NEW CHALLENGES FOR THE LISBON STRATEGY POST2010 Crisis, climate, governance

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NEW CHALLENGES FOR THE LISBON STRATEGY POST-2010
Crisis, climate, governance?

• Iain Begg
• European Institute, LSE

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PHASED RESPONSES

• Fighting the fires in the financial sector
• Now largely achieved?
• Or are new fires breaking out in CEE?
• Macroeconomic stimulus packages
• In progress, but still to have much impact
• Longer-term reforms to prevent recurrence
• Will need hard choices in redefining capitalism

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WHAT THE CRISIS CHANGES

• A reversal of employment growth
• Rising unemployment (lagged reaction)
• Adverse effect on human capital stock
• Risk of aggravating social exclusion
• Huge pressures on public finances
• Questioning of pro-market philosophy
• Especially, but not only, for financial services
• Return of the state as key actor
• Temporary or lasting?
• gtgt Is the Barroso era model still valid?
• Issues for Lisbon strategy, economic governance

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THE EUS ROLE IN THE CRISIS ITS LIMITATIONS
EXPOSED

• ECB has generally been applauded
• Largely irrelevant EU budget
• Review debate sidelined and stalled
• The weak institutional basis
• Power remains with Member States
• The Commissions inability to lead
• Uncertainty about structural policy agenda
• Pointless spats about state aids
• Mega-strategies seen as tangential
• Lisbon, sustainable development even energy

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STATING THE OBVIOUS

• Failings evident in macroeconomic policy
• Monetary policy neglected financial stability
• Imbalances too readily overlooked
• Macro-prudential supervision inadequate
• Aggregate output
• Employment x productivity
• Both must feature in structural policy response
• EU growth and jobs
• Sum of Member States
• Hence co-ordination matters
• Lisbon strategy fundamentally about co-ordination

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One for all and all for one
The dilemmas of policy coordination
but with who playing DArtagnan?
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AREAS FOR REFORM

• Clarifying rationale for Lisbon strategy
• An evolving policy agenda since 2000
• The knowledge economy mantra social aims
• The 2005 focus on responding to globalisation
• Key is having a convincing narrative
• Should it be a low carbon paradigm post 2010?
• Or, one orientated to recovery from crisis?
• gtgt OR BOTH AT ONCE?
• Improving the content procedures
• Plus better coherence across policy domains

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A LOW CARBON ECONOMY?

• Scientific case increasingly accepted
• Debate therefore shifts to how?
• The 20-20-20 energy policy as a start
• But still far from the required reductions
• We WILL need to move to 50-50-50
• Green seen as luxury in period of crisis
• Key challenge of reconciling winners losers
• Formulating and funding policy responses
• The many dimensions of burden-sharing

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RECOVERING FROM CRISISLong-term sustainability
orientations

• Education boosting human capital
• Infrastructure investment
• To bolster industrial productivity
• But could also cover energy productivity
• Diminishing EU energy dependency
• The productive role of social protection
• Labour transitions preserving human capital
• Strategic answer an investment strategy
• Targeting quality of growth, not just its rate
• Implies redefining Lisbons core aims

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SCENARIOS FOR THE BUDAPEST STRATEGY
DOUBLE DIVIDEND
Immediate focus on new sectors green economy
ageing related
BUSINESS AS USUAL
Continued stress on innovation
Search for new economy growth
ENSURING RECOVERY
Emphasis on job preservation
2020
2011
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QUESTIONS TO DISCUSS

• How to promote a new economic paradigm
• Implies a significant re-orientation of
  governance
• The EUs responsibility to show the way
• Achieving greater coherence in policy tools
• Needs budget and Lisbon to work in tandem
• Is there a need for an EU M/Mme Lisbon?
• Or is one Jean-Claude enough ??
• Should the recovery be the only priority?
• Fleshing out a double dividend approach
• Green jobs and output
• Social responses that preserve human capital
• Who will provide real leadership

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