European Parliament resolution on the situation of the European economy, report on the broad guidelines for economic policies (2003/2135(INI))
Date: 2004-02-26
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: EU employment policy, EU situation, economic policy, economic situation, industry-research relations, research and development, self-sufficiency in energy, structural policy, vocational training

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2.
Recalls in the strongest terms that the determination of priority projects in Annex III of Decision
No 1692/96/EC of 23 July 1996 of the European Parliament and of the Council on Community guidelines
for the development of the trans-European transport network (1) is governed solely by the codecision
procedure between Parliament and the Council in accordance with Article 251 of the Treaty;

3.
Stresses that any arbitrary setting of priorities with regard to priority projects listed in Annex III is
inadmissible and that the timing or funding of the individual projects within Annex III depends solely on
the prescribed criteria, such as each project’s state of maturity in planning, funding and construction terms;

Demands that it be regularly informed about the progress of these projects relating to Annex III as

4.
well as their financing;

Instructs its President to forward this resolution to the Council, the Commission and the govern-

5.
ments of the Member States.

(1) OJ L 228, 9.9.1996, p. 1. Decision as amended by Decision No 1346/2001/EC (OJ L 185, 6.7.2001, p. 1).

P5_TA(2004)0116

Preparatory report on the broad economic guidelines

European Parliament resolution on the situation of the European economy, report on the broad
guidelines for economic policies (2003/2135(INI))

The European Parliament,

(cid:1) having regard to the Presidency conclusions of the Lisbon European Council of 23/24 March 2000,
the Gothenborg European Council of 15/16 June 2001 and the Barcelona European Council of
15/16 March 2003,

(cid:1) having regard to the Commission Recommendation on the Broad Guidelines of the Economic Policies

of the Member States and the Community (for the 2003-2005 period), (COM(2003) 170),

(cid:1) having regard to the Presidency conclusions of the Brussels European Councils of 20/21 March and of

16/17 October 2003,

(cid:1) having regard to the Communication from the Commission ‘A European Initiative for Growth, Invest-
to the European Council,

ing in Networks and Knowledge for Growth and Jobs’ Final Report
(COM(2003) 690),

(cid:1) having regard to the conclusions of the Council for Economic and Financial Affairs of 25 November

2003,

(cid:1) having regard to the hearing on the Report of an Independent High-Level Study Group established on
the initiative of the President of the Commission and chaired by André Sapir in the Economic and
Monetary Committee on 4 November 2003,

(cid:1) having regard to the Final report of the Centre for European Policy Studies of 27 November 2003,

(cid:1) having regard to the Economic Forecasts Autumn 2003 (1),

(cid:1) having regard to the Communication from the Commission ‘Investing in research: an action plan for

Europe’ (COM(2003) 226),

(1) To be published as European Economy No 5/2003.

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(cid:1) having regard to the Communication from the Commission ‘More Research for Europe, towards 3 %

of GDP’ (COM(2002) 499),

Thursday 26 February 2004

(cid:1) having regard to the Communication from the Commission to the Council, the European Parliament,
the European Economic and Social Committee and the Committee of the Regions on ‘Innovation
policy: updating the Union’s approach in the context of the Lisbon strategy’ (COM(2003) 112),

(cid:1) having regard to the Proposal for a Decision of the European Parliament and of the Council amending
Decision No 1692/96/EC on Community guidelines for the development of the trans-European trans-
port network (COM(2003) 564),

(cid:1) having regard to its resolutions of 12 March 2003 on the state of the European economy (cid:1) prepara-
tory report with a view to the Commission recommendation on Broad Economic Policy Guidelines (1)
and of 15 May 2003 on the Commission recommendation on the Broad Guidelines of the Economic
Policies of the Member States and the Community (for the 2003-2005 period) (2) and to its resolution
the European Council meeting held in Brussels on
of 23 October 2003 on the outcome of
16/17 October 2003 (3),

(cid:1) having regard to the opinion of the European Economic and Social Committee on the Assessment of
the experiences gathered by the EESC to evaluate the economic, social and employment impact of
structural reforms in the EU (ECO/109, CESE 1406/2003),

(cid:1) having regard to the report from Commission to the Spring European Council ‘Delivering Lisbon,

Reforms for the Enlarged Union’ (COM(2004) 29),

(cid:1) having regard to the Communication from the Commission to the Council ‘Joint Employment Report

2003/2004’ (COM(2004) 24),

(cid:1) having regard to Rule 163 of its Rules of Procedure,

(cid:1) having regard to the report of the Committee on Economic and Monetary Affairs (A5-0045/2004),

A. whereas, due to the lack of structural reforms in most Member States, the GDP growth rate for the
euro zone has been continuously decreasing, leaving Europe’s economy on the brink of stagnation
(from 3,5 % of GDP in 2000 to 1,5 % in 2001, 0,9 % in 2002 and 0,4 % in 2003),

B. whereas an upturn in the European economy is to be expected in 2004,

C. whereas employment prospects have deteriorated in 2003, increasing the unemployment rate to 8,9 %

in the euro area and to 8,1 % in the EU as a whole, about 0,5 pps higher than in 2002,

D. whereas the percentage of persons at risk of poverty at EU level remains at a very high level of 15 %,
and would amount to 23 % without social transfers and to as much as 27 % in the accession countries;
whereas income inequalities will drastically increase with enlargement,

E. whereas, due to the economic stagnation, social expenditure has increased on average by 1,5 % of
GDP in the EU since 2000, resulting in greater pressure on public finances; whereas tax on labour
accounts for more than 50 % of total tax revenues creating an impediment to employment growth,

(1) P5_TA(2003)0089.
(2) P5_TA(2003)0222.
(3) P5_TA(2003)0459.

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F. whereas both public and private investment across the European Union have fallen in recent years,
with this downward trend persisting in 2003, and whereas better background conditions for increased
competitiveness are necessary in order to stimulate private investment;

G. whereas the dramatic decline of venture capital investments relative to GDP from 0,07 % to 0 029 % in
2002 is causing major difficulties for research-intensive SMEs, and whereas there is a growing con-
centration of transnational R & D expenditures of EU firms in the US, combined with an increase in
the ‘brain drain’ phenomenon,

H. whereas Europe is far behind its main competitors in investments in the future, such as research and
development and human resources, and is under-performing in innovation; whereas R & D spending
for acceding countries averages well below 1 % of GDP and represents an obstacle to real convergence
and integration into a knowledge-based economy,

I. whereas there are no signs of any substantial increase in overall investment in human resources and
whereas human capital accounts for 22 % of observed productivity growth; whereas raising the aver-
age level of education of the population by one year represents a 5 % increase in growth in the short
term and a further 2,5 % in the long run,

J. whereas Europe shows a gap with the US of 13 % of population to have completed higher education,
and whereas the EU invests only 1,1 % of GDP in tertiary education as compared to 3 % in the US,
with more than half coming from the private sector,

K. whereas levels of school failure and of social exclusion are excessively high, with almost 20 % of
young people aged 18 to 24 in the EU prematurely dropping out of school in 2002, and whereas
the quality and attractiveness of vocational training and life-long learning are not up to the new
requirements of the knowledge-based economy and the urgent need to increase labour market par-
ticipation in view of our ageing society,

L. whereas investment needs in acceding countries, especially in the area of transport networks and
environment, remain high considering the poor quality of public infrastructure which is often
ill-suited to the needs and standards of market economies,

M. whereas at the Lisbon European Council, the Union has set itself the goal of becoming the most
competitive and dynamic knowledge-based economy in the world by 2010, capable of sustainable
economic growth with more and better jobs and greater social cohesion; whereas four years will
soon have elapsed without any remarkable progress having been made before the 2004 Spring Euro-
pean Council,

Improving economic governance

Regrets that the impetus given by the Lisbon European Council in achieving sustainable growth, full
1.
employment and social inclusion, has been lost due to delays in the implementation of the Lisbon strategy
which remains the Union’s most comprehensive strategy to undertake economic and structural reforms,
growth-oriented strategies for achieving greater competitiveness and promoting full employment, and to
respond to environmental challenges and guarantee the viability of the European social model;

2.
Endorses the calls made in its abovementioned resolution of 12 March 2003, and in particular its
calls for a reformed labour market, with a balance between flexibility and security, the swift introduction
of structural reforms and responsible management of the Stability and Growth Pact;

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3.
Recalls the democratic deficit in economic policy governance and therefore calls on the 2004 Spring
European Council to include not only the European Parliament, but all national parliaments in the Lisbon
Strategy process, and for debates on this matter in all national parliaments before the Spring European
Council; calls for the involvement of social partners and civil society at all levels of the Lisbon strategy to
increase political involvement and commitment to the strategy;

Calls upon Member States and accession countries to engage in a coordinated strategy for structural

4.
reforms, as laid down in the Lisbon agenda;

5.
Encourages improvements in economic policy coordination such as a more active display of the
moral authority of the Commission, giving an early warning when Member States risk failing to provide
for a budget surplus, or even jeopardising their budgetary stability, in periods of strong growth;

Expresses its concern about the growing gap between the aims and targets set at the Lisbon Euro-
6.
pean Council and the existing broad economic policy guidelines (BEPGs); insists on an increase in the
coherence and consistency between the Lisbon strategy, the Growth Initiative, the 2003-2005 BEPGs, as
well as the 2003-2005 European employment guidelines (EEGs), and asks for these instruments to be fully
and promptly implemented at national and local level;

7.
Notes with regret the lack of cooperation and coordination in all fields of the Lisbon strategy; calls
for greater streamlining of the different instruments so as to aim for innovation, growth, sustainability and
social cohesion; stresses, in this connection, the importance of an integrated strategy to improve competi-
tiveness;

8.
Calls on the Member States to implement the requisite structural reforms and political measures with
a view to creating, in line with the principle of better law-making, a business climate conducive to entre-
preneurial enterprise, innovation and industrial competitiveness, and endorses in this connection the con-
clusions of the Competitiveness Council of 26/27 November 2003;

9.
Calls on the Commission to further improve its methods of applying prospective impact analysis to
draft legislation and, in particular, to examine the repercussions of legislative proposals which in a number
of cases may impede competitiveness of the European economy; notes, in this context, that over-regulation
is an obstacle to the European economy making up lost ground and can lead to further below-average
productivity growth;

10.
Stresses that a functioning internal market is a prerequisite for economic success and social
well-being in Europe; calls on the Member States to implement consistently the European legislation
intended to remove obstacles in the internal market as well as fiscal obstacles;

11. Welcomes the growth initiative as a long-expected signal of economic governance in order to boost
confidence and express commitment to the Lisbon strategy, establishing a partnership for investment in
networks, research and innovation; however, regrets the lack of initiatives in the field of environmentally
friendly technologies and renewable energy, and notes with great concern that investment measures in
human capital have been omitted;

Stresses that coordinated measures are needed to fight tax fraud and unfair tax competition;
12.
suggests, as an additional means to finance investments in growth, to improve the collection of public
revenues, focusing on the widespread problem of tax fraud, which deprives Member States of considerable
fiscal resources; calls on the Commission to work with Member States to establish a cooperation and
benchmarking system to combat tax fraud, particularly in areas such as VAT (in trade between Member
States);

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Investments in the Future: employment policy, human resources, skills strategy,
development and social service society

research and

13.
Considers investment in human capital to be a determining factor for growth, productivity and
competitiveness, and a precondition for the knowledge-based society and its economy; in addition, believes
that it is crucial for technological change and innovation, a key instrument to increase employment par-
ticipation and the quality of jobs, equal opportunities and social cohesion; encourages more emphasis to
be given to improving quality in work which goes hand in hand with progress towards full employment,
higher productivity growth and better social cohesion and is one of the three overarching objectives in the
Employment Guidelines for the period 2003-2005 and points at the relevance of the ten specific guidelines
supporting these objectives, notably those on lifelong learning, gender equality, adaptability, making work
pay, inclusion and undeclared work;

14.
Encourages Member States to cut down the drop-out rate at school, to improve the quality and
attractiveness of vocational training and to increase the share of the population to have completed
secondary, post-secondary and tertiary education by 2010; calls on Member States to create incentives
for the private sector to invest in the life-long learning for their employees, with particular attention to
the possibilities and needs of SMEs; stresses, in this connection, the shared responsibility of, and the need
for greater commitment to be demonstrated by, Member States, employers and employees themselves, in
order to translate the concept of life-long learning into reality; emphasises that the recognition of infor-
mally acquired skills must be improved in the case of small businesses;

Calls upon the Union to integrate a skills strategy into the growth initiative and calls for the
15.
establishment of a European area of knowledge and skills, identifying best practice in matching education,
life-long learning and pension systems; calls for the establishment of a common European references
framework (Europass) with principles, criteria and key indicators for quality assurance and validation of
formal and informal learning to improve quality and mobility;

16.
Agrees on the need to remove the existing legal and administrative obstacles to mobility, but
stresses again the need for the Commission to initiate a dialogue with the social partners including those
of the new Member States, in order to avoid unfair competition in wages and conditions;

Recommends focusing the skills and employment strategy particularly on women (cid:1) to increase the
17.
proportion of women specialising in science and technology (cid:1) older workers,
immigrants and new
entrants to the labour market; encourages investment in, and development of, a social service society to
increase employment participation and better to reconcile working and family life for men and women;
calls on Member States to speed up the realisation of the target set at the Barcelona European Council of
15/16 March 2003 to provide childcare by 2010 to at least 90 % of children between three years of age
and the mandatory school age, and at least 33 % of children under 3 years of age in order to react to the
challenge of the ageing and knowledge-based society and economy;

Notes with great concern the decline in investment in the knowledge-based economy, the increase
18.
in the R & D investment gap between the EU and the US, in the ‘brain drain’ phenomenon and in the
concentration of EU firms’ transnational R & D expenditure in the USA, indicating that the EU is becoming
less attractive as a location for R & D for industry, and the dramatic decline of risk capital activity; calls on
the Member States to increase the number and attractiveness of research positions and improve the career
development for researchers in order to prevent the ‘brain drain’ to the US;

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Calls for an urgent mobilisation of private-sector investment for R & D with a special focus on seed

19.
and start-up venture capital for microenterprises and SMEs;

Thursday 26 February 2004

20.
Encourages the improvement of framework conditions for R & D in Europe such as more research
and innovation-friendly state aid and public procurement rules, the setting-up of a legal framework for
public (cid:1) private partnerships, adequate intellectual property rights systems and highly qualified, adaptable
and mobile human resources; calls for a strong public research base with links with industry in the context
of EU regional and cohesion policies and of the financial instruments targeted particularly at the accession
countries; calls for the realisation of a European research area; encourages the opening-up of national
R & D systems and programmes to transnational collaboration;

21.
Notes with concern that Europe has lost its advance in environmentally friendly technologies and
renewable energies in the past years; recalls the strategy for sustainable development set at the Gothenburg
European Council of 15/16 June 2001 and demands that it be put at the centre of a coherent industrial
policy, favouring the introduction of new and environmentally friendly technologies such as nano- and
bio- communication, and other clean technologies, in particular in the field of energy,
investments in
greenhouse mitigation measures and transport; supports, in particular, their wider use and those projects
aimed at transforming research into economically viable innovation, acknowledging their growth potential;

22.
Stresses the importance of reducing Europe’s dependence on oil imports, which constitutes a heavy
burden from the political and price volatility point of view; welcomes technology platforms such as the
European Partnership for a Hydrogen Economy; encourages further investment in the most cost-effective
forms of renewable energy, which will reduce the volatility of the cost per unit of energy, increase the
security of energy supply, be less harmful to the environment, and potentially trigger an industrial revol-
ution similar to the IT-led industrial revolution in the US;

Calls for an intensified public-private partnership with particular support

23.
for SMEs, and the
development of a coherent industrial policy; supports measures to establish and keep the R & D centres
of industry within the EU; encourages an increase of public financial support to business R & D; calls for
intensified co-operation between public research institutions and industry, with a special focus on SMEs, a
stronger participation of industry in the determination of priorities for public research, but also a substan-
tial increase of private sector financial contribution thereto; supports the promotion of technology transfer
of publicly-funded or public-privately funded research to industry and spin-off creation; strongly welcomes
networks of excellence, public-private R & D partnerships, business incubators and clusters leading to
knowledge transfer and commercialisation of R & D results; calls on the EIB to develop new funding
arrangements to foster the development and market introduction of new technologies, including grouped
loans for specific research activities, technology platforms, and simplified lending procedures for midsized
firms;

24. Welcomes the increased role and proposed initiatives of the EIB and EIF in this context and calls for
the full use of the loan facilities of the EIB institutions;

Recommends,

25.
in particular, that the existing margin for manoeuvre offered within the current
Financial Perspectives be used now, by taking full advantage of the EU budget and European funds,
in particular structural funds, to better reflect and implement the Lisbon strategy;

Instructs its President to forward this resolution to the Council and the Commission, the European
26.
Economic and Social Committee and the governments and parliaments of the Member States and the
social partners.