Globalisation and the Reform of European Social Models. Bruegel Policy Contribution/September 2005

Notwithstanding considerable other achievements, the EU economic system is increasingly failing to deliver a satisfactory growth performance. As I and my co-authors argued in the 2003 report An Agenda for a Growing Europe, the EU’s growth problem is a symptom of an economy stuck in a system of mass production, large firms, existing technology and long-term employment patterns that is no longer suitable in today’s world characterised by rapid technological change and strong global competition. The report insisted that Europe needs to undertake massive economic and social reforms in order to develop an innovation-based economy, focused on R&D, technology and human capital. It concluded that growth must become Europe’s number one economic priority – not only in the declarations of its leaders but above all in their actions. It also warned that failure to deliver on growth would threaten not only the sustainability of the European model, but also the very process of European integration which is built on the twin foundations of peace and prosperity