What's Wrong With Lisbon? Bruegel Third-Party Papers, June 2005

There is thus a need for a deeper investigation into the shortcomings of the Lisbon strategy. What this paper argues is that the reason for those shortcomings is a lack of incentives to coordinate reforms within the EU. It makes the point that the very rationale for undertaking reforms jointly is in fact weak for the EU as a whole while it is stronger within the Eurozone. If this analysis is correct, the conclusion is that the EU must give thoughts to improving the incentive they face, especially within the Eurozone. It must also make better use of its own instruments – the EU legislation, the budget, monetary policy and the Stability pact. This paper starts with a short assessment of economic situation in the Union and the degree to which it explains the result of the referendums. Part 2 is devoted to an evaluation of the Lisbon strategy. Part 3 discusses why this strategy did not deliver. Recommendations for improving it are made in part 4. Part 5 concludes2