In 2010, Europe faced a choice

Transcription

1 Europe 2020 Ruth Paserman DG Enterprise and Industry Head of Unit Europe 2020 and National Competitiveness Policies Alpeuregio summer school June 2013

2 In 2010, Europe faced a choice : a decade of sluggish growth? Output level Pre-crisis growth path «Strong recovery»: a full return to earlier growth path and a capacity to go beyond «Sluggish recovery»: a permanent loss in wealth and stagnation on a lower growth path «Lost decade»: a permanent loss in wealth and an eroded potential for future growth years Source: presentation of President Barroso to the informal European Council of February 2010, launching Europe

3 Economic context Economic situation has continued to deteriorate in early 2013, albeit at a decreasing pace and the social consequences are being severely felt Unemployment is reaching new heights and the risks of poverty and social exclusion are rising The challenge is to sustain improvements in financial markets and to restore confidence, whilst also carrying out structural reforms for the medium-term Decisive policy measures have already been taken, but it will be crucial to maintain the pace of reforms, recognising the specific needs of each Member State Real GDP, EU Source: Commission Services q-o-q% index, 2007= GDP growth rate (lhs) GDP (quarterly), index (rhs) GDP (annual), index (rhs) forecast Figures above horizontal bars are annual growth rates. Employment growth and unemploym Source: Commission Services % % of the labour force forecast Employment (q-o-q%, lhs), forecast (y-o-y%, lhs) Unemployment rate (rhs), forecast (rhs) Forecast figures are annual data

4 Tackling the «vicious circles» affecting Europe Europe 2020 Macro-imbalances procedure Euro Plus Pact Low competitiveness Higher taxes Low tax revenue Low productivity Low growth Low demand Limited access to finance Government debts Private and financial sector indebtedness Bank guarantees and recapitalisation Stability and Growth Pact Financial firewalls Treaty on on stability, coordination and governance Lower values of bonds EU supervisory framework Macro-imbalances procedure 3

5 Deficits are declining but decisive steps are needed Government deficit in % of GDP EU 27 Euro area Forecast* * Commission 2013 Spring Forecast. This forecast is based on a «no-policychange scenario» and does not reflect announcements made since its publication. Source: European Commission 4

6 There is a rebalancing of external positions Current account balance as a % of GDP Surplus countries Deficit countries *Commission 2013 Spring Forecast Source: European Commission 5

7 Cost trajectories have been very diverse Real effective exchange rates* vis-à-vis the other Euro Area Member States (average 1999 = 100) Relative loss in competitiveness Relative gain in competitiveness *This indicator measures changes in cost competitiveness relative to other countries EE and SK missing due to high values: 154 and 173 respectively in Source: European Commission 6

8 Why a European strategy? The crisis showed that our economies are closely inter-linked If we want to counter the crisis and weigh globally, we must act in a more coordinated way In addition, the crisis in Greece has more than ever underlined the interdependences in the eurozone area Only the EU gives us the critical mass to have impact: Activate all policy areas and levers in an integrated way Exchange of best practices 7

9 The Europe 2020 Strategy 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 8

10 EU targets agreed for 2020 Proposed by the Commission and agreed by the European Council in March 2010: all Member States were invited to set national targets on this basis. EMPLOYMENT INNOVATION 75% of the population aged should be employed 3% of the EU's GDP should be invested in R&D CLIMATE / ENERGY A reduction of greenhouse gas emissions by 20% A share of renewable energies up to 20% An increase in energy efficiency by 20% EDUCATION The share of early school leavers should be under 10% At least 40% of the younger generation should have a degree or diploma POVERTY Lifting at least 20 million people out of poverty 9

11 Europe 2020: the EU s growth strategy Strengthened EU economic governance Macro-economic & fiscal surveillance Regulation of financial services Targets and guidance for structural reforms Flagships for smart, sustainable and inclusive growth Digital Agenda Youth on the Move Innovation Union New Industrial Policy New Skills and new Jobs Platform against Poverty Resource Efficiency Modernised EU levers for growth and jobs Single Market Act Trade and external policies Structural Funds and future EU budget 10

12 Current economic governance framework More effective prevention of gross policy errors -Focus on structural balances -Expenditure benchmark Sound fiscal policy Better enforcement Of SGP rules -Sanctions -Two-pack: ex ante submission of draft budgets, monitoring -National layer: Directive on fiscal frameworks, Fiscal Compact Focus on debt developments Debt reduction benchmark Prevention and correction of macro imbalances 6-pack; MIP procedure and sanctions Balanced growth Crisis resolution instruments -EFSM/EFSF: temporary -ESM permanent -OMT More effective supervision and regulation of the financial system ESAs ESRB CRD IV Banking Union: SSM; direct recaps by ESM European Semester for economic policy coordination Structural reform strategy (Europe 2020) Growth Compact (EIB, Structural funds, Projects bonds) 11

13 Integrated country surveillance SGP: fiscal policy Competitiveness and Competitiveness imbalances and imbalances Structural reforms to raise growth potential Budgetary balances Public debt Long-term sustainability of public finances Budgetary rules and institutions Elements of quality of public finance Wages and price Wages competitiveness and price competitiveness External imbalances External imbalances Internal imbalances Internal (housing, credit) imbalances (housing, credit) Labour market reforms Product market reforms Reforms of social protection systems 12 12

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15 The 2013 AGS priorities 14

16 EU recommendations for national action in 2013/14 Public finances Financial sector Structural reforms Employment and social policies AT BE BG CZ DE DK EE ES FI FR HU IT LT LU LV MT NL PL RO SE SI SK UK Sound public finances Pension and healthcare systems Fiscal framew ork Taxation Banking and access to finance Housing market Netw ork industries Competition in service sector Public administration and smart regulation R&D and innovation Resource efficiency Labour market participation Active labour market policy Wage setting mechanisms Labour market segmentation Education Poverty and social inclusion For Cyprus, Ireland, Greece and Portugal the only recommendation is to implement commitments under EU/IMF financial assistance programmes. 15

17 Implementation Implementation of reforms is a shared responsibility: EU level National level Regional and local levels Social partners and civil society Regional and local administrations are often heavily involved with implementation, often playing a key role In labour market reforms and wider social policies the social partners have a key role to play The Commission consulted with social partners prior to the adoption of the AGS and encourages Member States and the Economic and Social Committee to continue this dialogue 16

18 Gaps in the EMU architecture exposed by the crisis Excessive risk-accumulation in quiet/good times in both the public and private sectors Failing market discipline Insufficent monitoring and enforcement tools Need to improve risk prevention Risks of financial instability within the single currency : Contagion between fragile sovereigns Feedback loops between weak fiscal and financial sectors Financial fragmentation across the euro area, even threatening the integrity of the euro area Need to improve crisis resolution 17 17

19 Towards a genuine EMU Stage 1 Completed end Stage 2 Start 2013 completed 2014 Stage 3 Post 2014 Objectives Integrated financial framework Ensuring fiscal sustainability; breaking link between banks and sovereigns SSM and Single Rulebook Completing integrated financial framework; promoting sound structural policies Harmonised national Single Resolution Mechanism resolution and deposit (SRM) with backstops guarantee frameworks ESM bank recapitalisation Establishing EMU country-specific shock absorption function Integrated budgetary framework Six pack, Two pack, TSCG Financial incentives linked to Country-specific contractual arrangements shock absorption Integrated economic framework Contractual arrangements integrated in European Semester Political accountability Framework for ex-ante coordination of economic policy reforms Commensurate process on democratic legitimacy and accountability 18

20 Europe 2020 targets

21 Are we likely to meet our targets for 2020? EMPLOYMENT 75% of the population aged should be employed INNOVATION 3% of the EU's GDP should be invested in R&D CLIMATE / ENERGY A reduction of CO2 emissions by 20% A share of renewable energies up to 20% 20% energy efficiency (EU primary and final energy consumption of 1474 and 1078 Mtoe in 2020, resp.)? EDUCATION The share of early school leavers should be under 10% At least 40% of the younger generation should have a degree or diploma POVERTY 20 million fewer people should be at risk of poverty 20

22 Smart, sustainable and inclusive growth i) 75% of the population aged should be employed 21

23 Progress with employment rates is stalling EU employment rate: past trends and scenario for 2020 (share of people employed in the age group) On the basis of current commitments, the Europe 2020 target of a 75% employment rate will not be met. The EU would need around 20 million new jobs to meet its target. * Estimated values based on Commission 2013 Spring Forecast for , assuming an employment growth to the levels of 2014, taking into account a 1.2% reduction of the active population during the decade ** No target set by the UK: the projection for the EU assumes 75% for the UK in 2020 Source: European Commission 22

24 Employment performances vary markedly Employment rates in the EU (share of people employed in the age group) * No target set for UK. For SE the target is well above 80 %. Source: European Commission 23

25 Smart, sustainable and inclusive growth ii) 3% of the EU s GDP should be invested in R&D 24

26 The EU is lagging behind its R&D target On the basis of current commitments, the Europe 2020 target willnot be met. * Scenario based on the continuation of on-going reforms and financial efforts. ** No targets set by CZ and the UK: 2020 figures were estimated by Commission services. *** The EU target includes R&D expenditure by intergovernmental research infrastructures which is not included in the R&D expenditure of the Member States. Source: European Commission 25

27 Levels of ambitions for R&D vary a lot * EL: 2007 **No targets set by CZ and the UK. For CZ: a target (of 1%) is available only for the public sector. For IE: the target is 2.5% of GNP which is estimated to be equivalent to 2.0% of GDP. For LU: the target is between 2.30% and 2.60% (2.45% was assumed). Source: European Commission 26

28 Smart, sustainable and inclusive growth iii) a reduction of CO2 emissions by 20%, a share of renewable energies up to 20%, an increase in energy efficiency by 20% 27

29 Progress towards climate/energy goals 2011 emissions: -17% Reduce greenhouse gas levels by 20% Target: -20% Increase share of renewables to 20% Reduce energy consumption by 20% Current trend to % ~16-20% Current trend to %? 28

30 Greenhouse gas emissions are being reduced Total greenhouse gas emissions from 1990 until 2011 and annual targets -17% -20% The EU is well on track for meeting its 2020 greenhouse gas emission reduction target of -20% In ktco2-eq for EU 27, scope of the climate and energy package Source: European Commission 29

31 But not all countries make sufficient effort Current projections show that EU would meet its 2020 target. However, for 13 Member States, the existing policies would not be sufficient to reach their national target Note:Non-ETS emissions only. Negative and positive values indicate, respectively overdelivery and shortfall compared to target. Gap basedon the most recent submission by Member States. No historic or projected non-ets emissions available for Croatia. 30 Source: EEA

32 The share of renewables is increasing Renewable energy share trajectories ( ) The EU is currently on track to reach the 2020 targets, however, as the trajectory grows steeper towards the end, more efforts will be needed from Member States in order to reach the 2020 targets * Commission projections based on Green-X model Source: European Commission 31

33 All countries are contributing Share of renewable energy (% of total energy use) 2011 performance 2020 national target % EU target 2011 figures indicate that the EU as a whole is on its trajectory towards the 2020 targets with a renewable energy share of 13%. All but six Member States (BE, FR, LV, MT, NL and UK) already reached their 2011/2012 interim targets set in the Directive. Source: European Commission 32

34 More encouraging trends for the EU's energy efficiency target Trends in primary energy consumption compared to EU target in 2020 (1474 Mtoe) Encouraging recent developments - more results in Commission's '2014 report' on the progress towards the EU target (due June 2014) * Gross inland consumption minus non-energy uses 33 Source: European Commission

35 Smart, sustainable and inclusive growth iv) the share of early school leavers should be under 10% and at least 40% of the younger generation should have a degree or diploma 34

36 One in seven young leaves school early Share of early school leavers* Past performance If national targets are met EU target % On the basis of current commitments (national targets), the Europe 2020 target will be missed by approx. 0.5 %. * Proportion of the population aged with only lower secondary education or less and no longer in education or training. Source: European Commission 35

37 There are big differences between countries Share of early school leavers* Performance in 2012 National target for 2020 EU target * aged Source: European Commission 36

38 Tertiary Attainment: National targets will not suffice to deliver Share of young people with tertiary attainment* Past performance If national targets are met EU target % Positive trend, but based on the basis of current commitments, the Europe 2020 target will not be met. * aged Source: European Commission 37

39 Starting points are very different Share of young people with tertiary attainment* Performance in 2012 National target for 2020 EU target The definition of the national target for AT, DE, FI and FR is different from the one used for the EU target. The UK has set no national target. * aged Source: European Commission 38

40 Smart, sustainable and inclusive growth v) 20 million fewer people should be at risk of poverty 39

41 120 million -or 24.2% -of Europeans were living at risk of poverty or social exclusion in 2011 Population at risk of poverty or social exclusion, 2011 EU goal by 2020 Jobless households 38 Mio At risk of poverty 84 Mio «To reduce the number of people at risk of poverty and social exclusion by 20 million» Severely materially deprived 43 Mio Source: European Commission 40

42 The situation is very different across Member States People living in poverty or social exclusion (in %) Population at risk of poverty or social exlusion* in target** * People at risk of poverty or social exclusion are at least in one of the following three conditions: living with less than 60% of the national median income ( at-risk-of-poverty threshold), severely material deprivation or living in a jobless household. ** Some Member States have no marked national 2020 target on this graph because they have chosen to use a different monitoring indicator which does not directly translate into a comparable indicator at EU level. Source: European Commission 41

43 Business environment & quality of public administration

44 The quality of public administration matters Global Government effectiveness ranking* (2011) Efficient governments are key to create competitive business environments, stimulate growth and innovation. Moreover, well-performing administrations are essential to ensure that citizens and businesses can benefit fully from the advantages of EU membership. * Government effectiveness captures perceptions of the quality of the public service, its degree of independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government s commitment to such policies Source: World Bank Governance Indicators

45 Reducing red tape is a priority (1) Time to start a business (2012, calendar days) In 2012, it took 5.4 days to start a business in Europe, at a cost of 372, on average. By end 2012, time and cost should have been reduced to 3 days and less than 100. Source: European Commission 44

46 Reducing red tape is a priority (2) Average payment duration of bills by public administrations to business, including delays (2013, number of days) Late payments, including delays, are a major obstacle for firms to manage cash flows. Payments take several months in some countries, and large differences exist across the EU. The Late Payments Directive will help to tackle this problem. Source: European Payment Index

47 Slow licensing delays business start-ups Time to get a license* (2010, average time in days) Licensing procedures can be particularly slow and burdensome. On the average they take 67 days, with Spain, Malta and Cyprus faring particularly badly. *Indicator based on aggregated data on licences required to open five different activities (manufacture of steel products, manufacture of small IT devices, a hotel with a restaurant, a plumbing company, wholesale distribution and retail distribution Source: Study on Business dynamics: Start-ups, business transfers and bankruptcy (2010) 46

48 E-government could become the norm for citizens Electronic interaction by citizens with public authorities* (2012) The use of e-government services is increasing across the EU, but very large differences persist. There is ample scope for improvements in many countries. *Citizens concerned are those aged between 25 and 54 Source: European Commission 47

49 Firms would also benefit from e-government Electronic interaction by small enterprises with public authorities (2012) Low levels of usage by enterprises very often suggest that services should be more adapted to the needs of companies. Source: European Commission 48

50 Corruption costs 1% of EU annual GDP on average Irregular payments and bribes* ( survey among firms, ranging from 1 = very common to 7 = never occurs) Survey among firms shows that the frequency of irregular payments differs substantially among Member States. This is a particular issue for some countries. * The indicator is based on the weighted average score across five components of an Executive Opinion Source: World Economic Forum, Global Competitiveness Report