1. Brussels, 24 March 2010 Ulrik Mogensen Secretariat General
Europe Strategy
Brussels, 24 March 2010
Ulrik Mogensen
Secretariat General

2. Challenges Crisis (deficits/debts, unemployment)
Globalisation (spill overs from trade, euro, finance)
Ageing
Climate change
Energy dependency
Knowledge (education and research)
Social cohesion

3. Where Europe stands now ?
The crisis has wiped out recent progress:
GDP growth: - 4% in 2009, worst since the 1930s
Industrial production: - 20% with the crisis, back to the 1990s
Unemployment levels:
23 million people
7 million more unemployed in 20 months
expected to reach 10.3% in 2010 (back to 1990s level)
youth unemployment over 21%

4. Youth unemployment rate (%)
Young people are particularly at risk 5
Youth unemployment rate (%)
Youth unemployment reached 21.4% in December 2009, an increase by 7 percentage points since March 2008.
Background Information for the Informal European Council, 11 February 2010

5. Manufacturing and construction outputs
Industrial production declined sharply 6
Manufacturing and construction outputs
Industrial production fell by 20% compared to its peak in 2008 to reach a level not seen since the 1990s. It has now stabilised and is beginning to increase, although the recovery is still fragile.
Background Information for the Informal European Council, 11 February 2010

6. Export share (% world exports)
Global competition is fierce 15
Export share (% world exports)
The EU benefits from being one of the most open economies in the world, but its external position is eroding.
Background Information for the Informal European Council, 11 February 2010

7. Population by sex and age on 1. January of each year
Our demographic path is known 19
Population by sex and age on 1. January of each year
First baby-boom cohort: age 64 in 2010
Baby-boomers start retiring. This marks the end of the demographic dividend, i.e. the fact that the working age cohorts were particularly large compared to the rest of the population.
Background Information for the Informal European Council, 11 February 2010

8. Old-age dependency will rise fast21
Old-age dependency ratios under four retirement age assumptions (59, 63, 66 and 69 year-old)
The old-age dependency ratio – the ratio of people above retirement age for each person in active age – is rising fast and would almost double by 2060 if current demographic and retirement patterns persist.
Background Information for the Informal European Council, 11 February 2010

9. Expenditure on R&D (% GDP)
Raising our levels of R&D 33
Expenditure on R&D (% GDP) EU
Japan US
In spite of our 3% target, there has been little progress on R&D spending since The EU is particularly lagging in terms of private R&D spending.
Background Information for the Informal European Council, 11 February 2010

10. Investment in ICT R&D in 2009 (billions €)
Matching the pace of competition 34
Investment in ICT R&D in 2009 (billions €)
The EU Framework Programme for Research (FP7) invests about 1.3 billion € in ICT R&D every year. In 2009, “Google” invested billion USD - the equivalent of 2 bn € - in R&D.
Background Information for the Informal European Council, 11 February 2010

11. Expenditure on tertiary education (% GDP)
Investing in our students and universities 36
Expenditure on tertiary education (% GDP)
Total spending on tertiary education in the EU (as a % of GDP) is less than half the US level, mainly as a result of lower private spending in Europe.
Background Information for the Informal European Council, 11 February 2010

12. Share of population aged 25-34 with tertiary education
Broadening access to tertiary education 37
Share of population aged with tertiary education
Today in the EU, less than one person in three aged has completed a university degree, compared to more than 50% in Japan and 40% in the US.
Background Information for the Informal European Council, 11 February 2010

13. Share in the top institutions of the 2009 Shangai list
Taking up the global fight for knowledge 38
Share in the top institutions of the 2009 Shangai list
While the EU has 40% of the universities in the top 500 of the Shanghai ranking, the top end is clearly dominated by the US (17 of the top 20 institutions are located in the US).
Background Information for the Informal European Council, 11 February 2010

14. At-risk-of-poverty rates by groups in the EU, 2005-2008
Combating risks of poverty 41
At-risk-of-poverty rates by groups in the EU,
Almost 80 million Europeans (17%) were at risk of poverty before the crisis. 19 million of these are children. 8% of people in work don’t earn enough to escape from it. Women, the young, the elderly, people on precarious contracts and migrants are especially exposed.
Background Information for the Informal European Council, 11 February 2010

15. Tackling early school-leaving42
Share of population aged with at most lower secondary education and not in further education or training
Today, one in seven young people (18-24) leave school early (6 million dropouts in EU 27). The rates are declining too slowly, and several Member States are lagging behind.
Background Information for the Informal European Council, 11 February 2010

16. Share of pupils with poor reading competences
The PISA survey rang the alarm bell 44
Share of pupils with poor reading competences
One in four 15 year-old has poor reading competences. The EU average is declining. Migrant populations succeed better in Canada and Australia.
Background Information for the Informal European Council, 11 February 2010

17. Investing in human capital pays off46
If, over the next 20 years, student performance in each country would improve to reach the level achieved by Finland today…
… the effect on GDP by 2090 (the lifetime of the generation born in 2010) will be:
+ 606% for the OECD,
and between
+ 177% (NL) and
+ 1073% (EL) for EU countries
Source: OECD 2010 “The High Costs of Low Educational Performance: The long-run economic impact of improving PISA outcomes”.
Background Information for the Informal European Council, 11 February 2010

18. Employment in EU eco-industry (thousands)
Green growth creates new jobs 55
Employment in EU eco-industry (thousands)
Jobs in the eco-industry have increased by 7% every year on average since 2000 to reach 3.4 million. Achieving the 2020 renewable target could deliver 2.8 million jobs in the renewable energy sector in total.
Background Information for the Informal European Council, 11 February 2010

19. Global vehicle park – number of vehicles
The case of automotive production 61
Global vehicle park – number of vehicles
Given GDP and population growth across the world, the global vehicle park will increase from the current 800 million vehicles to about 2 billion by How many of these will be «green» and produced by European firms?
Background Information for the Informal European Council, 11 February 2010

20. Europe 2020: EU after the crisis (i)
Europe’s structural weaknesses have been exposed: lower growth potential, productivity gap, high and rising unemployment, ageing, limited fiscal room
Global challenges intensify: competition from developed and emerging economies, global finance, climate change and pressure on resources
President Barroso
“ The crisis is a wake-up call ... ‘business as usual’ would consign us to a gradual decline”
(Communication, 3 March 2010)

21. Europe 2020: EU after the crisis (ii)
Europe needs to be back on track : our short term priority is a successful exit from the crisis
Whilst taking a long-term vision: where Europe should be in 2020 – no time to waste to face challenges
Therefore, a new strategy “Europe 2020” to return to growth, but not same – unsustainable – growth, rather:
‘smart’, sustainable and inclusive growth
translating into high employment and social & territorial cohesion 21

22. Europe 2020: delivering reforms
3 thematic priorities
5 EU headline targets – translated into national ones
7 flagship initiatives – EU & national action
Mobilising existing EU instruments:
Single market
External dimension
SGP
EU and national Budgets & new financing instruments 22

23. Europe 2020: 3 interlinked priorities
1.) Smart growth: developing an economy based on knowledge and innovation
2.) Sustainable growth: promoting a more efficient, greener and more competitive economy
3.) Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion 23

24. Europe 2020: 5 EU headline targets (translated into national targets)
By 2020:
75 % employment rate (% of population aged years)
3% investment in R&D (% of EU’s GDP)
“20/20/20” climate/energy targets met (incl. 30% emissions reduction if conditions are right)
< 10% early school leavers & min. 40% hold tertiary degree
20 million less people should be at risk of poverty

25. Europe 2020: 7 flagship initiatives underpin the targets
Smart Growth
Sustainable Growth
Inclusive Growth
Innovation
« Innovation Union »
Climate, energy and mobility
« Resource efficient Europe »
Employment and skills
« An agenda for new skills and jobs »
Education
« Youth on the move »
Competitiveness
« An industrial policy for the globalisation era »
Fighting poverty
« European platform against poverty »
Digital society
« A digital agenda for Europe »

26. Europe 2020: new governance
Lead role for the European Council
Extend partnership to regions, social partners & civil society
COM and European Council monitoring ...
1.) Thematic - combining priorities and headline targets
2.) Country - Member States strategies to meet targets
… based on international comparison
Country-specific recommendations & policy warnings
Simultaneous reporting under Europe 2020 and SGP – but keeping instruments separate & maintaining integrity of SGP

27. Where do we go from here?
Commission launched wide public consultation:
1400 contributions received and analysed: ec.europa.eu/eu2020
March 3rd 2010: Commission proposal (COM(2010)2020)
Spring European Council ( ): endorse overall approach, EU headline targets and “governance”
June European Council 2010: approve detailed parameters, including the integrated guidelines and national targets
Thereafter: launch of flagship initiatives & implementation 27

28. Europe 2020 Strategy

29. Lessons from Lisbon Strategy
Strong convergence on direction of reforms ...
- Concrete results before crisis
- Partnership EU & Member States
- « Lisbonisation » of structural funds
... but a delivery gap has built up:
- Uneven progress between Member States
- Key targets (R&D, employment) not reached
- Lack of ownership; weak communication
- Regions not sufficiently involved
- Too EU-inward looking
→ UPDATE VISION TO POST-CRISIS WORLD &
IMPROVE DELIVERY 29