Europe 2020: Commission proposes new economic strategy

Commission sets out a 10-year strategy for reviving the European economy, casting a vision of ‘smart, sustainable, inclusive' growth rooted in greater coordination of national and European policy.

Coming on the heels of the longest and deepest recession in EU history, the much-anticipated Europe 2020  plan acknowledges the huge challenges ahead. The economic crisis has exposed deep flaws in an economy already under strain from globalisation, pressures on resources and an ageing population. The commission's position is that these can be overcome if Europe is willing to embrace transformation to a greener, more innovative market that fosters social wellbeing.

The strategy revolves around promoting low-carbon industries, investing in efforts to develop new products, unleashing a digital economy and modernising education and training. Five quantitative targets are proposed, including increasing the employment rate to at least 75% from the current 69% and boosting spending on research and development to 3% of gross domestic product - it is currently only 2% of GDP, significantly less than in the US and Japan.

Likewise, the plan reaffirms the EU's ‘20/20/20' climate change goals - already among the most ambitious in the world - and proposes a poverty reduction target of 25%, estimating that this would lift 20 million people out of poverty.

Turning to education, the commission recommends efforts to cut the school dropout rate to below 10% from the current 15% and to expand the share of people in their early 30s with a university degree (to 40% from 31%).

The paper proposes that governments agree on national targets that would take account of conditions in each country while helping the EU as a whole achieves its goals. The commission will monitor progress and issue warnings in cases of "inadequate response."

The EU already tracks public finances to prevent imbalances that could undermine the eurozone. The new plan would go beyond that to include other issues that could undermine EU-wide competitiveness.

The strategy identifies seven flagship initiatives the EU should take to boost growth and employment. These include programmes to improve conditions and access to finance for R&D, speed up the roll-out of high-speed internet and increase the use of renewable energy.

Government leaders are expected to debate the overall approach at the meeting later this month. The details, including national targets, would the subject of a summit later this year, possibly in June.