SPEECH/06/49
Danuta Hübner
Member of the European Commission responsible for Regional Policy “Europe in Schleswig-Holstein: how the EU impacts on the development of Member States”
Conference: Europa in Schleswig-Holstein; Industrie – und Handelskammer zu Flensburg Flensburg, 31 January 2006
Ladies and gentlemen,
There are many challenges we Europeans face today. Some of them come from the world around us, to many of them Europe itself contributes, some are Europe-specific. I am thinking here of the dramatic increase of global interdependence, of emerging new economic powers challenging our competitiveness, but also of the not-so-well understood long term consequences of ageing of Europe’s population.
The history of European integration clearly demonstrates that subsequent enlargements of the Union have been adding to its potential, have been making the Union more powerful, both economically and politically. But with regard to the recent, 2004 enlargement, my feeling is that the EU has not yet entirely digested it. We seem to be unable to fully exploit opportunities brought out by this enlargement and this contributes to divisions between the old and the new Member States. These sentiments are reinforced by the debate on the efficiency of different socio-economic models, triggered in the context of the negotiations on the next financial perspectives. These issues will continue to come to the fore.
There is no doubt therefore that 2006 will be another important year for the future of the Union. The EU will have to take final decisions on further enlargement (Bulgaria, Romania) as well as focus on the Balkans (Macedonia, Kosovo). Legislative screening will continue for Turkey and Croatia.
The Constitutional Treaty is unlikely to be revived in 2006. However, the debate on the future of Europe will receive a strong impulse from the June Summit and, hopefully, will create the context that will allow the Union to progress with its work on the Constitution itself.
The decision on the next financial perspectives made by Heads of State in December 2005 allows us, the European institutions, to focus on so badly needed economic reforms.
The European Commission’s reports show an improvement in the overall economic indicators in the EU. They are still far from rosy but they are improving. This improvement of economic climate can help to reverse the rather strong trend towards defending national interests.
Due to weak domestic demand, exports seem to be a major growth vehicle. This over-reliance on exports exerts downward pressure on labour costs which impact on the labour market.
It seems highly probable that the European economy will continue to grow at a level insufficient to reduce substantially unemployment. The cycle of low growth and high unemployment can be broken only with a policy change and through parallel efforts at the national and EU level.
That is why the European Commission has made the renewed Lisbon strategy for growth and jobs the cornerstone of its work programme.
What is new in the approach of the Commission to Lisbon Strategy?
First of all we propose a co-ordinated action, based on the rational allocation of tasks between the Union and Member States, defined today as “the partnership for growth and jobs”. The lack of such a division and the malfunction of the “open co-ordination method” – based on the indicators, rankings and best practices published by the Commission and supposed to encourage Member States to implement the necessary reforms – was one of the main causes underlying the failure of the EU to achieve Lisbon objectives insofar. Now we propose that community and national actions create complementary and mutually reinforcing programmes.
At the level of Member States the major novelty is the adoption of National Reform Programmes (NRP), which define the most important objectives related to the growth and jobs agenda and methods of their implementation. These Programmes are based on the Commission’s recommendations which were adopted in April 2005. The NRPs identify priorities at the macro and micro levels and in relation to the labour market. This is necessary for the increase in the EU competitiveness.
Another important characteristic of the new approach at the Community level is the strife for the full exploitation of the synergy between those policies, for which the Commission is responsible. Up to now, they had their own hierarchy of priorities and, to large extent, functioned independently. Thus, the Commission’s recommendations and the new cycle of reporting by Member States about the progress in achieving Lisbon objectives should lead to a better co-ordination of the whole EU economic policy.
But the changes in the approach to the Lisbon strategy go beyond this. A couple of days ago the Commission adopted the Annual Progress Report, which constitutes its contribution to the EU Spring Summit, dedicated to the Lisbon agenda. The name may be misleading because the report does not contain – as it was the case up to now – only a general assessment of the progress achieved on the road to Lisbon. This time it is made up by the detailed evaluation of the National Reform Programmes, review of the macro, micro and labour market aspects of the socio-economic situation in the EU and the proposals for concrete actions, including a precise allocation of tasks between the Commission and Member States. In 2007 we shall see another important novelty – Commission’s recommendation for the economic policy of individual Member States.
For the first time in the history of EU we have now 25 national reform programmes complemented by country level policies. The national programmes show that the progress in implementing reforms, in embarking on new policies, is very uneven across Europe. However, in all those programmes there are new measures, new initiatives, many good ideas that have to be translated into practical results.
What does this mean for businesses?
An example of the new approach to the division of responsibilities between the national and community levels is a specific action dedicated to better legislation and impact assessment, laid out in Annual Progress Report. Member States are obliged, until the end of 2007, to put into practice a methodology allowing for the evaluation of administrative costs due to the implementation of the national law. Simultaneously, a similar task will be undertaken by the Commission with respect to the Community legislation, with particular emphasis on Small and Medium Enterprises.
Speaking in more general terms, the Annual Progress Report spells out the need for better synergy in a number of areas which are important to business, like the need to strengthen the links between research, innovation and growth, of particular importance for SMEs. This is the agenda which has obvious relevance to a wide range of EU policies and financing instruments.
In the Report, and in line with hitherto Council’s decision, the Commission decided to harness all its policies for the common jobs and growth agenda. The reformed EU regional policy is defined by the Report as a main EU financial lever impacting – in line with the objectives set out in National Reform Programmes – many of the key drivers of growth, innovation and entrepreneurship, such as research, business, risk capital and skilled workers.
What can EU regional policy do for Schleswig-Holstein?
First of all, I would like to underline that the financial compromise reached at the European Council in December 2005 clearly falls short of the Commission’s ambitions for Europe. Yet, it has created a positive momentum in the process. An agreement with Parliament is now needed to finalize the deal. Substantive negotiations between the Council, EP and Commission are expected to start in early February in view of coming to an agreement by the end of April.
On the basis of the financial agreement reached in December, Germany’s allocation under the Structural Funds will be significant.
Schleswig-Holstein will receive EU funds both under Competitiveness objective and Cooperation objective. The concrete share for Schleswig-Holstein will be decided by the Bund and the Länder in partnership with the Commission.
Interventions co-financed by the Structural Funds will have to be concentrated on a limited number of priorities in line with the Lisbon agenda for jobs and growth. In fact, the bulk of investments (75% of the total allocated to German Objective 2 programmes) should be spent on Lisbon-type projects in the period 2007-2013. With a view to creating sustainable growth and jobs, I believe that Schleswig-Holstein should channel more funds towards innovation and related areas in the forthcoming programming period. Clearly, Schleswig-Holstein has potential and can build on its existing resources, including research and innovation capacities. The University of Lübeck and the University of Applied Sciences in Kiel are just two examples of those capacities.
Renewable energy is an asset which is likely to become even more valuable as oil prices are expected to remain at their current high levels. Structural Funds can help improving the competitiveness of maritime and environment related activities. Indeed, this can be achieved by supporting research, innovation, and information technologies. Building clusters would be another important element which associate businesses, in particular SMEs, and research centres.
I am sure you will exploit these potentials in the next programming period.
Of course, public money will rarely suffice to achieve all of those goals. That is why I have also been taking steps to raise awareness concerning the importance of private sector involvement. We have designed instruments to provide programme authorities with technical help on preparing public-private initiatives.
Improving access to finance for micro, small and medium enterprises is crucial for growth and jobs in the EU and its regions. For Schleswig-Holstein, I am sure you will find the JEREMIE initiative interesting in this respect. JEREMIE stands for “Joint European Resources for Micro to Medium Enterprises”. it is a joint initiative of the Commission and the European Investment Fund which aims to improve the supply of micro credit, venture capital, loan guarantees and other forms of innovative financing. It is aimed especially at micro to medium-sized enterprises.
We will start this year with evaluating where demand for financial services has not been met in the regions. Our aim is to identify and propose the areas where JEREMIE can add most value. These evaluations will be carried out by the EIF, in cooperation with the Commission and the regions.
I invite you to work closely with the EIF and my services in the Commission in order to produce a good quality evaluation. This will be the basis for an action plan to improve access to finance in your region. Based on such a valuable preparation, we will be able to programme and implement successfully a JEREMIE type of action in Schleswig-Holstein for the period 2007-2013.
Another crucial issue in our efforts to launch new generation of regional policy is timing.
In fact, we cannot prepare our next joint programme in Schleswig-Holstein until the financial framework and the regulations are finally agreed and adopted. We need to press on with the detailed arrangements for 2007-2013 if we want to avoid delays in implementation. This means designing and agreeing the programme, nominating the partnerships who will run them, deciding which key investments should be co-funded by the region, the Member State and the Commission, and getting started on project design.
My impression is that Schleswig-Holstein is on a good track. I was informed that the government will have a first discussion on the priorities of the programme for Schleswig-Holstein on 7 February. I have instructed my services to accompany the works very closely and I would like to ask you to contribute to the preparation and implementation of our joint programme.
Ladies and gentlemen,
Lisbon is about making Europe an attractive place to live and work – it means better regulation, improved education and training, increased investment in research and development and more competition. It means making our economies more adaptable to the continuous process of technological and other changes they face. It means creating job opportunities and helping individuals to seize these opportunities. All of this requires a partnership between European, national, regional and local levels – a partnership in support of economic reforms and growth-enhancing investments.
Of course, the challenge will be in the implementation. But I am sure that with your support we can master the challenges ahead of us.
Thank you very much for your attention
