THE LISBON STRATEGY AS POLICY CO-ORDINATION Does it promote policy learning? Iain Begg European Institute London School of Economics & Political Science

LISBON FAULT-LINES Strategic aims not really contested –But shifting priorities undermine consistency –Few demonstrate case for Community level Policy instruments have been inadequate –Problems with incentives & means –Action plan fatigue? Target proliferation? Delivery failings –Large disparities among the Member States

THE RECORD SO FAR The growth shortfall: undermines progress Confusion in: –Objectives (too many) –Responsibilities (everyone = no-one) Targets proving to be elusive Policy learning mechanisms: limited impact –Peer review (naming & shaming) but… –Bench-marking: not very visible

RATIONALE FOR CO-ORDINATION Spillover effects across economies –Mutually reinforcing policies: common interest –The example of fiscal policy Avoiding undue pressure on monetary policy etc. –Does it apply to Lisbon strategy? How? The vincolo esterno argument –Valuable where vested interests are strong Policy learning and improvement

CO-ORDINATION & LEARNING Common policy agenda  shared solutions Framework for policy-making Better policy integration Procedures & monitoring –Exchange of experience & good/best practice –Use of targets and benchmarks –Peer review and other forms of scrutiny Transfer/adaptation of successful models Transfer/adaptation of successful models

TRAJECTORY OF ECONOMY The reform ‘j’-curve Time Performance AB Without major reforms With extensive reforms

THE KOK PROPOSALS Above all about governance –Derived from perception of delivery failures Increase ownership and focus –Above all by NRPs Expand support from Community budget –Not much progress – December 2005 outcome Greater weight to naming and shaming –Opposed by Commission

THE RELAUNCH Growth and employment as headline goals –Playing-down of social and environmental A new partnership approach –NRPs based on 24 integrated guidelines Same for all Member States Yet big differences in practice –Community problem But what is new in it? No national recommendations…yet

RETHINKING GOVERNANCE Methods of economic policy governance –Balance between hard law and open method needs to be reviewed –Finding effective incentives …and sanctions Role(s) of the EU level –Arbitrator, disciplinarian, or just advisor? –Is real budgetary capability needed? Soft rules and weak institutions worst of all

ENHANCING LEARNING Ownership should be vital –But limited embedding in national discourse –Communication & advocacy therefore vital Continuing absence of hard incentives –Few sanctions … or rewards –Should be factored into 2008/9 FP review Stability needed in policy framework –Structural reforms never a quick fix (j-curve) –…or easy to sell

STRUCTURAL REFORMS The latest in U-shaped curves? Intensity of reforms Performance of economy   Sense of crisis in economy Political support for reforms SPAIN ITALY ESTONIA

CONCLUDING COMMENTS Member States broadly know what’s needed –But have to overcome inertia & resistance –Key challenge will be implementation Far from clear how co-ordination adds value –Still searching for a rationale on supply-side –The danger of Lisbon becoming too pervasive –Tension between national plans & common IGs Scope for learning not proven

Charlemagne column, The Economist, 9 th July 2005 HOW TO ACHIEVE REFORM ‘No EU member is going to accept the pain of reform just because Mr Blair makes a good speech in the European Parliament, or because an EU summit passes a stirring resolution. Economic reforms in France or Germany will be carried through by French of German politicians or not at all’