Anyone remember the Lisbon Strategy? This was a grand European Union programme, adopted almost exactly nine years ago, to turn the EU into “the most competitive and dynamic knowledge-based economy” in the world by 2010. It set a number of specific targets, such as average annual economic growth of 3 per cent and an overall employment participation rate of 70 per cent.
Given the crisis the world economy now faces, it would be cruel and gratuitous to mock the EU’s lofty ambitions of March 2000. Suffice it to say that a new report prepared by Allianz, the German insurer, and the Lisbon Council, a Brussels-based think-tank, says that Europe’s recession “is so severe that none of the countries surveyed can presently come up to the Lisbon goals”.
Assessing how far each country falls short is by no means a futile exercise, however. Michael Heise, the report’s principal author and Allianz’s chief economist, ranks the EU’s 14 largest economies according to six criteria – economic growth, productivity growth, jobs, human capital, future-oriented investment and sustainable public finances.
His conclusion is that Finland comes top, with strong results in human capital (that famous Finnish education system), public finances, and research and development (allocated an impressive 3.45 per cent of gross domestic product a year). Second comes Poland, which scores well on economic growth and productivity growth but badly on jobs.
Heise estimates that if the recession had not intervened, six countries would have been on track to meet their Lisbon targets by 2010 – Finland, Greece, the Netherlands, Poland, Spain and Sweden. The Spanish performance is a bit of an optical illusion: Spain improved its labour productivity, but only by shedding jobs on a massive scale.
Who’s been doing worst? Very striking is the fall from grace of Ireland, which crashed to 13th in this year’s rankings from fourth in 2008. The Irish performance in economic growth, productivity and public finances makes grim reading.
And bottom of the pack, like last year, is Italy. Italy’s persistent lack of business competitiveness compared to Germany, and its tendency to be the first eurozone country to fall into recession whenever the economic outlook darkens, are an extremely serious long-term concern for Europe’s monetary union.
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