EUROPE 2020 A strategy for smart, sustainable and inclusive growth
Date: 2010-03-03
Institutions: European Commission
Subjects: climate change, economic and social cohesion, economic growth, economic recession, education, job creation, knowledge economy, management of resources, poverty, research and development, sustainable development

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EUROPEAN COMMISSION 

Brussels, 3.3.2010 
COM(2010) 2020 final 

COMMUNICATION FROM THE COMMISSION 

EUROPE 2020 

A strategy for smart, sustainable and inclusive growth 

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Preface 

2010  must  mark  a  new  beginning.  I  want  Europe  to  emerge  stronger 
from the economic and financial crisis.  

Economic  realities  are  moving  faster  than  political  realities,  as  we  have 
seen with the global impact of the financial crisis. We need to accept that 
interdependence  demands  also  a  more 
the 
determined and coherent response at the political level. 

increased  economic 

The  last  two  years  have  left  millions  unemployed.  It  has  brought  a 
burden of debt that will last for many years. It has brought new pressures 
on  our  social  cohesion.  It  has  also  exposed  some  fundamental  truths 
about  the  challenges  that  the  European  economy  faces.  And  in  the 
meantime, the global economy is moving forward. How Europe responds 
will determine our future. 

The  crisis  is  a  wake-up  call,  the  moment  where  we  recognise  that 
"business as usual" would consign us to a gradual decline, to the second 
rank of the new global order. This is Europe's moment of truth. It is the 
time to be bold and ambitious.  

Our short-term priority is a successful exit from the crisis. It will be tough 
for  some  time  yet  but  we  will  get  there.  Significant  progress  has  been 
made  on  dealing  with  bad  banks,  correcting  the  financial  markets  and 
recognising the need for strong policy coordination in the eurozone. 

To achieve a sustainable future, we must already look beyond the short 
term. Europe needs to get back on track. Then it must stay on track. That 
is  the  purpose  of  Europe  2020.  It's  about  more  jobs  and  better  lives.  It 
shows  how  Europe  has  the  capability  to  deliver  smart,  sustainable  and 
inclusive growth, to find the path to create new jobs and to offer a sense 
of direction to our societies. 

European leaders have a common analysis on the lessons to be drawn 
from  the  crisis.  We  also  share  a  common  sense  of  urgency  on  the 
challenges  ahead.  Now  we  jointly  need  to  make  it  happen.  Europe  has 
many  strengths.  We  have  a  talented  workforce,  we  have  a  powerful 
technological  and  industrial  base.  We  have  an  internal  market  and  a 
single  currency  that  have  successfully  helped  us  resist  the  worst.  We 
have  a  tried  and  tested  social  market  economy.  We  must  have 
confidence  in  our  ability  to  set  an  ambitious  agenda  for  ourselves  and 
then gear our efforts to delivering it. 

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The Commission is proposing five measurable EU targets for 2020 that 
will  steer  the  process  and  be  translated  into  national  targets:  for 
employment;  for  research  and  innovation;  for  climate  change  and 
energy;  for  education;  and  for  combating  poverty.  They  represent  the 
direction we should take and will mean we can measure our success. 

They  are  ambitious,  but  attainable.  They  are  backed  up  by  concrete 
proposals to make sure they are delivered. The flagship initiatives set out 
in  this  paper  show  how  the  EU  can  make  a  decisive  contribution.  We 
have powerful tools to hand in the shape of new economic governance, 
supported  by  the  internal  market,  our  budget,  our  trade  and  external 
economic  policy  and  the  disciplines  and  support  of  economic  and 
monetary union. 

The condition for success is a real ownership by European leaders and 
institutions. Our new agenda requires a coordinated European response, 
including with social partners and civil society. If we act together, then we 
can  fight  back  and  come  out  of  the  crisis  stronger.  We  have  the  new 
tools and the new ambition. Now we need to make it happen. 

José Manuel BARROSO 

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TABLE OF CONTENTS 

Executive summary .................................................................................................................... 5 

1. 

2. 

3. 

4. 

5. 

6. 

A moment of transformation........................................................................................ 7 

Smart, sustainable and inclusive growth.................................................................... 10 

Missing links and bottlenecks .................................................................................... 20 

Exit from the crisis: first steps towards 2020............................................................. 24 

Delivering results: stronger governance..................................................................... 27 

Decisions for the European Council .......................................................................... 30 

Annexes .................................................................................................................................... 32 

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EUROPE 2020 STRATEGY 
EXECUTIVE SUMMARY 

Europe  faces  a  moment  of  transformation.  The  crisis  has  wiped  out  years  of  economic  and 
social progress and exposed structural weaknesses in Europe's economy. In the meantime, the 
world is moving fast and long-term challenges – globalisation, pressure on resources, ageing 
– intensify. The EU must now take charge of its future. 

Europe can succeed if it acts collectively, as a Union. We need a strategy to help us come out 
stronger  from  the  crisis  and  turn  the  EU  into  a  smart,  sustainable  and  inclusive  economy 
delivering high levels of employment, productivity and social cohesion. Europe 2020 sets out 
a vision of Europe's social market economy for the 21st century. 

Europe 2020 puts forward three mutually reinforcing priorities: 

–  Smart growth: developing an economy based on knowledge and innovation. 

–  Sustainable  growth:  promoting  a  more  resource  efficient,  greener  and  more  competitive 

economy. 

–  Inclusive  growth:  fostering  a  high-employment  economy  delivering  social  and  territorial 

cohesion. 

The EU needs to define where it wants to be by 2020. To this end, the Commission proposes 
the following EU headline targets:  

–  75 % of the population aged 20-64 should be employed. 

–  3% of the EU's GDP should be invested in R&D. 

–  The  "20/20/20"  climate/energy  targets  should  be  met  (including  an  increase  to  30%  of 

emissions reduction if the conditions are right). 

–  The  share  of  early  school  leavers  should  be  under  10%  and  at  least  40%  of  the  younger 

generation should have a tertiary degree. 

–  20 million less people should be at risk of poverty. 

These targets are interrelated and critical to our overall success. To ensure that each Member 
State tailors the Europe 2020 strategy to its particular situation, the Commission proposes that 
EU goals are translated into national targets and trajectories. 

The targets are representative of the three priorities of smart, sustainable and inclusive growth 
but they are not exhaustive: a wide range of actions at national, EU and international levels 
will  be  necessary  to  underpin  them.  The  Commission  is  putting  forward  seven  flagship 
initiatives to catalyse progress under each priority theme: 

–  "Innovation  Union"  to  improve  framework  conditions  and  access  to  finance  for  research 
and  innovation  so  as  to  ensure  that  innovative  ideas  can  be  turned  into  products  and 
services that create growth and jobs. 

–  "Youth on the move" to enhance the performance of education systems and to facilitate the 

entry of young people to the labour market. 

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–  "A digital agenda for Europe" to speed up the roll-out of high-speed internet and reap the 

benefits of a digital single market for households and firms. 

–  "Resource efficient Europe" to help decouple economic growth from the use of resources, 
support  the  shift  towards  a  low  carbon  economy,  increase  the  use  of  renewable  energy 
sources, modernise our transport sector and promote energy efficiency. 

–  "An  industrial  policy  for  the  globalisation  era"  to  improve  the  business  environment, 
notably  for  SMEs,  and  to  support  the  development  of  a  strong  and  sustainable  industrial 
base able to compete globally. 

–  "An agenda for new skills and jobs" to modernise labour markets and empower people by 
developing  their  of  skills  throughout  the  lifecycle  with  a  view  to  increase  labour 
participation  and  better  match  labour  supply  and  demand,  including  through  labour 
mobility. 

–  "European platform against poverty" to ensure social and territorial cohesion such that the 
benefits of growth and jobs are widely shared and people experiencing poverty and social 
exclusion are enabled to live in dignity and take an active part in society.  

These  seven  flagship  initiatives  will  commit  both  the  EU  and  the  Member  States.  EU-level 
instruments, notably the single market, financial levers and external policy tools, will be fully 
mobilised to tackle bottlenecks and deliver the Europe 2020 goals. As an immediate priority, 
the Commission charts what needs to be done to define a credible exit strategy, to pursue the 
reform of the financial system, to ensure budgetary consolidation for long-term growth, and to 
strengthen coordination within the Economic and Monetary Union. 

Stronger  economic  governance  will  be  required  to  deliver  results.  Europe  2020  will  rely  on 
two pillars: the thematic approach outlined above, combining priorities and headline targets; 
and  country  reporting,  helping  Member  States  to  develop  their  strategies  to  return  to 
sustainable growth and public finances. Integrated guidelines will be adopted at EU level to 
cover  the  scope  of  EU  priorities  and  targets.  Country-specific  recommendations  will  be 
addressed to Member States. Policy warnings could be issued in case of inadequate response. 
The  reporting  of  Europe  2020  and  the  Stability  and  Growth  Pact  evaluation  will  be  done 
simultaneously,  while  keeping  the  instruments  separate  and  maintaining  the  integrity  of  the 
Pact. 

The  European  Council  will  have  full  ownership  and  be  the  focal  point  of  the  new  strategy. 
The  Commission  will  monitor  progress  towards  the  targets,  facilitate  policy  exchange  and 
make  the  necessary  proposals  to  steer  action  and  advance  the  EU  flagship  initiatives.  The 
European  Parliament  will  be  a  driving  force  to  mobilise  citizens  and  act  as  co-legislator  on 
key  initiatives.  This  partnership  approach  should  extend  to  EU  committees,  to  national 
parliaments and national, local and regional authorities, to social partners and to stakeholders 
and civil society so that everyone is involved in delivering on the vision. 

The  Commission  proposes  that  the  European  Council  endorses  -  in  March  -  the  overall 
approach  of  the  strategy  and  the  EU  headline  targets,  and  approves  -  in  June  -  the  detailed 
parameters  of  the  strategy,  including  the  integrated  guidelines  and  national  targets.  The 
Commission  also  looks  forward  to  the  views  and  support  of  the  European  Parliament  for 
making Europe 2020 a success. 

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1. 

A MOMENT OF TRANSFORMATION 

The crisis has wiped out recent progress 

The recent economic crisis has no precedent in our generation. The steady gains in economic 
growth and job creation witnessed over the last decade have been wiped out – our GDP fell by 
4% in 2009, our industrial production dropped back to the levels of the 1990s and 23 million 
people - or 10% of our active population - are now unemployed. The crisis has been a huge 
shock  for  millions  of  citizens  and  it  has  exposed  some  fundamental  weaknesses  of  our 
economy. 

The  crisis  has  also  made  the  task  of  securing  future  economic  growth  much  more  difficult. 
The  still  fragile  situation  of  our  financial  system  is  holding  back  recovery  as  firms  and 
households  have  difficulties  to  borrow,  spend  and  invest.  Our  public  finances  have  been 
severely affected, with deficits at 7% of GDP on average and debt levels at over 80% of GDP 
–  two  years  of  crisis  erasing  twenty  years  of  fiscal  consolidation.  Our  growth  potential  has 
been  halved  during  the  crisis.  Many  investment  plans,  talents  and  ideas  risk  going  to  waste 
because of uncertainties, sluggish demand and lack of funding. 

Europe's structural weaknesses have been exposed 

Moving out of the crisis is the immediate challenge, but the biggest challenge is to escape the 
reflex to try to return to the pre-crisis situation. Even before the crisis, there were many areas 
where Europe was not progressing fast enough relative to the rest of the world:  

– 

– 

– 

Europe's  average  growth  rate  has  been  structurally  lower  than  that  of  our  main 
economic partners, largely due to a productivity gap that has widened over the last 
decade.  Much  of  this  is  due  to  differences  in  business  structures  combined  with 
lower  levels  of  investment  in  R&D  and  innovation,  insufficient  use  of  information 
and  communications  technologies,  reluctance  in  some  parts  of  our  societies  to 
embrace  innovation,  barriers  to  market  access  and  a  less  dynamic  business 
environment.  

In spite of progress, Europe's employment rates – at 69% on average for those aged 
20-64  –  are  still  significantly  lower  than  in  other  parts  of  the  world.  Only  63%  of 
women  are  in  work  compared  to  76%  of  men.  Only  46%  of  older  workers  (55-64) 
are  employed  compared  to  over  62%  in  the  US  and  Japan.  Moreover,  on  average 
Europeans work 10% fewer hours than their US or Japanese counterparts. 

Demographic ageing is accelerating. As the baby-boom generation retires, the EU's 
active population will start to shrink as from 2013/2014. The number of people aged 
over 60 is now increasing twice as fast as it did before 2007 – by about two million 
every  year  compared  to  one  million  previously.  The  combination  of  a  smaller 
working population and a higher share of retired people will place additional strains 
on our welfare systems. 

Global challenges intensify 

While Europe needs to address its own structural weaknesses, the world is moving fast and 
will be very different by the end of the coming decade: 

– 

Our  economies  are  increasingly  interlinked.  Europe  will  continue  to  benefit  from 
being one of the most open economies in the world but competition from developed 
and  emerging  economies  is  intensifying.  Countries  such  as  China  or  India  are 

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– 

– 

investing heavily in research and technology in order to move their industries up the 
value  chain  and  "leapfrog"  into  the  global  economy.  This  puts  pressure  on  some 
sectors  of  our  economy  to  remain  competitive,  but  every  threat  is  also  an 
opportunity.  As  these  countries  develop,  new  markets  will  open  up  for  many 
European companies. 

Global  finance  still  needs  fixing.  The  availability  of  easy  credit,  short-termism  and 
excessive  risk-taking  in  financial  markets  around  the  world  fuelled  speculative 
behaviour, giving rise to bubble-driven growth and important imbalances. Europe is 
engaged  in  finding  global  solutions  to  bring  about  an  efficient  and  sustainable 
financial system. 

Climate and resource challenges require drastic action. Strong dependence on fossil 
fuels  such  as  oil  and  inefficient  use  of  raw  materials  expose  our  consumers  and 
businesses to harmful and costly price shocks, threatening our economic security and 
contributing  to  climate change. The  expansion of the world population from 6 to 9 
billion will intensify global competition for natural resources, and put pressure on the 
environment. The EU must continue its outreach to other parts of the world in pursuit 
of  a  worldwide  solution  to  the  problems  of  climate  change  at  the  same  time  as  we 
implement our agreed climate and energy strategy across the territory of the Union.  

Europe must act to avoid decline 

There are several lessons we can learn from this crisis: 

– 

– 

– 

The  27  EU  economies  are  highly  interdependent:  the  crisis  underscored  the  close 
links  and  spill-overs  between  our  national  economies,  particularly  in  the  euro  area. 
Reforms, or the lack of them, in one country affect the performance of all others, as 
recent  events  have  shown;  moreover,  the  crisis  and  severe  constraints  in  public 
spending have made it more difficult for some Member States to provide sufficient 
funding for the basic infrastructure they need in areas such as transport and energy 
not only to develop their own economies but also to help them participate fully in the 
internal market. 

Coordination within the EU works: the response to the crisis showed that if we act 
together,  we  are  significantly  more  effective.  We  proved  this  by  taking  common 
action  to  stabilise  the  banking  system  and  through  the  adoption  of  a  European 
Economic  Recovery  Plan.  In  a  global  world,  no  single  country  can  effectively 
address the challenges by acting alone; 

The  EU  adds  value  on  the  global  scene.  The  EU  will  influence  global  policy 
decisions only if it acts jointly. Stronger external representation will need to go hand 
in hand with stronger internal co-ordination. 

The  crisis  has  not  just  been  a  one-off  hit,  allowing  us  to  resume  "business  as  usual".  The 
challenges  that  our  Union  faces  are  greater  than  before  the  recession,  whilst  our  room  for 
manoeuvre is limited. Moreover, the rest of the world is not standing still. The enhanced role 
of  the  G20  has  demonstrated  the  growing  economic  and  political  power  of  emerging 
countries.  

Europe  is  left  with  clear  yet  challenging  choices.  Either  we  face  up  collectively  to  the 
immediate challenge of the recovery and to long-term challenges – globalisation, pressure on 
resources,  ageing,  –  so  as  to  make  up  for  the  recent  losses,  regain  competitiveness,  boost 
productivity and put the EU on an upward path of prosperity ("sustainable recovery"). 

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Or we continue at a slow and largely uncoordinated pace of reforms, and we risk ending up 
with a permanent loss in wealth, a sluggish growth rate ("sluggish recovery") possibly leading 
to high levels of unemployment and social distress, and a relative decline on the world scene 
("lost decade").  

Three scenarios for Europe by 2020 

Scenario 1: Sustainable recovery 

Output level 

Pre-crisis growth path 

Scenario 2: Sluggish recovery 

Scenario 3: Lost decade 

Europe is able to 
make a full return to 
earlier growth path 
and raise its potential 
to go beyond 

years

Europe will have 
suffered a permanent 
loss in wealth and 
start growing again 
from this eroded basis 

Europe will have 
suffered a permanent 
loss in wealth and 
potential for future 
growth 

Europe can succeed 

Europe has many strengths: we can count on the talent and creativity of our people, a strong 
industrial  base,  a  vibrant  services  sector,  a  thriving,  high  quality  agricultural  sector,  strong 
maritime  tradition,  our  single  market  and  common  currency,  our  position  as  the  world's 
biggest  trading  bloc  and  leading  destination  for  foreign  direct  investment.  But  we  can  also 
count  on  our  strong  values,  democratic  institutions,  our  consideration  for  economic,  social 
and territorial cohesion and solidarity, our respect for the environment, our cultural diversity, 
respect for gender equality – just to name a few. Many of our Member States are amongst the 
most  innovative  and  developed  economies  in  the  world.  But  the  best  chance  for  Europe  to 
succeed is if it acts collectively – as a Union.  

When confronted with major events in the past, the EU and its Member States have risen to 
the challenge. In the 1990s, Europe launched the largest single market in the world backed by 
a  common  currency.  Only  a  few  years  ago,  the  division  of  Europe  ended  as  new  Member 
States  entered  the  Union  and  other  states  embarked  on  the  road  towards  membership  or  a 
closer relation with the Union. Over the last two years common action taken at the height of 

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the crisis through the European Recovery Plan helped prevent economic meltdown, whilst our 
welfare systems helped protect people from even greater hardship.  

Europe  is  able  to  act  in  times  of  crisis  and  to  adapt  its  economies  and  societies.  And  today 
Europeans  face  again  a  moment  of  transformation  to  cope  with  the  impact  of  the  crisis, 
Europe's structural weaknesses and intensifying global challenges.  

In so doing, our exit from the crisis must be the point of entry into a new economy. For our 
own and future generations to continue to enjoy a high-quality of healthy life, underpinned by 
Europe's unique social models, we need to take action now. What is needed is a strategy to 
turn  the  EU  into  a  smart,  sustainable  and  inclusive  economy  delivering  high  levels  of 
employment,  productivity  and  social  cohesion.  This  is  the  Europe  2020  strategy.  This  is  an 
agenda for all Member States, taking into account different needs, different starting points and 
national specificities so as to promote growth for all.  

2. 

SMART, SUSTAINABLE AND INCLUSIVE GROWTH 

Where do we want Europe to be in 2020? 

Three priorities should be the heart of Europe 20201: 

– 

– 

– 

Smart growth – developing an economy based on knowledge and innovation. 

Sustainable  growth  –  promoting  a  more  resource  efficient,  greener  and  more 
competitive economy. 

Inclusive  growth  –  fostering  a  high-employment  economy  delivering  economic, 
social and territorial cohesion. 

These three priorities are mutually reinforcing; they offer a vision of Europe's social market 
economy for the 21st century. 

To  guide  our  efforts  and  steer  progress,  there  is  a  large  consensus  that  the  EU  should 
commonly  agree  on  a  limited  number  of  headline  targets  for  2020.  These  targets  should  be 
representative  of  the  theme  of  smart,  sustainable  and  inclusive  growth.  They  must  be 
measurable,  capable  of  reflecting  the  diversity  of  Member  States  situations  and  based  on 
sufficiently reliable data for purposes of comparison. The following targets have been selected 
on this basis – meeting them will be critical to our success by 2020: 

– 

– 

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The employment rate of the population aged 20-64 should increase from the current 
69%  to  at  least  75%,  including  through  the  greater  involvement  of  women,  older 
workers and the better integration of migrants in the work force; 

The  EU  currently  has  a  target  of  investing  3%  of  GDP  in  R&D.  The  target  has 
succeeded in focusing attention on the need for both the public and private sectors to 
invest  in  R&D  but  it  focuses  on  input  rather  than  impact.  There  is  a  clear  need  to 
improve  the  conditions  for  private  R&D  in  the  EU  and  many  of  the  measures 
proposed  in  this  strategy  will  do  this.  It  is  also  clear  that  by  looking  at  R&D  and 
innovation  together  we  would  get  a  broader  range  of  expenditure  which  would  be 
more relevant for business operations and for productivity drivers. The Commission 

These  themes  have been  widely  welcomed  in  the  public  consultation  carried out by  the  Commission. 
For details of the views expressed during the consultation see: http://ec.europa.eu/eu2020/index_en.htm 

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proposes  to  keep  the  3%  target  while  developing  an  indicator  which  would  reflect 
R&D and innovation intensity; 

Reduce  greenhouse  gas  emissions  by  at  least  20%  compared  to  1990  levels  or  by 
30%, if the conditions2 are right; increase the share of renewable energy sources in 
our final energy consumption to 20%; and a 20% increase in energy efficiency; 

A target on educational attainment which tackles the problem of early school leavers 
by  reducing  the  drop  out  rate  to  10%  from  the  current  15%,  whilst  increasing  the 
share of the population aged 30-34 having completed tertiary education from 31% to 
at least 40% in 2020; 

The number of Europeans living below the national poverty lines should be reduced 
by 25%, lifting over 20 million people out of poverty3. 

– 

– 

– 

These targets  are  interrelated.  For  instance, better educational  levels help employability and 
progress  in  increasing  the  employment  rate  helps  to  reduce  poverty.  A  greater  capacity  for 
research and development as well as innovation across all sectors of the economy, combined 
with  increased  resource  efficiency  will  improve  competitiveness  and  foster  job  creation. 
Investing  in  cleaner,  low  carbon  technologies  will  help  our  environment,  contribute  to 
fighting  climate  change  and  create  new  business  and  employment  opportunities.  Meeting 
these  targets  should  mobilise  our  collective  attention.  It  will  take  strong  leadership, 
commitment and an effective delivery mechanism to change attitudes and practices in the EU 
to deliver the results which are summarised in these targets. 

These targets are representative, not exhaustive. They represent an overall view of where the 
Commission would like to see the EU on key parameters by 2020. They do not represent a 
"one size fits all" approach. Each Member State is different and the EU of 27 is more diverse 
than it was a decade ago. Despite disparities in levels of development and standards of living 
the Commission considers that the proposed targets are relevant to all Member States, old and 
newer alike. Investing in research and development as well as innovation, in education and in 
resource efficient technologies will benefit traditional sectors, rural areas as well as high skill, 
service economies. It will reinforce economic, social and territorial cohesion. To ensure that 
each  Member  States  tailors  the  Europe  2020  strategy  to  its  particular  situation,  the 
Commission proposes that these EU targets are translated into national targets and trajectories 
to  reflect  the  current  situation  of  each  Member  State  and  the  level  of  ambition  it  is  able  to 
reach as part of a wider EU effort to meet these targets. In addition to the efforts of Member 
States the Commission will propose an ambitious range of actions at EU level designed to lift 
the EU onto a new, more sustainable growth path. This mix of EU and national efforts should 
be mutually reinforcing. 

Smart growth – an economy based on knowledge and innovation 

Smart growth means strengthening knowledge and innovation as drivers of our future growth. 
This requires improving the quality of our education, strengthening our research performance, 
promoting  innovation  and  knowledge  transfer  throughout  the  Union,  making  full  use  of 

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The European Council of 10-11 December 2009 concluded that as part of a global and comprehensive 
agreement  for  the  period  beyond  2012,  the  EU  reiterates  its  conditional  offer  to  move  to  a  30% 
reduction by 2020 compared to 1990 levels, provided that other developed countries commit themselves 
to  comparable  emission  reductions  and  that  developing  countries  contribute  adequately  according  to 
their responsibilities and respective capabilities. 
The national poverty line is defined as 60% of the median disposable income in each Member State. 

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information and communication technologies and ensuring that innovative ideas can be turned 
into new products and services that create growth, quality jobs and help address European and 
global  societal  challenges.  But,  to  succeed,  this  must  be  combined  with  entrepreneurship, 
finance, and a focus on user needs and market opportunities. 

Europe must act: 

– 

– 

– 

Innovation: R&D spending in Europe is below 2%, compared to 2.6% in the US and 
3.4% in Japan, mainly as a result of lower levels of private investment. It is not only 
the absolute amounts spent on R&D that count – Europe needs to focus on the impact 
and  composition  of  research  spending  and  to  improve  the  conditions  for  private 
sector R&D in the EU. Our smaller share of high-tech firms explains half of our gap 
with the US. 

Education, training and lifelong learning: A quarter of all pupils have poor reading 
competences,  one  in  seven  young  people  leave  education  and  training  too  early. 
Around  50%  reach  medium  qualifications  level  but  this  often  fails  to  match  labour 
market  needs.  Less  than  one  person  in  three  aged  25-34  has  a  university  degree 
compared  to  40%  in  the  US  and  over  50%  in  Japan.  According  to  the  Shanghai 
index, only two European universities are in the world's top 20.  

Digital society: The global demand for information and communication technologies 
is a market worth € 2 000 billion, but only one  quarter of this comes from European 
firms. Europe is also falling behind on high-speed internet, which affects its ability to 
innovate,  including  in  rural  areas,  as  well  as  on  the  on-line  dissemination  of 
knowledge and on-line distribution of goods and services. 

Action  under  this  priority  will  unleash  Europe's  innovative  capabilities,  improving 
educational outcomes and the quality and outputs of education institutions, and exploiting the 
economic  and  societal  benefits  of  a  digital  society.  These  policies  should  be  delivered  at 
regional, national and EU level. 

Flagship Initiative: "Innovation Union" 

The  aim  of  this  is  to  re-focus  R&D  and  innovation  policy  on  the  challenges  facing  our  society,  such  as 
climate  change,  energy  and  resource  efficiency,  health  and  demographic  change.  Every  link  should  be 
strengthened in the innovation chain, from 'blue sky' research to commercialisation.  

At EU level, the Commission will work: 

–  To complete the European Research Area, to develop a strategic research agenda focused on challenges 
such  as  energy  security,  transport,  climate  change  and  resource  efficiency,  health  and  ageing, 
environmentally-friendly production methods and land management, and to enhance joint programming 
with Member States and regions; 

–  To  improve  framework  conditions  for  business  to  innovate  (i.e.  create  the  single  EU  Patent  and  a 
specialised  Patent  Court,  modernise  the  framework  of  copyright  and  trademarks,  improve  access  of 
SMEs to Intellectual Property Protection, speed up setting of interoperable standards; improve access to 
capital  and  make  full  use  of  demand  side  policies,  e.g.  through  public  procurement  and  smart 
regulation); 

–  To  launch  'European  Innovation  Partnerships'  between  the  EU  and  national  levels  to  speed  up  the 
development and deployment of the technologies needed to meet the challenges identified. The first will 
include: 'building the bio-economy by 2020', 'the key enabling technologies to shape Europe's industrial 
future' and 'technologies to allow older people to live independently and be active in society'; 

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–  To  strengthen  and  further  develop  the  role  of  EU  instruments  to  support  innovation  (e.g.  structural 
funds, rural development funds, R&D framework programme, CIP, SET plan), including through closer 
work with the EIB and streamline administrative procedures to facilitate access to funding, particularly 
for SMEs and to bring in innovative incentive mechanisms linked to the carbon market, namely for fast-
movers; 

–  To  promote  knowledge  partnerships  and  strengthen  links  between  education,  business,  research  and 
innovation,  including  through  the  EIT,  and  to  promote  entrepreneurship  by  supporting  Young 
Innovative Companies.  

At national level, Member States will need: 

–  To  reform  national  (and  regional)  R&D  and  innovation  systems  to  foster  excellence  and  smart 
specialisation,  reinforce  cooperation  between  universities,  research  and  business,  implement  joint 
programming and enhance cross-border co-operation in areas with EU value added and adjust national 
funding procedures accordingly, to ensure the diffusion of technology across the EU territory; 

–  To ensure a sufficient supply of science, maths and engineering graduates and to focus school curricula 

on creativity, innovation, and entrepreneurship;  

–  To prioritise knowledge expenditure, including by using tax incentives and other financial instruments 

to promote greater private R&D investments. 

Flagship initiative: "Youth on the move" 

The  aim  is  to  enhance  the  performance  and  international  attractiveness  of  Europe's  higher  education 
institutions and raise the overall quality of all levels of education and training in the EU, combining both 
excellence and equity, by promoting student mobility and trainees' mobility, and improve the employment 
situation of young people. 

At EU level, the Commission will work: 

–  To integrate and enhance the EU's mobility, university and researchers' programmes (such as Erasmus, 
Erasmus Mundus, Tempus and Marie Curie) and link them up with national programmes and resources; 

–  To  step  up  the  modernisation  agenda  of  higher  education  (curricula,  governance  and  financing) 

including by benchmarking university performance and educational outcomes in a global context; 

–  To explore ways of promoting entrepreneurship through mobility programmes for young professionals; 

–  To promote the recognition of non-formal and informal learning; 

–  To launch a Youth employment framework outlining policies aimed at reducing youth unemployment 
rates: this should promote, with Member States and social partners, young people's entry into the labour 
market  through  apprenticeships,  stages  or  other  work  experience,  including  a  scheme  ("Your  first 
EURES job") aimed at increasing job opportunities for young people by favouring mobility across the 
EU. 

At national level, Member States will need: 

–  To ensure efficient investment in education and training systems at all levels (pre-school to tertiary); 

–  To improve educational outcomes, addressing each segment (pre-school, primary, secondary, vocational 
and  tertiary)  within  an  integrated  approach,  encompassing  key  competences  and  aiming  at  reducing 
early school leaving; 

–  To  enhance  the  openness  and  relevance  of  education  systems  by  building  national  qualification 

frameworks and better gearing learning outcomes towards labour market needs. 

–  To improve young people's entry into the labour market through integrated action covering i.a guidance, 

counselling and apprenticeships. 

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Flagship Initiative: "A Digital Agenda for Europe" 

The aim is to deliver sustainable economic and social benefits from a Digital Single Market based on fast 
and ultra fast internet and interoperable applications, with broadband access for all by 2013, access for all 
to  much  higher  internet  speeds  (30  Mbps  or  above)  by  2020,  and  50%  or  more  of  European  households 
subscribing to internet connections above 100 Mbps. 

At EU level, the Commission will work: 

–  To provide a stable legal framework that stimulate investments in an open and competitive high speed 

internet infrastructure and in related services; 

–  To develop an efficient spectrum policy; 

–  To facilitate the use of the EU's structural funds in pursuit of this agenda; 

–  To create a true single market for online content and services (i.e. borderless and safe EU web services 
and digital content markets, with high levels of trust and confidence, a balanced regulatory framework 
with  clear  rights  regimes,  the  fostering  of  multi-territorial  licences,  adequate  protection  and 
remuneration for rights holders and active support for the digitisation of Europe's rich cultural heritage, 
and to shape the global governance of the internet; 

–  To reform the research and innovation funds and increase support in the field of ICTs so as to reinforce 
Europe's technology strength in key strategic fields and create the conditions for high growth SMEs to 
lead emerging markets and to stimulate ICT innovation across all business sectors; 

–  To promote internet access and take-up by all European citizens, especially through actions in support 

of digital literacy and accessibility. 

At national level, Member States will need: 

–  To  draw  up  operational  high  speed  internet  strategies,  and  target  public  funding,  including  structural 

funds, on areas not fully served by private investments;  

–  To establish a legal framework for co-ordinating public works to reduce costs of network rollout;  

–  To  promote  deployment  and  usage  of  modern  accessible  online  services  (e.g.  e-government,  online 

health, smart home, digital skills, security). 

Sustainable  growth  –  promoting  a  more  resource  efficient,  greener  and  more  competitive 
economy 

Sustainable growth means building a resource efficient, sustainable and competitive economy, 
exploiting  Europe's  leadership  in  the  race  to  develop  new  processes  and  technologies, 
including  green  technologies,  accelerating  the  roll  out  of  smart  grids  using  ICTs,  exploiting 
EU-scale networks, and reinforcing the competitive advantages of our businesses, particularly 
in manufacturing and within our SMEs, as well through assisting consumers to value resource 
efficiency.  Such  an  approach  will  help  the  EU  to  prosper  in  a  low-carbon,  resource 
constrained  world  while  preventing  environmental  degradation,  biodiversity  loss  and 
unsustainable use of resources. It will also underpin economic, social and territorial cohesion. 

Europe must act: 

– 

Competitiveness:  The  EU  has  prospered  through  trade,  exporting  round  the  world 
and importing inputs as well as finished goods. Faced with intense pressure on export 
markets and for a growing range of inputs we must improve our competitiveness vis- 
à-vis our main trading partners through higher productivity. We will need to address 
relative  competitiveness  inside  the  Euro  area  and  in  the  wider  EU.  The  EU  was 
largely a first mover in green solutions, but its advantage is being challenged by key 

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– 

– 

competitors, notably China and North America. The EU should maintain its lead in 
the market for green technologies as a means of ensuring resource efficiency through 
out the economy, while removing bottlenecks in key network infrastructures, thereby 
boosting our industrial competitiveness.  

Combating  climate  change:  Achieving  our  climate  goals  means  reducing  emissions 
significantly more quickly in the next decade than in the last decade and exploiting 
fully  the  potential  of  new  technologies  such  as  carbon  capture  and  sequestration 
possibilities. Improving resource efficiency would significantly help limit emissions, 
save  money  and  boost  economic  growth.  All  sectors  of  the  economy,  not  just 
emission-intensive,  are  concerned.  We  must  also  strengthen  our  economies' 
resilience to climate risks, and our capacity for disaster prevention and response. 

Clean and efficient energy: Meeting our energy goals could result in € 60 billion less 
in oil and gas imports by 2020. This is not only financial savings; this is essential for 
our  energy  security.  Further  progress  with  the  integration  of  the  European  energy 
market can add an extra 0.6% to 0.8% GDP. Meeting the EU's objective of 20% of 
renewable sources of energy alone has the potential to create more than 600 000 jobs 
in the EU. Adding the 20% target on energy efficiency, it is well over 1 million new 
jobs that are at stake. 

Action under this priority will require implementing our emission-reduction commitments in 
a way which maximises the benefits and minimises the costs, including through the spread of 
innovative technological solutions. Moreover, we should aim to decouple growth from energy 
use  and  become  a  more  resource  efficient  economy,  which  will  not  only  give  Europe  a 
competitive  advantage,  but  also  reduce  its  dependency  of  foreign  sources  for  raw  materials 
and commodities. 

Flagship Initiative: "Resource efficient Europe" 

The aim is to support the shift towards a resource efficient and low-carbon economy that is efficient in the 
way  it  uses  all  resources.  The  aim  is  to  decouple  our  economic  growth  from  resource  and  energy  use, 
reduce CO2 emissions, enhance competitiveness and promote greater energy security.  

At EU level, the Commission will work: 

–  To  mobilise  EU  financial  instruments  (e.g.  rural  development,  structural  funds,  R&D  framework 
programme,  TENs,  EIB)  as  part  of  a  consistent  funding  strategy,  that  pulls  together  EU  and  national 
public and private funding; 

–  To  enhance  a  framework  for  the  use  of  market-based  instruments  (e.g.  emissions  trading,  revision  of 

energy taxation, state-aid framework, encouraging wider use of green public procurement);  

–  To  present  proposals  to  modernise  and  decarbonise  the  transport  sector  thereby  contributing  to 
increased  competitiveness.  This  can  be  done  through  a  mix  of  measures  e.g.  infrastructure  measures 
such as  early deployment  of  grid  infrastructures  of  electrical  mobility,  intelligent traffic  management, 
better  logistics,  pursuing  the  reduction  of  CO2  emissions  for  road  vehicles  ,  for  the  aviation  and 
maritime  sectors  including  the  launch  of  a  major  European  "green"  car  initiative  which  will  help  to 
promote  new  technologies  including  electric  and  hybrid  cars  through  a  mix  of  research,  setting  of 
common standards and developing the necessary infrastructure support; 

–  To  accelerate  the  implementation  of  strategic  projects  with  high  European  added  value  to  address 
critical  bottlenecks,  in  particular  cross  border  sections  and  inter  modal  nodes  (cities,  ports,  logistic 
platforms);  

–  To  complete  the  internal  energy  market  and  implement  the  strategic  energy  technologies  (SET)  plan, 

promoting renewable sources of energy in the single market would also be a priority;  

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–  To  present  an  initiative  to  upgrade  Europe's  networks,  including  Trans  European  Energy  Networks, 
towards  a  European  supergrid,  "smart  grids"  and  interconnections  in  particular  of  renewable  energy 
sources  to  the  grid  (with  support  of  structural  funds  and  the  EIB).  This  includes  to  promote 
infrastructure projects of major strategic importance to the EU in the Baltic, Balkan, Mediterranean and 
Eurasian regions; 

–  To adopt and implement a revised Energy Efficiency Action Plan and promote a substantial programme 
in resource efficiency (supporting SMEs as well as households) by making use of structural and other 
funds  to  leverage  new  financing  through  existing  highly  successful  models  of  innovative  investment 
schemes; this should promote changes in consumption and production patterns; 

–  To establish a vision of structural and technological changes required to move to a low carbon, resource 
efficient  and  climate  resilient  economy  by  2050  which  will  allow  the  EU  to  achieve  its  emissions 
reduction  and  biodiversity  targets;  this  includes  disaster  prevention  and  response,  harnessing  the 
contribution  of  cohesion,  agricultural,  rural  development,  and  maritime  policies  to  address  climate 
change, in particular through adaptation measures based on more efficient use of resources, which will 
also contribute to improving global food security. 

At national level, Member States will need: 

–  To phase out environmentally harmful subsidies, limiting exceptions to people with social needs;  

–  To deploy market-based instruments such as fiscal incentives and procurement to adapt production and 

consumption methods;  

–  To develop smart, upgraded and fully interconnected transport and energy infrastructures and make full 

use of ICT; 

–  To  ensure  a  coordinated  implementation  of  infrastructure  projects,  within  the  EU  Core  network,  that 

critically contribute to the effectiveness of the overall EU transport system; 

–  To  focus  on  the  urban  dimension  of  transport  where  much  of  the  congestion  and  emissions  are 

generated; 

–  To  use  regulation,  building  performance  standards  and  market-based  instruments  such  as  taxation, 
subsidies  and  procurement  to  reduce  energy  and  resource  use  and  use  structural  funds  to  invest  in 
energy efficiency in public buildings and in more efficient recycling;  

–  To incentivise energy saving instruments that could raise efficiency in energy-intensive sectors, such as 

based on the use of ICTs. 

Flagship Initiative: "An industrial policy for the globalisation era" 

Industry  and  especially  SMEs  have  been  hit  hard  by  the  economic  crisis  and  all  sectors  are  facing  the 
challenges of globalisation and adjusting their production processes and products to a low-carbon economy. 
The  impact  of  these  challenges  will  differ  from  sector  to  sector,  some  sectors  might  have  to  "reinvent" 
themselves but for others these challenges will present new business opportunities. The Commission will 
work  closely  with  stakeholders  in  different  sectors  (business,  trade  unions,  academics,  NGOs,  consumer 
organisations) and will draw up a framework for a modern industrial policy, to support entrepreneurship, to 
guide and help industry to become fit to meet these challenges, to promote the competitiveness of Europe’s 
primary, manufacturing and service industries and help them seize the opportunities of globalisation and of 
the green economy. The framework will address all elements of the increasingly international value chain 
from access to raw materials to after-sales service. 

At EU level, the Commission will work: 

–  To  establish  an  industrial  policy  creating  the  best  environment  to  maintain  and  develop  a  strong, 
competitive  and  diversified  industrial  base  in  Europe  as  well  as  supporting  the  transition  of 
manufacturing sectors to greater energy and resource efficiency; 

–  To  develop  a  horizontal  approach  to  industrial  policy  combining  different  policy  instruments  (e.g. 

"smart" regulation, modernised public procurement, competition rules and standard setting); 

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–  To improve the business environment, especially for SMEs, including through reducing the transaction 
costs of doing business in Europe, the promotion of clusters and improving affordable access to finance; 

–  To promote the restructuring of sectors in difficulty towards future oriented activities, including through 
quick redeployment of skills to emerging high growth sectors and markets and support from the EU's 
state aids regime and/or the Globalisation Adjustment Fund; 

–  To  promote  technologies  and  production  methods  that  reduce  natural  resource  use,  and  increase 

investment in the EU's existing natural assets; 

–  To promote the internationalisation of SMEs; 

–  To ensure that transport and logistics networks enable industry throughout the Union to have effective 

access to the Single Market and the international market beyond;  

–  To develop an effective space policy to provide the tools to address some of the key global challenges 

and in particular to deliver Galileo and GMES; 

–  To enhance the competitiveness of the European tourism sector; 

–  To review regulations to support the transition of service and manufacturing sectors to greater resource 
efficiency, including more effective recycling; to improve the way in which European standard setting 
works to leverage European and international standards for the long-term competitiveness of European 
industry. This will include promoting the commercialisation and take-up of key enabling technologies; 

–  To renew the EU strategy to promote Corporate Social Responsibility as a key element in ensuring long 

term employee and consumer trust. 

At national level, Member States will need: 

–  To improve the business environment especially for innovative SMEs, including through public sector 

procurement to support innovation incentives;  

–  To improve the conditions for enforcing intellectual property; 

–  To reduce administrative burden on companies, and improve the quality of business legislation; 

–  To  work  closely  with  stakeholders  in  different  sectors  (business,  trade  unions,  academics,  NGOs, 
consumer  organisations)  to  identify  bottlenecks  and  develop  a  shared  analysis  on  how  to  maintain  a 
strong  industrial  and  knowledge  base  and  put  the  EU  in  a  position  to  lead  global  sustainable 
development. 

Inclusive growth – a high-employment economy delivering economic, social and territorial 
cohesion 

Inclusive growth means empowering people through high levels of employment, investing in 
skills,  fighting  poverty  and  modernising  labour  markets,  training  and  social  protection 
systems so as to help people anticipate and manage change, and build a cohesive society. It is 
also essential that the benefits of economic growth spread to all parts of the Union, including 
its outermost regions, thus strengthening territorial cohesion. It is about ensuring access and 
opportunities  for  all  throughout  the  lifecycle.  Europe  needs  to  make  full  use  of  its  labour 
potential to face the challenges of an ageing population and rising global competition. Policies 
to promote gender equality will be needed to increase labour force participation thus adding to 
growth and social cohesion. 

Europe must act: 

– 

Employment:  Due  to  demographic  change,  our  workforce  is  about  to  shrink.  Only 
two-thirds  of  our  working  age  population  is  currently  employed,  compared  to  over 
70%  in  the  US  and  Japan.  The  employment  rate  of  women  and  older  workers  are 
particularly  low.  Young  people  have  been  severely  hit  by  the  crisis,  with  an 

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unemployment  rate  over  21%.  There  is  a  strong  risk  that  people  away  or  poorly 
attached to the world of work lose ground from the labour market. 

– 

– 

Skills:  About  80  million  people  have  low  or  basic  skills,  but  lifelong  learning 
benefits mostly the more educated. By 2020, 16 million more jobs will require high 
qualifications,  while  the  demand  for  low  skills  will  drop  by  12  million  jobs. 
Achieving  longer  working  lives  will  also  require  the  possibility  to  acquire  and 
develop new skills throughout the lifetime. 

Fighting  poverty:  80  million  people  were  at  risk  of  poverty  prior  to  the  crisis.  19 
million  of  them  are  children.  8  per  cent  of  people  in  work  do  not  earn  enough  to 
make it above the poverty threshold. Unemployed people are particularly exposed. 

Action under this priority will require modernising, strengthening our employment education 
and  training  policies  and  social  protection  systems  by  increasing  labour  participation  and 
reducing  structural  unemployment,  as  well  as  raising  corporate  social  responsibility  among 
the business community. Access to childcare facilities and care for other dependents will be 
important in this respect. Implementing flexicurity principles and enabling people to acquire 
new skills to adapt to new conditions and potential career shifts will be key. A major effort 
will be needed to combat poverty and social exclusion and reduce health inequalities to ensure 
that  everybody  can  benefit  from  growth.  Equally  important  will  be  our  ability  to  meet  the 
challenge  of  promoting  a  healthy  and  active  ageing  population  to  allow  for  social  cohesion 
and higher productivity. 

Flagship Initiative: "An Agenda for new skills and jobs" 

The aim is to create conditions for modernising labour markets with a view to raising employment levels 
and  ensuring  the  sustainability  of  our  social  models.  This  means  empowering  people  through  the 
acquisition  of  new  skills  to  enable  our  current  and  future  workforce  to  adapt  to  new  conditions  and 
potential career shifts, reduce unemployment and raise labour productivity. 

At EU level, the Commission will work: 

–  To  define  and  implement  the  second  phase  of  the  flexicurity  agenda,  together  with  European  social 
partners, to identify ways to better manage economic transitions and to fight unemployment and raise 
activity rates; 

–  To adapt the legislative framework, in line with 'smart' regulation principles, to evolving work patterns 

(e.g. working time, posting of workers) and new risks for health and safety at work; 

–  To facilitate and promote intra-EU labour  mobility and better  match labour supply with demand with 
appropriate financial support from the structural funds, notably the European Social Fund (ESF), and to 
promote  a  forward-looking  and  comprehensive  labour  migration  policy  which  would  respond  in  a 
flexible way to the priorities and needs of labour markets; 

–  To  strengthen  the  capacity  of  social  partners  and  make  full  use  of  the  problem-solving  potential  of 
social  dialogue  at  all  levels  (EU,  national/regional,  sectoral,  company),  and  to  promote  strengthened 
cooperation  between  labour  market  institutions  including  the  public  employment  services  of  the 
Member States; 

–  To give a strong impetus to the strategic framework for cooperation in education and training involving 
all  stakeholders.  This  should  notably  result  in  the  implementation  of  life-long  learning  principles  (in 
cooperation with Member States, social partners, experts) including through flexible learning pathways 
between  different  education  and  training  sectors  and  levels  and  by  reinforcing  the  attractiveness  of 
vocational  education  and  training.  Social  partners  at  European  level  should  be  consulted  in  view  of 
developing an initiative of their own in this area; 

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–  To  ensure  that  the  competences  required  to  engage  in  further  learning  and  the  labour  market  are 
acquired  and  recognised  throughout  general,  vocational,  higher  and  adult  education  and  to  develop  a 
common  language  and  operational  tool  for  education/training  and  work:  a  European  Skills, 
Competences and Occupations framework (ESCO). 

At national level, Member States will need: 

–  To  implement  their  national  pathways  for  flexicurity,  as  agreed  by  the  European  Council,  to  reduce 
labour market segmentation and facilitate transitions as well as facilitatig the reconciliation of work and 
family life; 

–  To review and regularly monitor the efficiency of tax and benefit systems so to make work pay with a 

particular focus on the low skilled, whilst removing measures that discourage self-employment;  

–  To promote new forms of work-life balance and active ageing policies and to increase gender equality; 

–  Promote and monitor the effective implementation of social dialogue outcomes; 

–  To give a strong impetus to the implementation of the European Qualifications Framework, through the 

establishment of national qualification frameworks; 

–  To  ensure  that  the  competences  required  to  engage  in  further  learning  and  the  labour  market  are 
acquired  and  recognised  throughout  general,  vocational,  higher  and  adult  education,  including  non 
formal and informal learning; 

–  To develop partnerships between the worlds of education/training and work, in particular by involving 

social partners in the planning of education and training provision. 

Flagship Initiative: "European Platform against Poverty" 

The aim is to ensure economic, social and territorial cohesion, building on the current European year for 
combating poverty and social exclusion so as to raise awareness and recognise the fundamental rights of 
people experiencing poverty and social exclusion, enabling them to live in dignity and take an active part in 
society. 

At EU level, the Commission will work: 

–  To transform the open method of coordination on social exclusion and social protection into a platform 
for  cooperation,  peer-review  and  exchange  of  good  practice,  and  into  an  instrument  to  foster 
commitment  by  public  and  private  players  to  reduce  social  exclusion,  and  take  concrete  action, 
including through targeted support from the structural funds, notably the ESF; 

–  To  design  and  implement  programmes  to  promote  social  innovation  for  the  most  vulnerable,  in 
particular  by  providing  innovative  education,  training,  and  employment  opportunities  for  deprived 
communities,  to  fight  discrimination  (e.g.  disabled),  and  to  develop  a  new  agenda  for  migrants' 
integration to enable them to take full advantage of their potential; 

–  To undertake an assessment of the adequacy and sustainability of social protection and pension systems, 

and identify ways to ensure better access to health care systems. 

At national level, Member States will need: 

–  To promote shared collective and individual responsibility in combating poverty and social exclusion; 

–  To  define  and  implement  measures  addressing  the  specific  circumstances  of  groups  at  particular  risk 
(such  as  one-parent  families,  elderly  women,  minorities,  Roma,  people  with  a  disability  and  the 
homeless);  

–  To fully deploy their social security and pension systems to ensure adequate income support and access 

to health care. 

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3. 

MISSING LINKS AND BOTTLENECKS  

All  EU  policies,  instruments  and  legal  acts,  as  well  as  financial  instruments,  should  be 
mobilised  to  pursue  the  strategy’s  objectives.  The  Commission  intends  to  enhance  key 
policies and instruments such as the single market, the budget and the EU's external economic 
agenda to focus on delivering Europe 2020's objectives. Operational proposals to ensure their 
full contribution to the strategy are an integral part of the Europe 2020.  

3.1. 

A single market for the 21st century 

A  stronger,  deeper,  extended  single  market  is  vital  for  growth  and  job  creation.  However, 
current  trends  show  signs  of  integration  fatigue  and  disenchantment  regarding  the  single 
market.  The  crisis  has  added  temptations  of  economic  nationalism.  The  Commission's 
vigilance  and  a  shared  sense  of  responsibility  among  Member  States  have  prevented  a  drift 
towards disintegration. But a new momentum – a genuine political commitment - is needed to 
re-launch  the  single  market,  through  a  quick  adoption  of  the  initiatives  mentioned  below. 
Such  political  commitment  will  require  a  combination  of  measures  to  fill  the  gaps  in  the 
single market. 

Every day businesses and citizens are faced with the reality that bottlenecks to cross-border 
activity remain despite the legal existenceof the single market. They realise that networks are 
not  sufficiently  inter-connected  and  that  the  enforcement  of  single  market  rules  remains 
uneven.  Often,  businesses  and  citizens  still  need  to  deal  with  27  different  legal  systems  for 
one and the same transaction. Whilst our companies are still confronted with the day-to-day 
reality  of  fragmentation  and  diverging  rules,  their  competitors  from  China,  the  US  or  Japan 
can draw full strength from their large home markets.  

The  single  market  was  conceived  before  the  arrival  of  Internet,  before  information  and 
communication  technologies  became  the  one  of  the  main  drivers  of  growth  and  before 
services  became  such  a  dominant  part  of  the  European  economy.  The  emergence  of  new 
services  (e.g.  content  and  media,  health,  smart  energy  metering)  shows  huge  potential,  but 
Europe will only exploit this potential if it overcomes the fragmentation that currently blocks 
the flow of on-line content and access for consumers and companies.  

To gear the single market to serve the Europe 2020 goals requires well functioning and well-
connected markets where competition and consumer access stimulate growth and innovation. 
An  open  single  market  for  services  must  be  created  on  the  basis  of  the  Services  Directive, 
whilst  at  the  same  time  ensuring  the  quality  of  services  provided  to  consumers.  The  full 
implementation of the Services Directive could increase trade in commercial services by 45% 
and  Foreign  Direct  investment  by  25%,  bringing  an  increase  of  between  0.5%  and  1.5% 
increase in GDP.  

Access for SMEs to the single market must be improved. Entrepreneurship must be developed 
by  concrete  policy  initiatives,  including  a  simplification  of  company  law  (bankruptcy 
procedures,  private  company  statute,  etc.),  and  initiatives  allowing  entrepreneurs  to  restart 
after failed businesses. Citizens must be empowered to play a full part in the single market. 
This  requires  strengthening  their  ability  and  confidence  to  buy  goods  and  services  cross-
border, in particular on-line. 

Through the implementation of competition policy the Commission will ensure that the single 
market  remains  an  open  market,  preserving  equal  opportunities  for  firms  and  combating 
national  protectionism.  But  competition  policy  will  do  more  to  contribute  to  achieving  the 
Europe  2020  goals.  Competition  policy  ensures  that  markets  provide  the  right  environment 

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for innovation, for example through ensuring that patents and property rights are not abused. 
Preventing  market  abuse  and  anticompetitive  agreements  between  firms  provides  a 
reassurance  to  incentivise  innovation.  State  aid  policy  can  also  actively  and  positively 
contribute  to  the  Europe  2020  objectives  by  prompting  and  supporting  initiatives  for  more 
innovative, efficient and greener technologies, while facilitating access to public support for 
investment, risk capital and funding for research and development. 

The Commission will propose action to tackle bottlenecks in the single market by: 

– 

– 

– 

– 

– 

Reinforcing  structures  to  implement  single  market  measures  on  time  and  correctly, 
including  network  regulation,  the  Services  Directive  and  the  financial  markets 
legislative  and  supervision  package,  enforce  them  effectively  and  when  problems 
arise, resolve them speedily;  

Pressing  ahead  with  the  Smart  Regulation  agenda,  including  considering  the  wider 
use of of regulations rather than directives, launching ex-post evaluation of existing 
legisation,  pursuing  market  monitoring,  reducing  administrative  burdens,  removing 
tax  obstacles,  improving  the  business  environment,  particularly  for  SMEs,  and 
supporting entrepreneurship; 

Adapting  EU  and  national  legislation  to  the  digital  era  so  as  to  promote  the 
circulation  of  content  with  high  level  of  trust  for  consumers  and  companies.  This 
requires updating rules on liability, warranties, delivery and dispute resolution; 

Making it easier and less costly for businesses and consumers to conclude contracts 
with  partners  in  other  EU  countries,  notably  by  offering  harmonised  solutions  for 
consumer contracts, EU model contract clauses and by making progress towards an 
optional European Contract Law; 

Making  it  easier  and  less  costly  for  businesses  and  consumers  to  enforce  contracts 
and to recognise court judgments and documents in other EU countries. 

3.2. 

Investing  in  growth:  cohesion  policy,  mobilising  the  EU  budget  and  private 
finance 

Economic, social and territorial cohesion will remain at the heart of the Europe 2020 strategy 
to  ensure  that  all  energies  and  capacities  are  mobilised  and  focused  on  the  pursuit  of  the 
strategy's  priorities.  Cohesion  policy  and  its  structural  funds,  while  important  in  their  own 
right, are key delivery mechanisms to achieve the priorities of smart, sustainable and inclusive 
growth in Member States and regions. 

The  financial  crisis  has  had  a  major  impact  on  the  capacity  of  European  businesses  and 
governments to finance investment and innovation projects. To accomplish its objectives for 
Europe  2020,  a  regulatory  environment  that  renders  financial  markets  both  effective  and 
secure  is  key.  Europe  must  also  do  all  it  can  to  leverage  its  financial  means,  pursue  new 
avenues  in  using  a  combination  of  private  and  public  finance,  and  in  creating  innovative 
instruments to finance the needed investments, including public-private partnerships (PPPs). 
The European Investment Bank and the European Investment Fund can contribute to backing 
a "virtuous circle" where innovation and entrepreneurship can be funded profitably from early 
stage investments to listing on stock markets, in partnership with the many public initiatives 
and schemes already operating at national level.  

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The  EU  multi-annual  financial  framework  will  also  need  to  reflect  the  long-term  growth 
priorities. The Commission intends to take the priorities, once agreed, up in its proposals for 
the next multi-annual financial framework, due for next year. The discussion should not only 
be about levels of funding, but also about how different funding instruments such as structural 
funds, agricultural and rural development funds, the research framework programme, and the 
competitiveness  and  innovation  framework  programme  (CIP)  need  to  be  devised  to  achieve 
the  Europe  2020  goals  so  as  to  maximise  impact,  ensure  efficiency  and  EU  value  added.  It 
will be important to find ways of increasing the impact of the EU budget – while small it can 
have an important catalytic effect when carefully targetted. 

The  Commission  will  propose  action  to  develop  innovative  financing  solutions  to  support 
Europe 2020's objectives by: 

– 

– 

– 

Fully  exploiting  possibilities  to  improve  the  effectiveness  and  efficiency  of  the 
existing  EU  budget  through  stronger  prioritisation  and  better  alignment  of  EU 
expenditure with the goals of the Europe 2020 to address the present fragmentation 
of EU funding instruments (e.g. R&D and innovation, key infrastructure investments 
in  cross-border  energy  and  transport  networks,  and  low-carbon  technology).  The 
opportunity of the review of the Financial Regulation should also be fully exploited 
to  develop  the  potential  of  innovative  financial  instruments,  whilst  ensuring  sound 
financial management; 

Designing new financing instruments, in particular in cooperation with the EIB/EIF 
and the private sector, responding to hitherto unfulfilled needs by businesses. As part 
of the forthcoming research and innovation plan, the Commission will co-ordinate an 
initiative  with  the  EIB/EIF  to  raise  additional  capital  for  funding  innovative  and 
growing businesses; 

Making  an  efficient  European  venture  capital  market  a  reality,  thereby  greatly 
facilitating  direct  business  access  to  capital  markets  and  exploring  incentives  for 
private  sector  funds  that  make  financing  available  for  start-up  companies,  and  for 
innovative SMEs. 

3.3. 

Deploying our external policy instruments 

Global growth will open up new opportunities for Europe's exporters and competitive access 
to  vital  imports.  All  instruments  of  external  economic  policy  need  to  be  deployed  to  foster 
European growth through our participation in open and fair markets world wide. This applies 
to  the  external  aspects  of  our  various  internal  policies  (e.g.  energy,  transport,  agriculture, 
R&D)  but  this  holds  in  particular  for  trade  and  international  macroeconomic  policy 
coordination. An open Europe, operating within a rules-based international framework, is the 
best route to exploit the benefits of globalisation that will boost growth and employment. At 
the same time, the EU must assert itself more effectively on the world stage, playing a leading 
role in shaping the future global economic order through the G20, and pursuing the European 
interest through the active deployment of all the tools at our disposal 

A part of the growth that Europe needs to  generate  over the next decade will need to come 
from the emerging economies as their middle classes develop and import goods and services 
in which the European Union has a comparative advantage. As the biggest trading bloc in the 
world, the EU prospers by being open to the world and paying close attention to what other 
developed or emerging economies are doing to anticipate or adapt to future trends.  

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Acting  within  the  WTO  and  bilaterally  in  order  to  secure  better  market  access  for  EU 
business, including SMEs, and a level playing field vis-à-vis our external competitors should 
be  a  key  goal.  Moreover,  we  should  focus  and  streamline  our  regulatory  dialogues, 
particularly  in  new  areas  such  as  climate  and  green  growth,  where  possible  expanding  our 
global  reach  by  promoting  equivalence,  mutual  recognition  and  convergence  on  key 
regulatory issues, as well as the adoption of our rules and standards.  

The  Europe  2020  strategy  is  not  only  relevant  inside  the  EU,  it  can  also  offer  considerable 
potential  to  candidate  countries  and  our  neighbourhood  and  better  help  anchor  their  own 
reform efforts. Expanding the area where EU rules are applied, will create new opportunities 
for both the EU and its neighbours. 

In  addition,  one  of  the  critical  objectives  in  the  next  few  years  will  be  to  build  strategic 
relationships  with  emerging  economies  to  discuss  issues  of  common  concern,  promote 
regulatory  and  other  co-operation  and  resolve  bilateral  issues.  The  structures  underpinning 
these relationships will need to be flexible and be politically rather than technically driven. 

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The Commission will draw up in 2010 a trade strategy for Europe 2020 which will include: 

– 

– 

– 

– 

An emphasis on concluding on-going multilateral and bilateral trade negotiations, in 
particular  those  with  the  strongest  economic  potential,  as  well  as  on  better 
enforcement of existing agreements, focussing on non-tariff barriers to trade; 

Trade  opening  initiatives  for  sectors  of  the  future,  such  as  "green"  products  and 
technologies, high-tech products and services, and on international standardization in 
particular in growth areas;  

Proposals  for  high-level  strategic  dialogues  with  key  partners,  to  discuss  strategic 
issues ranging from market access, regulatory framework, global imbalances , energy 
and  climate  change,  access  to  raw  materials,  to  global  poverty,  education  and 
development. It will also work to reinforce the Transatlantic Economic Council with 
the  US  the  High  Level  Economic  Dialogue  with  China  and  deepen  its  relationship 
with Japan and Russia; 

Starting in 2011 and then annually before the Spring European Council, a trade and 
investment barriers report identifying ways to improve market access and regulatory 
environment for EU companies. 

The  EU  is  a  global  player  and  takes  its  international  responsibilities  seriously.  It  has  been 
developing  a  real  partnership  with  developing  countries  to  eradicate  poverty,  to  promote 
growth and to fulfil the Millenium Development Goals (MDGs). We have a particularly close 
relationship with Africa and will need to invest further in the future in developing that close 
partnership. This will take place in the broader ongoing efforts to increase development aid, 
improve the efficiency of our aid programmes notably through the efficient division of labour 
with  Member  States  and  by  better  reflecting  development  aims  in  other  policies  of  the 
European Union. 

4. 

EXIT FROM THE CRISIS: FIRST STEPS TOWARDS 2020  

Policy instruments were decisively, and massively, used to counteract the crisis. Fiscal policy 
had, where possible, an expansionary and counter-cyclical role; interest rates were lowered to 
historical  minima  while  liquidity  was  provided  to  the  financial  sector  in  an  unprecedented 
way. Governments gave massive support to banks, either through guarantees, recapitalization 
or  through  "cleaning"  of  balance  sheets  from  impaired  assets;  other sectors  of  the  economy 
were  supported  under  the  temporary,  and  exceptional,  framework  for  State  aid.  All  these 
actions  were,  and  still  are,  justified.  But  they  cannot  stay  there  permanently.  High  levels  of 
public debt cannot be sustained indefinitely. The pursuit of the Europe 2020 objectives must 
be  based  on  a  credible  exit  strategy  as  regards  budgetary  and  monetary  policy  on  the  one 
hand,  and  the  direct  support  given  by  governments  to  economic  sectors,  in  particular  the 
financial sector, on the other. The sequencing of these several exits is important. A reinforced 
coordination  of  economic  policies,  in  particular  within  the  euro  area  should  ensure  a 
successful global exit. 

4.1. 

Defining a credible exit strategy 

Given  remaining  uncertainties  about  the  economic  outlook  and  fragilities  in  the  financial 
sector,  support  measures  should  only  be  withdrawn  once  the  economic  recovery  can  be 

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regarded as self-sustaining and once financial stability has been restored4. The withdrawal of 
temporary crisis-related measures should be coordinated and take account of possible negative 
spill-over  effects  both  across  Member  States  as  well  as  of  interactions  between  different 
policy  instruments.  State  aid  disciplines  should  be  restored,  starting  with  the  ending  of  the 
temporary  state  aid  framework.  Such  a  coordinated  approach  would  need  to  rely  on  the 
following principles:  

– 

– 

– 

– 

– 

The  withdrawal  of  the  fiscal  stimulus  should  begin  as  soon  as  the  recovery  is  on  a 
firm footing. However, the timing may have to differ from country to country, hence 
the need for a high degree of coordination at European level; 

Short-term unemployment support should only start to be phased out once a turning 
point  in  GDP  growth  can  be  regarded  as  firmly  established  and  thus  employment, 
with its usual lag, will have started to grow; 

Sectoral  support  schemes  should  be  phased  out  early  as  they  carry  a  large  budget 
costs, are considered to have by and large achieved their objectives, and due to their 
possible distorting effects on the single market; 

Access-to-finance  support  should  continue  until  there  are  clear  signs  that  financing 
conditions for business have broadly returned to normal; 

Withdrawal  of  support  to  the  financial  sector,  starting  with  government  guarantee 
schemes, will depend on the state of the economy overall and of the stability of the 
financial system in particular. 

4.2. 

The reform of the financial system 

A crucial priority in the short term will be to restore a solid, stable and healthy financial sector 
able to finance the real economy. It will require the full and timely implementation of the G20 
commitments. Five objectives will in particular have to be met: 

– 

– 

– 

– 

– 

Implementing the agreed reforms of the supervision of the financial sector; 

Filling  the  regulatory  gaps,  promoting  transparency,  stability  and  accountability 
notably as regards derivatives and market infrastructure; 

Completing the strengthening of our prudential, accounting and consumer protection 
rules  in  the  form  a  single  European  rule-book  covering  all  financial  actors  and 
markets in an appropriate way; 

Strengthening  the  governance  of  financial  institutions,  in  order  to  address  the 
weaknesses identified during the financial crisis in the area of risk identification and 
management; 

Setting in motion an ambitious policy that will allow us in the future to better prevent 
and  if  needed  manage  possible  financial  crises,  and  that  –  taking  into  account  the 
specific responsibility of the financial sector in the current crisis – will look also into 
adequate contributions from the financial sector. 

4 

European Council conclusions of 10/11 December 2009. 

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4.3. 

Pursuing smart budgetary consolidation for long-term growth 

Sound public finances are critical for restoring the conditions for sustainable growth and jobs 
so  we  need  a  comprehensive  exit  strategy.  This  will  involve  the  progressive  withdrawal  of 
short-term crisis support and the introduction of medium- to longer-term reforms that promote 
the sustainability of public finances and enhance potential growth.  

The  Stability  and  Growth  Pact  provides  the  right  framework  to  implement  fiscal  exit 
strategies  and  Member  States  are  setting  down  such  strategies  in  their  stability  and 
convergence  programmes.  For  most  countries,  the  onset  of  fiscal  consolidation  should 
normally occur in 2011. The process of bringing the deficits to below 3% of GDP should be 
completed,  as  a  rule,  by  2013.  However,  in  a  number  of  countries,  the  consolidation  phase 
may have to begin earlier than 2011 implying that the withdrawal of temporary crisis support 
and fiscal consolidation may in these cases need to occur simultaneously.  

To  support  the  EU's  economic  growth  potential  and  the  sustainability  of  our  social  models, 
the consolidation of public finances in the context of the Stability and Growth Pact involves 
setting priorities and making hard choices: coordination at EU can help Member States in this 
task  and  help  address  spill-over  effects.  In  addition,  the  composition  and  quality  of 
government  expenditure  matters:  budgetary  consolidation  programmes  should  prioritise 
'growth-enhancing items' such as education and skills, R&D and innovation and investment in 
networks,  e.g.  high-speed  internet,  energy  and  transport  interconnections  –  i.e.  the  key 
thematic areas of the Europe 2020 strategy.  

The revenue side of the budget also matters and particular attention should also be given to 
the  quality  of  the  revenue/tax  system.  Where  taxes  may  have  to  rise,  this  should,  where 
possible,  be  done  in  conjunction  with  making  the  tax  systems  more  "growth-friendly".  For 
example, raising taxes on labour, as has occurred in the past at great costs to jobs, should be 
avoided. Rather Member States should seek to shift the tax burden from labour to energy and 
environmental taxes as part of a “greening” of taxation systems. 

Fiscal consolidation and long-term financial sustainability will need to go hand in hand with 
important  structural  reforms,  in  particular  of  pension,  health  care,  social  protection  and 
education  systems.  Public  administration  should  use  the  situation  as  an  opportunity  to 
enhance efficiency and the quality of service. Public procurement policy must ensure the most 
efficient use of public funds and procurement markets must be kept open EU-wide.  

4.4. 

Coordination within the Economic and Monetary Union 

The common currency has acted as a valuable shield from exchange rate turbulences for those 
Member States whose currency is the euro. But the crisis has also revealed the extent of the 
interdependence between the economies within the euro area, namely in the financial domain, 
rendering spill-over effects more likely. Divergent growth patterns lead in some cases to the 
accumulation  of  unsustainable  government  debts  which  in  turn  puts  strains  on  the  single 
currency. The crisis has thus amplified some of the challenges faced by the euro area, e.g. the 
sustainability  of  public  finances  and  potential  growth,  but  also  the  destabilising  role  of 
imbalances and competitiveness divergences. 

Overcoming  these  challenges  in  the  euro  area  is  of  paramount  importance,  and  urgent,  in 
order  to  secure  stability  and  sustained  and  employment  creating  growth.  Addressing  these 
challenges requires strengthened and closer policy co-ordination including: 

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– 

– 

– 

A framework for deeper and broader surveillance for euro area countries: in addition 
to  strengthening  fiscal  discipline,  macro-economic  imbalances  and  competitiveness 
developments should be an integral part of economic surveillance, in particular with 
a view to facilitating a policy driven adjustment. 

A  framework  for  addressing  imminent  threats  for  the  financial  stability  of  the  euro 
area as a whole. 

Adequate external representation of the euro area in order to forcefully tackle global 
economic and financial challenges. 

The Commission will make proposals to take these ideas forward. 

5. 

DELIVERING RESULTS: STRONGER GOVERNANCE  

To  achieve  transformational  change,  the  Europe  2020  strategy  will  need  more  focus,  clear 
goals  and  transparent  benchmarks  for  assessing  progress.  This  will  require  a  strong 
governance  framework  that  harnesses  the  instruments  at  its  disposal  to  ensure  timely  and 
effective implementation. 

5.1. 

Proposed architecture of Europe 2020 

The  strategy  should  be  organised  around  a  thematic  approach  and  a  more  focused  country 
surveillance.  This  builds  on  the  strength  of  already  existing  coordination  instruments.  More 
specifically: 

– 

– 

A  thematic  approach  would  focus  on  the  themes  identified  in  Section  2,  in 
particular the  delivery of the 5 headline  targets.  The  main  instrument  would  be  the 
Europe 2020 programme and its flagship initiatives, which require action at both EU 
and  Member  States  level  (see  Section  2  and  Annexes  1  and  2).  The  thematic 
approach reflects the EU dimension, shows clearly the interdependence of Member 
States  economies,  and  allows  greater  selectivity  on  concrete  initiatives  which  push 
the strategy forward and help achieve the EU and national headline targets.  

implement  exit  strategies, 

Country  reporting  would  contribute  to  the  achievement  of  Europe  2020  goals  by 
helping  Member  States  define  and 
to  restore 
macroeconomic stability, identify national bottlenecks and return their economies to 
sustainable  growth  and  public  finances.  It  would  not  only  encompass  fiscal  policy, 
but  also  core  macroeconomic  issues  related  to  growth  and  competitiveness  (i.e. 
macro-imbalances). It would have to ensure an integrated approach to policy design 
and implementation, which is crucial to support the choices Member States will have 
to  make,  given  the  constraints  on  their  public  finances.  A  specific  focus  will  be 
placed on the functioning of the euro area, and the interdependence between Member 
States. 

To  achieve  this,  the  Europe  2020  and  Stability  and  Growth  Pact  (SGP)  reporting  and 
evaluation  will  be  done  simultaneously  to  bring  the  means  and  the  aims  together,  while 
keeping  the  instruments  and  procedures  separate  and  maintaining  the  integrity  of  the  SGP. 
This means proposing at the same time the annual stability or convergence programmes and 
streamlined reform programmes which each Member State will draw up to set out measures to 
report  on  progress  towards  their  targets,  as  well  as  key  structural  reforms  to  address  their 
bottlenecks  to  growth.  Both  these  programmes,  which  should  contain  the  necessary  cross-
references, should be submitted to the Commission and other Member States during the last 

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quarter  of  the  year.  The  European  Systemic  Risk  Board  (ESRB)  should  report  regularly  on 
macro-financial  risks:  these  reports  will  be  an  important  contribution  to  the  overall 
assessment. The Commission will assess these programmes and report on progress made with 
their  implementation.  Specific  attention  will  be  devoted  to  the  challenges  of  the  Economic 
and Monetary Union. 

This would give the European Council all the information necessary to take decisions. Indeed, 
it would have an analysis  of the  economic and  job situations, the overall budgetary picture, 
macro-financial  conditions  and  progress  on  the  thematic  agendas  per  Member  State,  and 
would in addition review the overall state of the EU economy. 

Integrated guidelines 

The  Europe  2020  strategy  will  be  established  institutionally  in  a  small  set  of  integrated 
'Europe 2020' guidelines (integrating employment and broad economic policy guidelines), to 
replace  the  24  existing  guidelines.  These  new  guidelines  will  reflect  the  decisions  of  the 
European  Council  and  integrate  agreed  targets.  Following  the  opinion  of  the  European 
Parliament on the employment guidelines as foreseen by the Treaty, the guidelines should be 
politically endorsed by the June European Council before they are adopted by Council. Once 
adopted, they should remain largely stable until 2014 to ensure a focus on implementation. 

Policy recommendations 

Policy  recommendations  will  be  addressed  to  Member  States  both  in  the  context  of  the 
country  reporting  as  well  as  under  the  thematic  approach  of  Europe  2020.  For  country 
surveillance, they will take the form of Opinions on stability/convergence programmes under 
Council  Regulation  (EC)  No  1466/97  accompanied  by  recommendations  under  the  Broad 
Economic  Policy  Guidelines  (BEPGs,  Article  121.2).  The  thematic  part  would  include 
Employment recommendations (Article 148) and country recommendations on other selected 
thematic  issues  (for  instance  on  business  environment,  innovation,  functioning  of  the  single 
market, energy/climate change etc.), both of which could also be addressed to the extent that 
they  have  macroeconomic  implications  through  the  recommendations  under  the  BEPGs  as 
indicated  above.  This  set-up  for  the  recommendations  would  also  help  ensure  coherence 
between the macro/fiscal framework and the thematic agendas. 

The  recommendations  under  the  country  surveillance  would  address  issues  with  significant 
macroeconomic  and  public  finance  implications,  whereas  the  recommendations  under  the 
thematic  approach  would  provide  detailed  advice  on  micro-economic  and  employment 
challenges.  These  recommendations  would  be  sufficiently  precise  and  normally  provide  a 
time-frame within which the Member State concerned is expected to act (e.g. two years). The 
Member  State  would  then  set  out  what  action  it  would  take  to  implement  the 
recommendation.  If  a  Member  State,  after  the  time-frame  has  expired,  has  not  adequately 
responded to a policy recommendation of the Council or develops policies going against the 
advice, the Commission could issue a policy warning (Article 121.4). 

5.2.  Who does what? 

Working  together  towards  these  objectives  is  essential.  In  our  interconnected  economies, 
growth and employment will only return if all Member States move in this direction, taking 
account  of  their  specific  circumstances.  We  need  greater  ownership.  The  European  Council 
should provide overall guidance for the strategy, on the basis of Commission proposals built 
on  one  core  principle:  a  clear  EU  value  added.  In  this  respect,  the  role  of  the  European 
Parliament is particularly important. The contribution of stakeholders at national and regional 

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level and of the social partners needs also to be enhanced. An overview of the Europe 2020 
policy cycle and timeline is included in Annex 3. 

Full ownership by the European Council 

Contrary  to  the  present  situation  where  the  European  Council  is  the  last  element  in  the 
decision-making process of the strategy, the European Council should steer the strategy as it 
is  the  body  which  ensures  the  integration  of  policies  and  manages  the  interdependence 
between Member States and the EU.  

Whilst  keeping  a  horizontal  watching  brief  on  the  implementation  of  the  Europe  2020 
programme,  the  European  Council  could  focus  on  specific  themes  (e.g.  research  and 
innovation, skills) at its future meetings, providing guidance and the necessary impulses.  

Council of Ministers 

The relevant council formations would work to implement the Europe 2020 programme and 
achieve  the  targets  in  the  fields  for  which  they  are  responsible.  As  part  of  the  flagship 
initiatives, Member States will be invited to step up their exchange of policy information of 
good practices within the various Council formations. 

European Commission 

The  European  Commission  will  monitor  annually  the  situation  on  the  basis  of  a  set  of 
indicators  showing  overall  progress  towards  the  objective  of  smart,  green  and  inclusive 
economy delivering high levels of employment, productivity and social cohesion.  

It will issue a yearly report on the delivery of the Europe 2020 strategy focusing on progress 
towards  meeting  the  agreed  headline  targets,  and  assess  country  reports  and  stability  and 
convergence  programmes.  As  part  of  this  process,  the  Commission  will  present  policy 
recommendations or warnings, make policy proposals to attain the objectives of the strategy 
and will present a specific assessment of progress achieved within the euro-area. 

European Parliament 

The European Parliament should play an important role in the strategy, not only in its capacity 
as  co-legislator,  but  also  as  a  driving  force  for  mobilising  citizens  and  their  national 
parliaments. Parliament could, for instance, use the next meeting with national parliaments to 
discuss  its  contribution  to  Europe  2020  and  jointly  communicate  views  to  the  Spring 
European Council.  

National, regional and local authorities  

All  national,  regional  and  local  authorities  should  implement  the  partnership,  closely 
associating  parliaments,  as  well  as  social  partners  and  representatives  of  civil  society, 
contributing  to  the  elaboration  of  national  reform  programmes  as  well  as  to  its 
implementation.  

By establishing a permanent dialogue between various levels of government, the priorities of 
the Union are brought closer to citizens, strengthening the ownership needed to delivery the 
Europe 2020 strategy. 

Stakeholders and civil society 

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Furthermore,  the  Economic  and  Social  Committee  as  well  as  the  Committee  of  Regions 
should  also  be  more  closely  associated.  Exchange  of  good  practices,  benchmarking  and 
networking - as promoted by several Member States - has proven another useful tool to forge 
ownership and dynamism around the need for reform. 

The  success  of  the  new  strategy  will  therefore  depend  critically  on  the  European  Union’s 
institutions,  Member  States  and  regions  explaining  clearly  why  reforms  are  necessary  -  and 
inevitable to maintain our quality of life and secure our social models -, where Europe and its 
Member States want to be by 2020, and what contribution they are looking for from citizens, 
businesses  and  their  representative  organisations.  Recognising  the  need  to  take  account  of 
national  circumstances  and 
the  Commission  will  propose  a  common 
communication tool box to this effect. 

traditions, 

6. 

DECISIONS FOR THE EUROPEAN COUNCIL 

The Commission proposes that the European Council, at its meeting in Spring 2010: 

– 

– 

– 

– 

– 

– 

agrees on the thematic priorities of the Europe 2020 strategy;  

sets  the  five  headline  targets  as  proposed  in  section  2  of  this  paper:  on  R&D 
investments,  education,  energy/climate  change,  employment  rate,  and  reducing 
poverty, defining where Europe should be by 2020; invites the Member States in a 
dialogue  with  the  European  Commission  to  translate  these  EU  targets  into  national 
targets  for  decisions  at  the  June  European  Council,  taking  into  account  national 
circumstances and differing starting points;  

invites the Commission to come forward with proposals for the flagship initiatives, 
and  requests  the  Council  (and  its  formations)  on  this  basis  to  take  the  necessary 
decisions to implement them; 

agrees  to  strengthen  economic  policy  co-ordination  to  promote  positive  spill-over 
effects  and  help  address  the  Union's  challenges  more  effectively;  to  this  end,  it 
approves  the  combination  of  thematic  and  country  assessments  as  proposed  in  this 
communication whilst strictly maintaining the integrity of the Pact; it will also give 
special attention to strengthening EMU; 

calls  on  all  parties  and  stakeholders  (e.g.  national/regional  parliaments,  regional 
and/or  local  authorities,  social  partners  and  civil  society,  and  last  but  not  least  the 
citizens of Europe) to help implement the strategy, working in partnership, by taking 
action in areas within their responsibility;  

requests  the  Commission  to  monitor  progress  and  report  annually  to  the  Spring 
European Council, providing an overview of progress towards the targets, including 
international  benchmarking,  and  the  state  of  implementation  of  the  flagship 
initiatives. 

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At its subsequent meetings: 

– 

– 

– 

endorses  the  proposed  integrated  guidelines  which  constitutes  its  institutional 
underpinning following the opinion of the European Parliament; 

validates  the  national  targets  following  a  process  of  mutual  verification  to  ensure 
consistency; 

discusses  specific  themes  assessing  where  Europe  stands  and  how  progress  can  be 
accelerated.  A  first  discussion  on  research  and  innovation  could  take  place  at  its 
October meeting on the basis of a Commission contribution. 

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ANNEX 1 - EUROPE 2020: AN OVERVIEW 

HEADLINE TARGETS 

–  Raise the employment rate of the population aged 20-64 from the current 69% to at least 75%. 
–  Achieve the target of investing 3% of GDP in R&D in particular by improving the conditions for R&D investment by the private sector, and develop a 

new indicator to track innovation. 

–  Reduce greenhouse gas emissions by at least 20% compared to 1990 levels or by 30% if the conditions are right, increase the share of renewable energy 

in our final energy consumption to 20%, and achieve a 20% increase in energy efficiency. 

–  Reduce the share of early school leavers to 10% from the current 15% and increase the share of the population aged 30-34 having completed tertiary 

education from 31% to at least 40%. 

–  Reduce the number of Europeans living below national poverty lines by 25%, lifting 20 million people out of poverty. 

SMART GROWTH 

SUSTAINABLE GROWTH 

INCLUSIVE GROWTH 

INNOVATION  

CLIMATE, ENERGY AND MOBILITY 

EMPLOYMENT AND SKILLS 

EU  flagship  initiative  "Innovation  Union"  to 
improve  framework  conditions  and  access  to 
finance  for  research  and  innovation  so  as  to 
strengthen  the  innovation  chain  and  boost  levels 
of investment throughout the Union. 

EDUCATION 

EU  flagship  initiative  "Youth  on  the  move"  to 
enhance  the  performance  of  education  systems 
and to reinforce the international attractiveness of 
Europe's higher education. 

DIGITAL SOCIETY 

EU  flagship  initiative  "A  digital  agenda  for 
Europe"  to  speed  up  the  roll-out  of  high-speed 
internet  and  reap  the  benefits  of  a  digital  single 
market for households and firms. 

flagship 

initiative 

"Resource  efficient 
EU 
Europe" to help decouple economic growth from 
the  use  of  resources,  by  decarbonising  our 
economy, increasing the use of renewable sources, 
modernising  our  transport  sector  and  promoting 
energy efficiency. 

EU flagship initiative "An agenda for new skills 
and  jobs"  to  modernise  labour  markets  by 
facilitating  labour  mobility  and  the  development 
of  skills  throughout  the  lifecycle  with  a  view  to 
increase  labour  participation  and  better  match 
labour supply and demand. 

COMPETITIVENESS 

FIGHTING POVERTY 

EU  flagship  initiative  "An  industrial  policy  for 
the  globalisation  era"  to  improve  the  business 
environment, especially for SMEs, and to support 
the  development  of  a  strong  and  sustainable 
industrial base able to compete globally. 

flagship 

EU 
initiative  "European  platform 
against  poverty"  to  ensure  social  and  territorial 
cohesion such that the benefits of growth and jobs 
are  widely  shared  and  people  experiencing 
poverty and social exclusion are enabled to live in 
dignity and take an active part in society. 

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ANNEX 2 - EUROPE 2020 ARCHITECTURE 

Overall institutional 
structure 

Integrated guidelines establishing scope of EU policy priorities, including headline targets  
for the EU to reach by 2020 and to be translated into national targets. 

Country reporting: 

Thematic approach: 

Aim:  help  Member  States  define  and  implement 
exit  strategies  to  restore  macroeconomic  stability, 
identify  national  bottlenecks  and  return  their 
economies 
to  sustainable  growth  and  public 
finances. 

Approach:  enhanced  assessment  of  main  macro-
economic challenges facing Member States taking 
account  of  spill-overs  across  Member  States  and 
policy areas. 

Delivery 

targets  agreed  at  EU 
Aim:  deliver  headline 
combining concrete actions at EU and national levels. 

level 

Approach:  strategic 
the  sectoral  Council 
role  of 
formations for monitoring and reviewing progress towards 
the agreed targets. 

and 

their 

stability 

followed 

Instruments:  reporting  by  the  Member  State 
convergence 
through 
programmes, 
but 
synchronised recommendations on fiscal policy in 
and  Convergence  Programme 
the  Stability 
Opinions  and  on  macro-economic  imbalances  and 
growth  bottlenecks  under  the  Broad  Economic 
Policy Guidelines (art. 121.2). 

separate 

by 

reform  programmes 

Instruments:  reporting  by  the  Member  States  through 
streamlined  national 
including 
information  on  growth  bottlenecks  and  progress  towards 
the  targets,  followed  by  policy  advice  at  EU  level  to  be 
issued  in  the  form  of  recommendations  under  the  Broad 
Economic  Policy  Guidelines 
the 
Employment Guidelines (art. 148). 

(art.  121.2)  and 

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ANNEX 3 - PROPOSED TIMELINE IN 2010 - 2012 

European Commission 
Proposals for Europe 2020 overall approach 

Spring European Council 
Agreement on overall approach and choice of EU headline targets 

European Commission 
Proposals for Europe 2020 integrated guidelines 

European Parliament 
Debate on strategy and opinion on integrated guidelines 

Council of Ministers  
Refine key parameters (EU/national targets, flagship initiatives and integrated guidelines) 

June European Council 
Approval of Europe 2020 strategy, validation of EU and national targets, and endorsement 
of the integrated guidelines 

European Commission 
Operational guidance for next steps in Europe 2020 

Autumn European Council 
In-depth discussion on a selected thematic issue (e.g. R&D and innovation) 

Member States 
Stability and Convergence Programmes and National Reform Programmes 

European Commission 
Annual  Report  to  the  European  Spring  Summit,  Opinions  on  Stability  and  Convergence 
programmes and proposals for Recommendations 

Council of Ministers 
Review of Commission's proposals for Recommendations, ECOFIN for SGP 

European Parliament 
Plenary debate and adoption of a resolution 

Spring European Council 
Assessment of progress and strategic orientations 

Member States, European Commission, Council 
Follow-up on recommendations, implementation of reforms and reporting 

Same procedure with a specific focus on monitoring of progress 

2010 

2011 

2012 

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