Europe has just experienced its worst post–war recession; however, the actions taken by central banks, member state governments, the Commission and other EU institutions have helped to stabilise financial markets and support the economy.
It is essential that policy actions to support economic activity during the crisis do not imperil the prospects for recovery or endanger the single market and, where necessary, some measures must be withdrawn once the economy recovers. Fiscal measures should ideally offer dual benefits; mitigating the impact of the recession on output and jobs as well as providing longer-term benefits.
The report analyses the following issues:
· Strengthening innovation: Despite numerous policy initiatives, research and innovation in Europe still lag behind their counterparts in the United States and Japan. An integrated labour market for researchers, a Community patent and a Unified Patent Litigation System would help to stimulate innovation.
· Deepening the single market: The single market programme has already brought long–term benefits, but more can be done to enhance competitive pressures. The Services Directive needs to be implemented in a timely and effective manner and actions should be taken to ensure proper implementation of single market rules. Competition in financial services, energy markets and network industries can be raised further, and continued efforts are needed to simplify regulations and improve assessments of policy proposals.
· Implementing energy policy and the transition to a low–carbon economy: Europe is taking important steps towards becoming a low–carbon economy. Policies to reduce greenhouse gas emissions, promote low–emission technologies and reduce energy consumption should focus on correcting genuine market failures and be sufficiently flexible to cope with future economic and technological changes.
· Further improving external access to European markets: The EU must continue to resist the rise in protectionist sentiment and continue to push for global trade liberalisation. Reductions in tariffs would send a powerful free trade message to the rest of the world and improve consumer welfare. The rules of origin in the EU’s preferential trade agreements could be further simplified and thresholds for domestic content lowered, particularly for developing countries, while measures should be taken to ensure that they are fully consistent with the EU's trade and development goals.
© OECD
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