The Lisbon Strategy [print sheet]
Last updated: 14/08/08

The Lisbon strategy (sometimes called the Lisbon agenda) is a development plan to improve the economy of the EU and to push forward the creation of the single market between 2000 and 2010. It sets out a bold vision of creating 'the most competitive and dynamic knowledge-based economy' in the world. It promises to create more and better jobs and to improve European society. Although there has been a great deal of support for the ideas behind the Lisbon strategy, member states have been very slow to implement the difficult changes that it requires. In 2005 this led to a reworking of the plan to make its goals less ambitious.

The Lisbon strategy was decided at the Lisbon European Council on 22-23 March 2000 by all the European Heads of Government. However, in subsequent years, an economic downturn in many parts of the EU meant politicians did not follow the timetable set down at Lisbon. As a result, the EU launched an enquiry by former Dutch Prime Minster Wim Kok into why the Lisbon strategy was not more successful. The report, released in 2004, blamed member states for not doing enough to bring about difficult changes and recommended making the strategy simpler in order to focus on the economy in particular. Another blow was delivered to the Lisbon strategy in 2005 when the European Council rejected the Services Directive which would have made competition easier in the service sector. A revised version of the Directive was later adopted in 2006.

The original Lisbon strategy had several key aims. It set out to create an information society that would be based on strong research and development skills, setting a target that all member states should aim to spend 3% of GDP on research by 2010. It also called for more fundamental reforms of the economies of member states to help them prepare for new economic challenges resulting from new technology. In particular, it aimed to deregulate the single market for services, a sector in which about 70% of Europeans are employed. It also said that the European Social Model needed to be modernised and it set the goal of 70% employment across the EU.

The Kok Report reduced the ambition of many of these targets. In particular it dropped the aim of creating the most competitive economy in the world by 2010. Instead, focus was placed upon tackling the failure of member states to reform their own economies: the report called upon each member to draw up three year plans showing how they would meet the Lisbon goals. Every three years members have to report on the progress they have made. Although member states have all agreed to the Lisbon strategy, it is 1.6 legally binding, so it is difficult for the EU to make members change and there have been recent calls for the Lisbon strategy to be updated.

• EU productivity for every hour worked is very similar to that in the USA. However, total economic growth in the eurozone was only 1.6% in 2005, compared with 3.6% in the USA.

For

• The Lisbon strategy is important to improve economic growth in the EU and complete the single market - both aims central to the original European project.
• European productivity needs a boost to get ahead of competitors like the USA.

Against

• The new Lisbon strategy does not have sufficient power to force change to happen.
• The Lisbon strategy treats all EU countries' economies as the same regardless of how they now operate.
• By promoting free market reforms, the Lisbon strategy challenges the EU's traditional social model.

‘'If you consider that the EU has been growing at a snail's pace over the past number of years, then it's obvious that we must do something pretty dramatic to create economic activity…' - Charlie McCreevy, EU Internal Market Commissioner, 2004-2009

'I draw up a budget worth 1.24% of GDP, centring on research and development, and [member states] criticize me…then they cannot complain if European research workers go off to the US...' - Romano Prodi, EU Commission President, 1999-2004

'Lisbon has been blown off course by… economic conditions, international uncertainty, slow progress in the member states and a gradual loss of political focus.' - José Manuel Barosso, EU Commission President, 2004-2009