and their coordination at EU level;

- expanding and networking of regional energy generation;

- increasing the transparency in the energy market and a clear separation of energy production, distribution and marketing ("unbundling"); and

- establishing stronger "environment certificates";

25. Regards it as a priority to open up new chances of and opportunities for work for all sectors of society in a rapidly changing economy; underlines that the most vulnerable members of society are most at risk in this context and that priority should be given to promoting "active inclusion" and to creating better jobs more broadly; underlines also the need to balance new demands for workers' flexibility and readiness to retrain with new job prospects and the safeguarding of new forms of security ("flexicurity") also in order to promote chances better to combine professional and private life; calls in this connection for an improvement in the opportunity for participation in and access to the employment market by women, older workers, young people, the long-term unemployed and immigrants, for which the following measures, among others, should be more strongly pursued at national level in the fields of employment and education:

- ensuring that every school leaver is offered a job, training or other equivalent measures within six months;

- introducing a legal entitlement to retrain and participate in lifelong learning;

- providing incentives and investment to promote training, retraining and lifelong learning, and successful models for combining family with career, education and training;

- promoting flexible models for the transition from working to pensionable age on a voluntary basis, also with a view to facilitating access to the labour market for young people;

- promoting the establishment of new businesses and ensuring the hand-over of existing businesses on grounds of age;

- further reducing the overall burden of taxation and social contributions on low and average earnings;

- securing the qualification and first employment of young people by suitable private and public initiatives;

- increasing the availability and affordability of high-quality child care;

- ensuring a start-up time for new businesses of no more than one week as well as low start-up fees and administrative costs;

- including entrepreneurship education in lifelong learning curricula;

- ensuring a proper policy for legal immigration along the lines of the proposal for a European green card system;

26. Points out that in the interest of macroeconomic stability, the rise in productivity must go hand in hand with fairer distribution of the fruits of growth and a strengthening of social cohesion; draws attention in this connection to the call for the rise in incomes to keep pace with medium-term growth in productivity; underlines the urgent need to strengthen a culture of encouragement and involvement as part of the concepts of corporate governance and corporate social responsibility;

27. Stresses the need for enhanced and structured cooperation in the European Union and especially in the euro area, to strengthen governance and the process of European integration, as this is the only way to tackle the global economic challenges; calls, therefore, on the Council and the Commission to ensure that the annual statement on the euro area delivers a more practical range of instruments in future, to make it possible to hold a more detailed dialogue between the various EU bodies that are involved in strengthening the economic governance of the European Union; further takes the view that the Euro Group should focus on ensuring that when national budget plans are drawn up and implemented they are better balanced and harmonised, both in content and timing, as this would make a big contribution to seeing through an economic policy reform agenda; proposes in the framework of a more enhanced and structured cooperation within the euro area to invite the other Council formations concerned to participate in such cooperation;

Stimulating necessary institutional reforms

28. Welcomes the Commission's new approach to following up the assessment of the national reform programmes by proposing country-specific recommendations to guide Member States and urges the European Council to approve these; underlines, in this context, the urgent need to strengthen the mutually reinforcing approach of the Integrated Guidelines which must be reflected in national reform policies; calls once again for the transparent exchange of best practices and the publication of an annual "league table" of Member States with the best and worst reform records by the Commission in the interest of learning from both successes and failures; points out, however, in this connection that a sufficient number of integrated indicators are needed to cover all the policy areas of the Lisbon Strategy;

29. Regrets the still weak visibility of the Lisbon Strategy in the national politics of many Member States; takes the view that the mobilisation of all economic stakeholders is essential to ensuring its effective implementation; in particular, believes that a better involvement of social partners, national parliaments and civil society will increase the visibility of the Lisbon Strategy, enhance the quality of public debate on economic reforms, reinforce accountability and raise the awareness of public opinion about the need to coordinate closely economic policies with a view to addressing the main challenges posed by the ongoing globalisation process and to adopt a collective position to improve economic governance inside the European Union; urges the Member States to implement the Integrated Guidelines and the national reform programmes in the spirit of "ownership", in a committed way, with the enhanced involvement of the national parliaments and other interested actors such as the social partners, and requests a regular review of the relevance of the national reform programmes according to the "benchmarking" principle, including a broader consultation process in those Member States in which it is not yet the norm; expects the priorities of national reform programmes to be better reflected in the timetable as well as the content of national budget decisions;

30. Welcomes the consolidation and integration of the guidelines for economic, structural and employment policy measures; repeats in this connection that the economic and structural policy guidelines must receive the same legislative status as the guidelines for employment policy measures and that an interinstitutional agreement must be drawn up in order to clarify Parliament's participation in this context;

31. Expects, with a view to the forthcoming work on revising the Integrated Guidelines, to see a joint process of reflection between the EU institutions concerned and proposes an inter-institutional working party to be established after the Spring 2007 European Council; recommends the following aspects for improving implementation of the EU reform agenda for discussion and reflection:

- presenting a thorough analysis of structural reforms and their direct impact on productivity, employment and internal market demand with a view to revising the Integrated Guidelines;

- developing clearer and more focused integrated guidelines, while enlarging the range of reform areas to be covered as regards, for example, the comprehensive reform agenda for a more active policy of ecological sustainability, going beyond the scope of energy policy, and for a more committed policy to promote lifelong learning;

- developing a more standardised reporting structure in the context of the national reform programmes, without compromising the right of Member States to set national reform priorities;

- developing guidelines and benchmarks for national consultations, including recommendations for the involvement and active participation of national parliaments both in drawing up and reviewing the national reform programmes;

- developing and exchanging successful models for information and communication strategies;

- increasing the effectiveness of the EU reform agenda by consolidating the content and timing of economic policy instruments that are still deployed separately, with the goal of a "smart-growth strategy", which further concentrates the reporting and assessment work in the area of the national reform programmes, but at the same time also involves the national stability and convergence programmes and systematic initiatives to incorporate the principle of ecological sustainability;

32. Regrets, once again, that no clear plan and code of practice has, to date, been agreed between Parliament, the Council and the Commission, which would guarantee appropriate cooperation and the full involvement of the three EU institutions concerned in the appropriate further handling of the Integrated Guidelines as a key instrument of the Lisbon Strategy; calls in this connection on the Council and the Commission to submit forthwith proposals for the close cooperation of the three EU institutions concerned with a view to the impending revision of the Integrated Guidelines;

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33. Instructs its President to forward this resolution to the Council and the Commission.

[1] OJ L 205, 6.8.2005, p. 21.

[2] Autumn 2006, No 5/2006.

[3] http://ec.europa.eu/growthandjobs/key/nrp2006_en.htm

[4] OJ C 117 E, 18.5.2006, p. 248.

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