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Europe 2020
Ruth Paserman
DG Enterprise and Industry
Head of Unit Europe 2020 and National Competitiveness Policies
Alpeuregio summer school 2013
19 June 2013
In 2010, Europe faced a choice
2010-2020: a decade of sluggish growth?
Output level
•« Strong recovery » :
a full return to earlier growth path
and a capacity to go beyond
Pre-crisis growth path
•« 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 2020
1
Economic context
• Economic situation has continued to
deteriorate in early 2013, albeit at a
decreasing pace and the social
consequences are being severely felt
Real GDP, EU
Source: Commission Services
5
q-o-q%
4
3.2
index, 2007=100
1.4
0.3
1.6
3
-0.3
• The challenge is to sustain improvements
in financial markets and to restore
confidence, whilst also carrying out
structural reforms for the medium-term
100
2.1
2
-4.3
1
95
0
-1
• Unemployment is reaching new heights
and the risks of poverty and social
exclusion are rising
-0.1
forecast
-2
-3
90
07
08
09
10
11
12
13
14
GDP growth rate (lhs)
GDP (quarterly), index (rhs)
GDP (annual), index (rhs)
Figures above horizontal bars are annual growth rates.
Employment growth and unemploym
Commission
Services
0.6 Source:
% of the
labour force 12
%
0.4
11
0.2
10
0.0
-0.2
• 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
9
-0.4
8
-0.6
-0.8
7
forecast
-1.0
6
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Employment (q-o-q%, lhs), forecast (y-o-y%, lhs)
Unemployment rate (rhs), forecast (rhs)
Forecast figures are annual data.
2
Tackling the « vicious circles » affecting Europe
Europe 2020
Macro-imbalances procedure
Euro Plus Pact
Low competitiveness
Low productivity
Low growth
Higher
taxes
Low tax
revenue
Low
demand
Limited
access to
finance
Government
Private and
debts
financial sector
indebtedness
Bank guarantees
and recapitalisation
Stability and Growth Pact
Financial firewalls
Treaty on stability,
coordination and governance
Lower values
of bonds
EU supervisory framework
Macro-imbalances procedure
3
Deficits are declining but decisive steps are needed
Government deficit in % of GDP
Euro area
EU 27
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
-1
-2
-3
-4
-5
-6
-7
-8
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
There is a rebalancing of external positions
Current account balance as a % of GDP
Deficit countries
Surplus countries
4.0
3.0
% of GDP
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
99
00
01
02
03
04
05
Surplus
06
07
08
09
10
11
12
13*
14*
Deficit
*Commission 2013 Spring Forecast
Source: European Commission
5
Cost trajectories have been very diverse
Real effective exchange rates*
vis-à-vis the other Euro Area Member States (average 1999 = 100)
130
125
BE
ES
IT
PT
CY
DE
FR
NL
FI
SI
EL
IE
AT
MT
LU
Forecast
120
115
Relative loss in
competitiveness
110
105
100
95
Relative gain in
competitiveness
90
85
80
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
*This indicator measures changes in cost competitiveness relative to other countries
EE and SK missing due to high values: 154 and 173 respectively in 2014.
Source: European Commission
6
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
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
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
75% of the population aged 20-64 should be employed
INNOVATION
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
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
New
Industrial Policy
Youth
on the Move
New Skills
and new Jobs
Innovation
Union
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
Current economic
governance framework
More effective
prevention of gross
policy errors
Focus on debt
developments
Debt reduction benchmark
- 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
European Semester
for economic policy
coordination
Crisis resolution instruments
- EFSM/EFSF: temporary
ESM permanent
OMT
Prevention and
correction of
macro imbalances
More effective
supervision and
regulation of the
financial system
6-pack; MIP procedure
and sanctions
ESAs – ESRB – CRD IV
Banking Union: SSM; direct
recaps by ESM
Balanced
growth
Structural reform
strategy
(Europe 2020)
Growth Compact
(EIB, Structural funds,
Projects bonds)
11
Integrated country surveillance
SGP: fiscal policy
Competitiveness and
Competitiveness
imbalances and
imbalances
• Budgetary balances
• Public debt
• Long-term sustainability
of public finances
• Budgetary rules and
institutions
• Elements of quality of
public finance
• Wages and price
•competitiveness
Wages and price
competitiveness
• External imbalances
• External imbalances
• Internal imbalances
•(housing,
Internal credit)
imbalances
(housing, credit)
Structural reforms to
raise growth
potential
• Labour market
reforms
• Product market
reforms
• Reforms of social
protection systems
12
12
13
The 2013 AGS priorities
14
EU recommendations for national action in 2013/14
Public finances
Sound public
finances
Pension and
Fiscal
healthcare
framew ork
systems
Financial sector
Taxation
Banking and
access to
finance
Housing
market
Structural reforms
Netw ork
industries
Public
Competition
administration R&D and
in service
and smart
innovation
sector
regulation
Employment and social policies
Resource
efficiency
Labour
market
participation
Active
labour
market
policy
Wage setting
mechanisms
Labour
Poverty and
market
Education
social
segmentation
inclusion
AT
BE
BG
CZ
DE
DK
EE
ES
FI
FR
HU
IT
LT
LU
LV
MT
NL
PL
RO
SE
SI
SK
UK
For Cyprus, Ireland, Greece and Portugal the only recommendation is to implement
commitments under EU/IMF financial assistance programmes.
15
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
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
Towards a genuine EMU
Stage 1
Completed end 20123
Stage 2
Start 2013 –
completed 2014
Stage 3
Post 2014
Objectives
Ensuring fiscal
sustainability; breaking
link between banks and
sovereigns
Completing integrated
financial framework;
promoting sound
structural policies
Establishing EMU
country-specific
shock absorption
function
Integrated financial
framework
SSM and Single Rulebook
Harmonised national
resolution and deposit
guarantee frameworks
Single Resolution Mechanism
(SRM) with backstops
ESM bank recapitalisation
Integrated budgetary
framework
Integrated economic
framework
Six pack, Two pack, TSCG
Financial incentives linked to
contractual arrangements
Country-specific
shock absorption
Contractual arrangements integrated
in European Semester
Framework for ex-ante coordination
of economic policy reforms
Political accountability
Commensurate process on democratic legitimacy and accountability
18
Europe 2020 targets
Are we likely to meet our targets for 2020?
EMPLOYMENT
75% of the population aged 20-64 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
Smart, sustainable
and inclusive growth
i) 75% of the population aged 20-64 should be employed
21
Progress with employment rates is stalling
•EU employment rate: past trends and scenario for 2020
(share of people employed in the 20-64 age group)
75
EU target = 75%
%
if national commitments are met**
70
at current growth rate*
65
60
2000
2010
2020
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 2013-2014, 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
Employment performances vary markedly
•Employment rates in the EU
(share of people employed in the 20-64 age group)
performance in 2010
%
80
additional commitment for 2020
EU target = 75 %
75
70
65
HR
EL
ES
IT
HU
BG
MT
IE
RO
PL
SK
PT
BE
LV
SI
LT
FR
CY
LU
CZ
EE
FI
UK
DK
AT
DE
NL
55
SE
60
* No target set for UK. For SE the target is well above 80 %.
Source: European Commission 23
Smart, sustainable
and inclusive growth
ii) 3% of the EU’s GDP should be invested in R&D
24
The EU is lagging behind its R&D target
EU investment in R&D as a % of GDP in
2000, 2011 and 2020
Business as usual *
If national targets are met **
EU target ***
3.0
2.8
= 2,6%
2.6
%
2.4
= 2,2%
2.2
2.0
1.8
1.6
2000
2011
2020
On the basis of current commitments, the Europe 2020 target will not 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
Levels of ambitions for R&D vary a lot
R&D investments in the EU as a % of GDP
2011 performance *
2020 national target **
4.5
4.0
3.5
EU target
3.0
%
2.5
2.0
1.5
1.0
0.5
0.0
FI
SE DK DE
AT
SI
EE
FR
BE
NL
EU
CZ UK
IE
PT
LU
ES
IT
HU
LT
PL
HR MT
LV
SK
EL BG RO CY
* 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
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
Progress towards climate/energy 20-20-20 goals
Reduce greenhouse
gas levels by 20%
Increase share of
renewables to 20%
Reduce energy
consumption by 20%
100%
Current
trend to
2020
2011 emissions:
-17%
~16-20%
Target:
-20%
Current
trend to
2020
-20%
?
28
Greenhouse gas emissions are being reduced
•Total greenhouse gas emissions from 1990 until
2011 and 2013-2020 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
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
Gap between 2011 emissions and 2013 national targets
20%
10%
Gap between 2020 projections and 2020 national targets
0%
-10%
-20%
-30%
-40%
EU-27
MT
LU
IE
BE
ES
EL
AT
LT
DE
IT
SI
EE
LV
FI
DK
SE
FR
UK
NL
BG
RO
PL
CY
CZ
PT
HU
SK
Percentage points (% share of
2005 non-ETS emissions)
30%
Note: Non-ETS emissions only. Negative and positive values indicate, respectively overdelivery and shortfall compared to target. Gap based on
the most recent submission by Member States. No historic or projected non-ETS emissions available for Croatia.
Source: EEA
30
The share of renewables is increasing
•Renewable energy share trajectories (2010-2020)
EU Renewables to 2020
planned growth for 2020 targets (blue) Vs growth based
on existing measures only (red/dotted)
300000
250000
ktoe
200000
150000
100000
50000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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
All countries are contributing
•Share of renewable energy
(% of total energy use)
2011 performance
2020 national target
50.00
45.00
40.00
35.00
30.00
25.00
%
EU target
20.00
15.00
10.00
5.00
0.00
SE LV FI AT EE PT DK RO LT SI HR ES BG EU DE EL IT FR PL SK CZ HU IE CY NL BE UK LU MT
27
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
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
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
One in seven young leaves school early
Share of early school leavers*
Past performance
EU target
If national targets are met
≈ 10.3-10.5%
On the basis of current commitments (national targets), the Europe 2020 target will be
missed by approx. 0.5 %.
* Proportion of the population aged 18-24 with only lower secondary education or less and no longer in education or training.
Source: European Commission 35
There are big differences between countries
Share of early school leavers*
Performance in 2012
National target for 2020
30%
25%
20%
15%
10%
EU target
5%
0%
HR SI SK CZ PL LT SE AT LU NL FI DK EE DE LV CY EL HU IE FR BE BG EU UK RO IT PT MT ES
* aged 18-24
Source: European Commission 36
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
≈ 37.5-38%
Positive trend, but based on the basis of current commitments, the Europe 2020 target will
not be met.
* aged 30-34
Source: European Commission 37
Starting points are very different
Share of young people with tertiary attainment*
Performance in 2012
National target for 2020
70%
60%
ISCED 4
50%
40%
EU target
30%
20%
10%
0%
IE CY LU LT SE UK FI BE FR DE DK NL ES SI EE PL AT LV EU EL HU PT BG CZ SK HR MT RO IT
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 30-34
Source: European Commission 38
Smart, sustainable
and inclusive growth
v) 20 million fewer people should be at risk of poverty
39
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
Jobless
households
At risk of poverty
84 Mio
38 Mio
EU goal by 2020
« 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
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 2011
2020 target**
50
45
40
35
30
25
20
15
10
5
0
CZ NL SE LU AT
FI DK FR SI DE SK BE MT UK EE CY EU PT ES PL
IT
IE
EL HU HR LT RO LV BG
* 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
Business environment
& quality of public
administration
The quality of public administration matters
•Global Government effectiveness ranking*
• (2011)
100
90
80
70
60
50
40
30
20
10
0
FI
DK SE NL LU BE AT UK DE CY
IE
FR EE MT ES CZ
SI
PT SK HU LT
LI
PO HR EL
IT
BG RO
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 2011
43
Reducing red tape is a priority (1)
Time to start a business
(2012, calendar days)
20
15
10
The Small Business Act for Europe
has set the target of 3 days
to start a business by 2012
5
0
DK
IT
NL
PL
PT BE EE HU LU RO
SI
IE
BU FR
LI
LV CY EL DE UK MT
FI
AT SK CZ SE ES
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
Reducing red tape is a priority (2)
Average payment duration of bills by public
administrations to business, including delays
(2013, number of days)
Duration in days
Delays in days
180
160
140
120
100
80
The Late Payment Directive foresees
a maximum duration of 30 days
60
40
20
0
FI
EE SE DK DE LV
PL UK AT
NL CZ
IE
RO
SI
LT BG HU SK HR FR BE CY PT ES
EL
IT
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 2013
45
Slow licensing delays business start-ups
•Time to get a license*
(2010, average time in days)
120
100
80
60
40
20
0
CZ UK
IT
LV FR BE
FI
SK HU NL EE PL LU EU AT SE
SI
IE
EL DE PT DK LT RO BG CY MT ES
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
E-government could become the norm for citizens
•Electronic interaction by citizens with public authorities*
(2012)
100
90
80
70
60
50
40
30
20
10
0
DK SE FI
NL FR LU EE AT DE IE
SI BE LV ES HU EU SK MT UK PT LT EL PL CZ CY RO BG HR IT
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
Firms would also benefit from e-government
•Electronic interaction by small enterprises with public authorities
(2012)
100
90
80
70
60
50
40
30
20
10
0
LT
FI SE EE FR DK AT PT CZ SI
IE NL SK LU PL BE LV UK EL MT HR EU DE IT CY HU BG ES RO
Low levels of usage by enterprises very often suggest that services should be more adapted
to the needs of companies.
Source: European Commission 48
Corruption costs 1% of EU annual GDP on average
•Irregular payments and bribes*
•(2011-2012 survey among firms, ranging from 1 = very common to 7 = never occurs)
7
6
5
4
3
2
1
0
FI
DK LU SE NL
IE UK DE BE EE AT FR PT EU PL
SI ES CY LT MT HU LV
IT
CZ BG RO HR SK EL
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 2012-2013 49