OECD launches economic review of the EU

The Commission has welcomed the publication by the OECD, under the responsibility of Secretary General Gurria, of its first Economic review of the European Union. The review covers a wide range of Community policies and issues (including internal market, financial services, energy, competition, trade and agriculture, cohesion policy and labour mobility) and puts forward a number of policy recommendations. It complements the well established reviews of the Euro area dealing with monetary and fiscal policy, and the national surveys of the 19 EU members of the OECD. The EU review was prepared by the OECD over one year, with input from the European Commission and the EU Member States, and subject to customary peer review in the OECD Economic Development Review Committee.

President Barroso said: “It is the first time that the OECD assesses in a comprehensive fashion a large range of Community policies. I note the positive account in the OECD report of the successes achieved in reforming the European economy. We share the overall conclusion that the Union has played, and should continue to play, an important role in helping Europe meet the challenges posed by technological change, globalisation, population ageing, and climate change. As the OECD has pointed out, we need to sustain efforts and complete our unfinished agenda of reforms”.

The review highlights the impressive performance of the European Community and its “four freedoms” in bringing prosperity to the EU and its citizens. Economic reforms have already started paying off, especially in the Member States that started early. Combined with a supportive international environment, this allowed the EU economy to enjoy a cyclical rebound in 2006 with growth at 3%. Despite the recent turmoil of financial markets the fundamentals of the EU economy remain solid.

While the positive outlook can be maintained for the coming years, there is no room for complacency, as also recommended by the OECD in its report. Further structural reforms are needed to raise potential growth, and cope with technological change, globalisation, population ageing and climate change.

President Barroso added: “The Lisbon Strategy for Growth and Jobs – especially as re-launched in 2005- provides an overarching framework to keep up the pace of reforms, focusing on both Community and Member State structural reform measures. Within the Global Europe framework, the Commission will also continue developing the external dimension of competitiveness, by promoting our trade openness to others, and their openness to us, as critical and mutually reinforcing factors in European competitiveness.”

The OECD review notes that a vibrant internal market is central to Europe’s long term prosperity. The single market has delivered major benefits and needs to be further enhanced, especially in the services sector. The forthcoming Single Market Review, to be adopted by the Commission in November 2007, will set out a strategic action plan to tackle remaining barriers within the internal market, and deliver additional tangible results to citizens.

The OECD also calls for greater competition in network industries, particularly energy. The Commission has indeed just adopted a set of legislative proposals to improve the function of European electricity and gas markets, including on effective unbundling of networks and supply, stronger regulatory oversight and cooperation, and stronger cooperation of network operators.

The review praises the reform of the Common Agricultural Policy adopted in 2003, in particular the introduction of decoupling of support from production activities, and calls for continuing reforms in this direction. In the framework of the planned “Health Check”, the Commission will seek to allow the possibility of further adjustments to the CAP in line with new market developments and the emergence of new challenges in order to make it more relevant, effective and efficient.

The OECD also welcomes the EU global leadership in the Doha Development Agenda and on policies to tackle climate change, and calls for more effective cohesion policy and to reconsider remaining barriers to labour mobility within the EU. The implementation of these recommendations will be followed up in the next edition of the review, in two years time.