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Last Updated: Tuesday, 22 March 2005, 11:49 GMT
EU seeks solutions to slow growth
By John Moylan
BBC News business reporter in Brussels

Workers from across Europe protesting in Brussels about the EU's poor record on job creation
Unemployment levels are too high for comfort in many EU countries

The Spring Council of the European Union has a unique role in the EU calendar.

Its function is to focus attention on Europe's economic health.

But as EU leaders gather in Brussels on Tuesday, many know that this newly expanded economic region is far from well.

Growth in the eurozone is forecast to be just 1.6% this year compared with 3.6% in the United States. Unemployment is stubbornly high too, hitting 10% in France and Germany.

Lisbon RIP?

What is needed is a grand plan to rejuvenate the EU's economy. The problem is there already is one, but so far it hasn't worked.

The Lisbon Agenda was born in the heady days of the stock market boom in 2000.

As hi-tech shares soared, EU leaders meeting in Lisbon committed themselves to making Europe the world's most competitive region by 2010, even overtaking the US.

Five years on, it is clear that the Lisbon Agenda has not worked.

In truth, it never got off the ground. Few countries matched fine words with actions. But could that be about to change?

Optimism

If there is optimism it is because one major economic row has already been resolved.

European Commission President Jose Manuel Barroso
Jose Manuel Barroso faces a tough task to transform the EU economy

On Sunday, finance ministers finally agreed on changes to the EU's Stability and Growth Pact, the rules which underpin the euro.

These rules force governments to maintain budget discipline by limiting debt and spending.

But for the past three years they have been flouted by countries including France and Germany. They argued the rules were too strict and held back economic growth

Ministers have now agreed to keep the core rules intact while giving countries numerous loopholes. EU leaders are expected to sign off the new pact during the meeting.

Troubled directive

But a new row - over a plan to open up the EU market for services - could yet mar this meeting.

Supporters say the services directive could create 600,000 new jobs.

But it has prompted fierce opposition by some unions which fear it could lead to lower standards for workers.

Yet, the main aim of the next two days is to re-launch the Lisbon Agenda.

EU leaders will consider a more focused approach emphasising job creation and growth.

Workable plans

Member states will be asked to publish three-year action plans for economic reform. The original lofty ambitions will be replaced by a more workable scheme.

The man charged with ensuring that the actions of Europe's leaders do speak louder than their words is the European Commission President Jose Manuel Barroso.

A supporter of the Lisbon Agenda, he has put growth, competitiveness and job creation at the heart of his five-year tenure.

This meeting will be a test of whether he can persuade EU leaders to embrace economic reform and ultimately return the EU economy to health.




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