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The following is the Executive summary of the OECD assessment and recommendations, taken from the Economic Survey of the European Union, published on 21 September 2009.
The European Union is facing severe challenges from the financial crisis and the worst global recession in the past fifty years. The Community has responded to the crisis proactively, consistent with the broad framework for policy actions provided by the European Economic Recovery Plan. Actions have been taken to stabilise financial markets and support the economy. An ambitious agenda for financial services reform is underway to improve macro– and micro–prudential regulation and supervision, and the ECB has cut its policy rate significantly.
It is essential that policy actions to support economic activity during the crisis do not imperil the prospects for recovery or endanger the single market and, where necessary, some measures must be withdrawn once the economy recovers. Fiscal measures should ideally offer dual benefits; mitigating the impact of the recession on output and jobs as well as providing longer term benefits. Structural reforms must be accelerated in the years ahead to help prevent future financial crises, enhance resilience to adverse economic shocks and improve both longer term growth prospects and the long–term sustainability of the public finances.
Strengthening innovation. Despite numerous policy initiatives, research and innovation in Europe still lag behind that in the United States and Japan. An integrated labour market for researchers, a Community patent and a Unified Patent Litigation System would help to stimulate innovation. Tackling obstacles to the funding of innovation and encouraging research co–operation would improve the practical use of research results and accelerate their diffusion. New measures of innovation outputs should be developed to sharpen policy design and evaluation in this area, including education.
Deepening the single market. The single market programme has already brought long–term benefits, but more can be done to enhance competitive pressures. The Services Directive needs to be implemented in a timely and effective manner and actions should be taken to ensure proper implementation of single market rules. Competition in financial services, energy markets and network industries can be raised further, and continued efforts are needed to simplify regulations and improve assessments of policy proposals.
Implementing energy policy and the transition to a low–carbon economy. Europe is taking important steps towards becoming a low–carbon economy. Policies to reduce greenhouse gas emissions, promote low–emission technologies and reduce energy consumption should focus on correcting genuine market failures and be flexible to cope with future economic and technological changes. Faster liberalisation of EU electricity and gas markets is necessary to increase competition, improve energy security, and send clearer price signals through the EU Emission Trading Scheme. Regarding external energy policy, it is important that the Union speaks with a single voice.
Further improving external access to European markets. The EU must continue to resist the rise in protectionist sentiment and continue to push for global trade liberalisation. Reductions in tariffs would send a powerful free trade message to the rest of the world and improve consumer welfare. The rules of origin in the EU’s preferential trade agreements could be further simplified and thresholds for domestic content lowered, particularly for developing countries, and it should be ensured that they are fully consistent with both the EU's trade and development goals. Recent reforms have reduced distortions in the Common Agricultural Policy. Support could be further decoupled from production and payments better targeted to achieve income support objectives and encourage the provision of public goods such as improving the rural environment.
How to obtain this publication
The complete edition of the Economic Survey of the European Union is available from:
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
For further information please contact the European Union Desk at the OECD Economics Department at email@example.com.
The OECD Secretariat’s report was prepared by Nigel Pain and Jeremy Lawson under the supervision of Peter Hoeller. Research assistance was provided by Isabelle Duong.